Saudi sheep farm sparks bribery calls in New Zealand Parliament

New Zealand's Auditor General has been asked to investigate government spending of 11 million NZ dollars (7.96 million U.S. dollars) on a sheep farm in Saudi Arabia in what has been labeled a bribe to secure a free trade agreement with the Arab Gulf states.

Foreign Minister Murray McCully has been under growing pressure to reveal details of the spending, which was originally kept secret, but has been drawn out under pressure from opposition lawmakers and the media.

The money paid to set up a farm in the desert and fly over live sheep in order to compensate Saudi businessman Hamood Al-Ali Al- Khalaf for millions invested in a business to ship live sheep from New Zealand to Saudi Arabia.

The previous New Zealand government banned the trade on animal welfare grounds in 2004 and the current government renewed the ban after publicly indicating it would overturn it.

McCully said the government had agreed to the payment as a settlement after it had been exposed to a legal claim for compensation of up to 30 million NZ dollars (21.74 million U.S. dollars).

The opposition Green Party on Thursday asked the Office of the Auditor General to investigate the pay-offs.

A Cabinet paper released earlier in the week showed the government spent the money after the Saudi government made it clear a free trade deal (FTA) with the Gulf Cooperation Council would depend on al-Khalaf being placated.

"Murray McCully admitted that the government did not seek legal advice, but instead just tried to buy off Mr Al-Khalaf. This is a highly inappropriate way to settle a dispute," Green Party trade spokesperson James Shaw said in a statement.

"This incident raises serious questions about the use of the public purse to buy political outcomes. If genuine issues were raised by the Saudis then proper legal and disputes processes should have been followed. A commercial deal is a dodgy resolution to a legal issue."

The opposition New Zealand First party said the government had been successfully blackmailed into paying up in order to secure the FTA.

"It is a disgrace and borders on bribery," New Zealand First leader Winston Peters said in a statement.

Prime Minister John Key has said the deal had led to a practical and pragmatic outcome.

"The lawsuit that the gentleman might have taken had nothing to do with the FTA. It was totally about what he believed were the assurances made to him by previous governments and whether he would lose money," Radio New Zealand reported Key saying on Thursday.

"A factor that might help us is that we might also get an FTA, but it was just one factor, there was no guarantee."

However, the main opposition Labor Party said McCully had admitted the threat of legal action had been withdrawn before the Cabinet agreed to the payouts.

"This was a facilitation payment to advance the stalled Gulf Cooperation Council FTA. In other jurisdictions, it's called a bribe," Labor export growth and trade spokesperson David Parker said in a statement.