OIO releases Motukawaiti (Step) Island findings

2 February 2016

The Overseas Investment Office (OIO) today announced that it is not able to take action over the purchase of Motukawaiti Island – also known as Step Island – by New Zealand company St Morris NZ Limited.

“While the investigation found evidence pointing to a possible breach of the Overseas Investment Act, there is not enough to prove this beyond reasonable doubt,” OIO Manager Annelies McClure says.

“This means we cannot meet the threshold in the Solicitor-General’s Prosecution Guidelines and, so, we cannot take action.”

The OIO began its investigation after learning that St Morris had used funds borrowed from an overseas person – Chinese businessman Jun Zhang – to buy the island.

The investigation was to determine whether St Morris was a front for Mr Zhang – to get around the need for consent – or whether Mr Zhang was just a lender.

It initially involved examining the purchase, the loan from Mr Zhang to St Morris, and a complex finder’s fee transaction – however it also turned up a number of other property transactions.

“The OIO had to investigate these other transactions to see what effect – if any – they had on the island’s purchase and look into the people involved, some of whom are no longer in New Zealand.

“After weighing up all the evidence, our final conclusion is that there is not enough to prosecute for a breach of the Act in this case,” Ms McClure says.

Timeline

Feb-2010: First enquiry on behalf of Mr Zhang about investing in New Zealand

Apr-2010: Mr Zhang visits New Zealand

Jul-2010: Wenning Han (owner of St Morris) signs Sale and purchase agreements for Step Island

Aug-2010: Purchase of Step Island settled

Nov-2010: OIO begins investigation

Mar-2013: St Morris/Mr Han defaults on loans to Mr Zhang

Aug-2013: Island transferred to Mr Zhang in settlement of loan obligations (no consent required as Mr Zhang is no longer an overseas person)

Mar-Oct-2014: OIO interviews key individuals, including Mr Han and Mr Zhang

Jul-2014: Final evidence received

2015: Decision made not to take action

Media enquiries

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