First legal action for breach of Overseas Investment Act ‘good character’ rules saw the High Court approve negotiated penalties of $100,000 against Agria Singapore and $120,000 against Agria executive chairman Lai Guanglin following Mr Lai’s run-in with the US Securities Exchange Commission for alleged share price manipulation.
In 2009, Cayman Island-registered Agria Corporation was cleared to buy into New Zealand-based PGG Wrightson Ltd. Political approval was required under the Overseas Investment Act because of the breadth of Wrightson’s land holdings. The Act requires individuals in control of overseas interests be of good character. In part, this is intended to keep out any person likely to bring New Zealand into disrepute.
The High Court was told Agria ‘fessed up to a breach of the Act’s good character requirement when applying for clearance to make further investments in New Zealand. It disclosed Mr Lai had been under investigation by US securities regulators. US regulators alleged Agria Corporation concealed losses through fraudulent accounting; materially underreporting losses and inflating value of shares acquired. Mr Lai was alleged to have manipulated Agria share prices through publication of misleading press releases. Both Agria Corporation and Mr Lai paid fines to US regulators, without admitting liability.
Justice Gordon agreed fines payable to New Zealand authorities be discounted to recognise their early admission of liability, co-operation provided and steps taken to promote future compliance. Mr Lai agreed to stand down from the Wrightson board until at least December 2023. Agria Singapore committed to ensuring Wrightson board’s audit committee have a majority of independent directors.
Land Information New Zealand v. Agria (Singapore) Pte Ltd – High Court (21.03.19)
19.063