Editorial: NZ needs to assure world of trust scrutiny

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Judith Collins will represent the Prime Minister at the London Anti-Corruption Summit tomorrow. Photo / Mark Mitchell
Judith Collins will represent the Prime Minister at the London Anti-Corruption Summit tomorrow. Photo / Mark Mitchell

In London tomorrow Police Minister Judith Collins will represent the Prime Minister at the London Anti-Corruption Summit. World leaders at the high-powered gathering, hosted by Britain's Prime Minister David Cameron, are expected to announce a set of practical measures to counter corruption. Ms Collins described the summit as an opportunity "to promote New Zealand's reputation as one of the least corrupt countries in the world and demonstrate our commitment as a responsible member of the international community".

There is no little irony in the fact that as John Key's Police Minister heads to a global assembly targeting the culture of corruption, an avalanche of information continues to pour out of the Panama Papers. A searchable database which became available yesterday reveals in places the names of the real owners - called the "beneficial owners" - of offshore companies, trusts and foundations. This information is usually kept hidden from the public by the anonymity that offshore structures provide - a perfect vehicle for tax cheats, money launderers and other criminals to take advantage of the secrecy these companies give.

Journalists who have pored over the material have found more than 60,000 references to New Zealand. The material shows Mossack Fonseca, the Panamanian law firm whose records were hacked, told its mainly Latin American clients New Zealand was an appealing place to establish a foreign trust, with their tax-free status and limited disclosure obligations. This is the attraction tax havens offer, though Mr Key insists New Zealand is nothing of the sort. Mossack Fonseca, just one of the firms selling New Zealand's attraction, maintains that the trusts are used for legal purposes, and says it has a reputation beyond reproach.

But the fallout from the papers tell another story too. Over the past month, since the first series of reports emerged, the world has learned more about the offshore holdings of 12 world leaders, scores of politicians, and dozens of tax evaders, drug traffickers, money launderers and other criminals. The disclosures have led to arrests and resignations, and persuaded Governments in several countries to crack down on tax rorts.

This week, before the London summit, 300 economists signed a letter urging world leaders to end tax havens, saying they benefited only rich individuals and multinational corporations, while boosting inequality. "The existence of tax havens does not add to overall global wealth or well-being; they serve no useful economic purpose," it says.

The Obama Administration has responded with a measure designed to force financial institutions to keep records on the real owners behind the companies that use their services. Mr Key's Government has reluctantly agreed to an inquiry by tax expert John Shewan. The scope of his inquiry has been criticised as too limited by the lobby group Transparency International, whose New Zealand branch patron is former National Deputy Prime Minister Sir Don McKinnon. The existence in New Zealand of hundreds of foreign trusts reinforces the sense that we host an industry which thrives in the shadows. If Ms Collins wants to promote our reputation in London, she should tell the summit the industry will be exposed to the law's full glare.

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- NZ Herald

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