Newshub can reveal the Government has once again ignored official advice to fund a project through the Provincial Growth Fund (PGF), acting as a "lender of last resort".
Treasury told the Government to defer a decision about lending to debt-laden Westland Milk Products, out of concerns about the appropriateness of the Government loaning money to private companies - especially after banks had turned it down.
But despite the advice, Regional Economic Development Minister Shane Jones and Finance Minister Grant Robertson pushed ahead and signed off on the $9.9 million loan.
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National's Regional Economic Development spokesperson Paul Goldsmith is outraged.
"Shane Jones is a loose unit, we've all known that. He has gone about this fund in a nakedly political way," he said.
"His catchphrase is 'to the victor goes the spoils'. They've got the $3 billion and they're going to spend it anyway they like."
Mr Goldsmith says there has to be an exceptionally strong case for the Government to lend private companies money, and this case isn't one of them.
"The Government needs to tidy up its act with the Provincial Growth Fund."
The loan was announced with much fanfare. Prime Minister Jacinda Ardern and Mr Jones made a whirlwind trip to the West Coast to announce the PGF packages in November last year.
But official documents show that two months earlier, in August, Treasury told ministers that because Westland Milk Products is a private company, it would reap the benefits. The PGF is designed to boost New Zealand's regional economy and jobs.
Treasury said because Westland Milk "will substantially internalise the benefits of the proposed PGF investment, there needs to be a clear articulation of why Westland is deserving of PGF investment, over and above other competing firms".
The Treasury also raised concerns about the appropriateness of the loan: "We understand the reason Westland is seeking a loan from the PGF is they cannot get a loan from its bank on acceptable terms. In this case, the Crown would be acting as a lender of last resort."
In its latest annual report, Westland Milk Products reported a massive $254 million debt.
The Hokitika-based company secured a $9.9 million loan for a milk segregation project. Mr Jones said at the time the interest-bearing, repayable loan would enable Westland Milk Products to collect and process different types of milk products, such as A2 milk and colostrum.
Mr Jones faced criticism for giving the loan to Westland Milk when banks deemed it too risky. He defended the move in November, saying foreign-owned banks operating in New Zealand let the regions down, lacking the Government's "wellness approach".
"Banks have made money out of New Zealand recently by getting rid of people. I'm in the business of treating investment as growing jobs and growing the ability of people to create more wealth. That's not what banks do," he said at the time.
In December, Newshub revealed Treasury warned the Minister not to fund up to $11.5 million worth of projects in Gisborne - the Gisborne Airport revamp and a tourism project at Mt Titirangi.
Mr Goldsmith said the Government shouldn't be taking on the role of a bank, "especially one that is directly controlled by ministers".
Mr Jones was unavailable to be interviewed by Newshub for this story as he was in Northland and could not be reached. Mr Robertson was also unavailable to comment because he was in a meeting.
Newshub.
