Labour leader Andrew Little has today backed down from comments that the man charged with investigating New Zealand's offshore trusts industry had advised the Bahamas Government on protecting its financial sector from tax changes.
Former PricewaterhouseCoopers chair John Shewan travelled to the island nation with former National Party leader Don Brash in 2014 to provide advice on GST changes.
The trip was arranged after a meeting between Prime Minister John Key and Bahamas Prime Minister Perry Christie.
On April 13, Mr Little alleged that Mr Shewan and Dr Brash had effectively advised the Bahamas - a country known for tax haven activity - on how to protect its offshore financial services industry and maintain its haven status.
Appointing him to lead an inquiry on New Zealand's offshore trusts industry showed a lack of judgment, he said.
But today, in a short statement, Mr Little admitted that he was wrong.
"In April, I made statements concerning advice provided to the Bahamas government by John Shewan, the person appointed to review the disclosure rule concerning foreign trusts in New Zealand. Those statements were based on a report in a Bahamas newspaper," he said.
"After meeting with Mr Shewan, I accept his explanation that while he advised the Bahamas government on tax matters he did not advise them on how to maintain their tax haven status."
At the time, Mr Shewan said Mr Little's claims were "unfortunate and misleading".
He said the Bahamas Government had needed assistance in making its GST changes more workable.
Mr Shewan was appointed to independently review New Zealand's foreign trust laws in April amidst continuing fallout from the "Panama papers".
The move came after the Government came under pressure as New Zealand was described as a "tax haven"in some international media coverage of the leak.
The leak of more than 11 million documents from Panama-based law firm Mossack Fonseca drew attention to New Zealand's tax-exempt foreign trusts, which have been reported to be attractive to offshore investors because of minimal disclosure requirements.