The High Court has imposed fines totalling $220,000 against the biggest shareholder in PGG Wrightson for  breaches of good character.

This follows penalty proceedings taken by the Overseas Investment Office against Agria and Mr Alan Lai, who is the chair of Agria Corporation.

Land Information New Zealand Group Manager, Overseas Investment Office, Vanessa Horne has welcomed the judgment.

“The judgment reinforces that overseas investment in New Zealand is a privilege and there are on-going responsibilities when investing here,” she says.

LINZ says that in imposing the penalties, Justice Gordon considered the nature and extent of the breaches to be serious.

“There is a strong need to deter breaches of the good character requirement having regard to its importance in the context of the scheme of the Act,” she says.

It says Justice Gordon also considered that the penalty needed to ensure that large corporations take their obligations under the Act seriously.

The breaches of the overseas investment good character conditions arise from the settlement Agria Corporation and Mr Lai entered into with the United States Securities and Exchange Commission (SEC) concerning alleged violations of United States securities law.

Following the settlement with the SEC, both Agria and Mr Lai agreed with the Overseas Investment Office that the actions in the United States amounted to a breach of Agria’s conditions of consent for its investment in PGG Wrightson. Agria and Mr Lai agreed that civil penalties should be imposed by the High Court for the breaches. The High Court today [21 March] ordered:

• Agria to pay $100,000 in penalties.
• Mr Lai to pay $120,000 in penalties.
• Agria and Mr Lai to pay the Overseas Investment Office $30,000 towards its costs.

The size of the penalty reflects the serious nature and extent of the securities violations alleged in the United States, involving fraudulent accounting and share price manipulation.

“The Overseas Investment Office requires overseas investors to behave responsibly with all investments. In the case of Agria, the Overseas Investment Office was concerned at the exposure public investors faced as a result of the securities violations alleged in the United States and that the behaviour reflected poorly on the character of those who controlled Agria,” Vanessa Horne says.

As part of the settlement reached with the Overseas Investment Office, Agria agreed to divest its interest in PGG Wrightson to below 50 percent, which it did in December 2018.