28 August 2000
GOOD CHARACTER CLAUSES NEEDED IN NZ’S FOREIGN INVESTMENT LAWS
The Government has recently instituted “smart sanctions” against the criminals responsible for the Fiji coup. It was
also reported to be investigating law changes, or introducing new laws, to enable the seizure of any New Zealand assets
owned by George Speight and co. This is very commendable.
As you know, CAFCA has, this year, launched a campaign calling for an Inquiry into, and the seizure of, New Zealand
assets owned by Indonesia’s Suharto family and cronies. We have previously written to you about this. To our pleasant
surprise, the Government has taken up the issue, to some degree, and offered to help the Indonesian government should
assistance be requested to have some of those NZ assets seized.
What is required is more than an ad hoc response to criminals such as George Speight and the Suhartos. New Zealand’s
foreign investment laws need overhauling, as does the Overseas Investment Commission (OIC), the body that administers
them. One specific area that needs drastic improvement is the need for “good character” clauses in those laws, to
prevent the likes of the Suhartos and their cronies (or Speight and co) ever being able to invest in NZ in the future.
On each of its monthly decision sheets approving a foreign investment proposal, the OIC routinely states that the
applicant is “of good character” . We challenged this once, and presented the OIC with pretty good evidence that the
applicants definitely weren’t of good character. The OIC’s response took more than a year, and concluded that nowhere in
New Zealand law is “good character” defined. Needless to say, it rejected our complaint. This year, the Ministry of
Fisheries objected to several of the (unidentified) foreign fishing companies bidding to buy Brierley’s stake in
Sealord, because it deemed them not to be of good character and enclosed evidence to back it up. In every case, the OIC
overrode those objections from a Government Ministry, and recommended to the Government that every single applicant was
of good character (as it turned out, the Government vetoed any sale). Something needs to be done to tighten up this
There is a model that New Zealand can follow. A number of individual states in the US have “Good Character” (or “Bad
Boy”) laws. A corporation’s good character, or lack thereof, is considered to be important in deciding whether or not to
allow that company to invest in the American state. A corporation's “culture” can become the basis for denying business
opportunities. These laws give US states the right to refuse licences and permits to companies that have a history of
violating the law - criminal, civil or environmental. And these laws are applied. Waste Management (best known in NZ for
urban wheelie bins and controversial rural landfills) is one of the giant transnational corporations that have fallen
foul of them. Indiana is one state that refused a permit to it; in the first half of 2000, communities in both
California and New York declared Waste Management unfit for business, and had their decisions upheld in court.
CAFCA would be happy to supply you with details on this. One point to note – the American laws take into consideration
the corporate good character of the applicant; New Zealand only considers the individual good character of those owning
or controlling the applicant.
We urge you to ensure that “good character” clauses are inserted into New Zealand’s foreign investment laws; and that
those laws be reviewed, overhauled and strengthened.
As a model for regulating foreign investors, we enclose our Corporate Code of Responsibility *. We would be happy to
discuss it with you, and welcome your views on the subject we have raised.
Murray Horton Secretary/Organiser
* The Corporate Code of Responsibility can be found on CAFCA's Website
CAFCA Campaign Against Foreign Control of Aotearoa PO Box 2258, Christchurch email: email@example.com