After months of claiming the Government did a deal with a Saudi businessman to avoid the possibility of being sued, the Prime Minister now says it was never about compensation.

Photo: RNZ / Alexander Robertson

The government gave Hamood Al-Ali Al-Khalaf $11 million in cash, sheep and equipment, saying he had threatened legal action over New Zealand's ban on live sheep exports and could have sued for up to $30 million.

Documents released belatedly about the establishment of a Saudi agri-hub, partly funded by New Zealand, reveal Foreign Minister Murray McCully at times did not want lawyers involved in the deal.

Mr Key said there was a good reason for that.

"What Mr McCully was saying though was he didn't want lawyers brought in to be talking about compensation because the deal was never about compensation."

Yet in May, Mr Key said the government had done a deal with Mr Al-Khalaf in response to his legal threat, which the Prime Minister blamed on the former Labour government's handling of the live sheep export ban.

"He [Mr Al-Khalaf] certainly argued very vigorously that the actions of the previous government misled him. You know whether that would have legally succeeded in court it's not for me to determine because I'm not a lawyer. I can just tell you what he was claiming and I think overall we found a way through all of that and I think that's broadly the right step," he said then.

But now Mr Key appears to have a different explanation for the deal.