Moon Lake Investments won approval to buy Van Diemen’s Land Company after promising to invest $100m in Tasmania and create jobs.
The promises that helped a Chinese firm secure government approval for the controversial purchase of Australia’s largest dairy farm were not “legally binding”, according to Treasury officials.
The sale of the Van Diemen’s Land Company to Moon Lake Investments attracted controversy in 2015, because it allowed foreign ownership of the dairy farm in north-western Tasmania.
The sale was investigated by the Foreign Investment Review Board (Firb), and the government eventually allowed it to proceed in February 2016, saying Moon Lake had met the national interest test. The test was met partly because Moon Lake promised to create 95 local jobs, invest $100m in the region, and attempt to protect the endangered Tasmanian devil.
But recent ructions within the company have prompted concerns those promises will not be met. Board members staged a mass resignation last month after failing to convince the new owners to invest millions to make the company sustainable through drought-proofing and the improvement of animal welfare.
Greens senator Peter Whish-Wilson raised the matter in Senate estimates on Tuesday night, asking whether Moon Lake was meeting its Firb obligations.
Treasury officials said it would be illegal to comment on individual cases due to strict commercial-in-confidence laws. But Victoria Anderson, the chief adviser in Treasury’s foreign investment division, said the promises made by Moon Lake were public undertakings, not legally binding conditions.
“They are undertakings, so they’re not legally binding obligations, but those issues go to reputation and character of the investor and could be taken into account later on, should the same investor want to make another investment,” Anderson said.
“They are significant, it’s just that they are not enforceable in the same way as a legal condition would be enforceable.”
Directors who quit Australia’s largest dairy farm business urged Chinese owner to invest in it
The case has raised concerns about how Firb-approved businesses are held accountable for the promises they make and the conditions imposed on them.
Anderson said Treasury was conducting audits of high-risk cases. Those audits would not be made public.
“We can provide assurance in general terms as to the level of compliance, what we can’t do because of the protections in our act, is disclose information about particular instances of non-compliance,” she said.
The mass board resignation was prompted by a proposed restructure of the company, which removed a dedicated chief executive for the Van Diemen’s Land Company side of the business. Board members also wanted $2m spent on irrigation and water storage for drought mitigation, new laneways to prevent cows going lame, and the construction of a fence to keep wallabies off grazing pasture.
One of the Moon Lake directors who resigned, David Crean, told Guardian Australia last month it was unclear how new jobs would be created on the VDL side of the business. He said they could be added through the construction of a powdered milk factory, or other parts of the business.
“That’s still [the owner’s] idea but it’s about the implementation,” he said. “I’ve got no doubt he intends to do it but it’s about how he implements it.”
Source: The Guardian