Agria fined $220,000 for overseas investment breach

21 March 2019

Agria fined $220,000 for overseas investment breach

Today the High Court imposed fines totalling $220,000 against Agria and Mr Alan Lai for breaches of the requirement to remain of good character under conditions of Agria’s investment in PGG Wrightson.

This follows penalty proceedings taken by the Overseas Investment Office against Agria and Mr Lai.

Land Information New Zealand Group Manager, Overseas Investment Office, Vanessa Horne welcomed the judgement. “The judgement reinforces that overseas investment in New Zealand is a privilege and there are on-going responsibilities when investing here.”

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 said. 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 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 said.

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.

A link to the settlement reached with the OIO can be found here.

A link to information on the United States SEC investigation is here.

Q&A

Who is Agria Corporation and Agria (Singapore) PTE Ltd?

Agria Singapore is ultimately owned by Agria Corporation and is a Singaporean registered company. Agria Corporation is a Cayman Island registered company.

Who is Alan Lai?

Also known as Lai Guanglin, he is a citizen of Singapore and lives in Hong Kong. He is Chair of Agria Corporation and was Chair and director of PGG Wrightson at the end of October 2018. He is also a key shareholder in Agria Corporation.

What did Agria have consent for?

Agria Singapore was consented in 2009 and then 2011 to acquire a 50.22 percent shareholding in PGG Wrightson.

What is the good character condition?

Under the conditions of consent, individuals with control of Agria, such as Mr Lai, were required to continue to be of good character. The condition reflects that individuals with control of an investor must meet a good character requirement before they can invest in particular assets in New Zealand.

What does the good character condition require?

The good character condition is designed to ensure overseas persons investing in sensitive New Zealand assets are unlikely to act inappropriately or bring New Zealand into disrepute.

What did the US Securities and Exchange Commission (SEC) investigate?

Agria Corporation’s American Depository Shares were formerly registered with the SEC and traded on the New York Stock Exchange. Agria and Mr Lai were subject to investigation by the SEC following the delisting of Agria Corporation from the New York Stock Exchange on 2 January 2017.

The SEC allegations concerned serious violations of United States securities laws.

More information about the SEC investigations and settlements is here.

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