criminality

It was the first time that a sanction was considered against a partner of a foreign investor. Photo / File

A New Zealand company has been fined more than $ 170,000 for failing to seek approval for a purchase of sensitive land made on behalf of a foreign investor.

A judgment this week from the Auckland High Court found that Clevedon Kawakawa Road Limited had purchased sensitive land near Auckland for foreign businessman Zhaorong Mai.

The company has now been ordered to pay $ 160,000 in penalties and $ 15,000 in costs – the first time a penalty has been considered against a partner of a foreign investor.

Businessman Zhaorong Mai agreed to purchase two properties adjacent to Clevedon, together approximately 87 ha and known as “The Clevedon Properties”, in February 2013.

Before the transaction was settled the following year, CKRL was appointed by Mai to complete the purchase. They bought The Clevedon Properties for a total of $ 9.5 million.

The land was classified as sensitive because it was non-urban with an area greater than 5 ha. One of the properties was also adjacent to the foreshore of Kauri Bay and Auckland’s Kahuru Point.

The judgment also revealed that Mai, a Chinese citizen, was a friend and de facto husband, respectively, of the two owners of CKRL. He is considered to have been a foreign person at all relevant times as he was not ordinarily resident in New Zealand.

Under the Overseas Investment Act 2005, foreign investors must obtain the consent of the Overseas Investment Office (OIO) before purchasing sensitive land. It is also an offense for a partner of a foreign person to give effect to an investment abroad without this consent.

The judgment concluded that CKRL was “subject to the direction, control or influence of a foreign person” in acquiring the Clevedon properties, and was therefore an “associate” of a foreign person.

CKRL admitted that it did not seek consent by acting as Mai’s partner in the purchase of the land, in violation of the Overseas Investment Act.

Judge Katz said their guilt was not “materially reduced” by his acting as a partner.

Katz said it was absolutely necessary to deter violations of the law by associates of people abroad, as such violations could “alienate sensitive New Zealand lands” in a way that is more difficult to detect.

OIO group director Anna Wilson-Farrell said the regulator would not pursue associates any differently from foreign investors who have made direct purchases.

“It is a privilege for foreigners to invest in New Zealand and we will continue to investigate when investors do not obtain consent to purchase sensitive land.

“This is the eleventh case in which the court has handed down penalties for the purchase of sensitive land without consent.

“We will continue to focus on using partner relationships as part of our ongoing compliance efforts, and we will take enforcement action whenever we find a violation of the law.

“The court ruling recognizes it.”

The judgment acknowledged that CKRL had admitted responsibility for breaking the law and had engaged “constructively” with the regulator – the managing director of Land Information New Zealand.

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Source: www.nzherald.co.nz
This notice was published: 2021-07-22 02:10:09

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