- An illegal overstayer working in the kiwifruit industry in the Bay of Plenty alleges he was exploited as a ‘money mule’ in a tax evasion scam.
- More than $3m went into his bank accounts in just six months, which he withdrew in cash from ATMs.
- The ‘money mule’ alleged he was kidnapped and assaulted when he threatened to cooperate with law enforcement.
- Zespri said any labour exploitation is unacceptable and it contracts a team of specialist investigators to stop rogue contractors.
- IRD and police are investigating the allegations made by the ‘money mule’ and Cabinet Minister Casey Costello says agencies must work together to stop organised crime.
More than $3 million went through the bank accounts of an illegal migrant allegedly exploited as a ‘money mule’ in a tax fraud scheme in the kiwifruit industry, according to a Herald investigation.
The money was deposited in sums of up to $10,000 nearly every day over a six-month period, then withdrawn as cash by the ‘money mule’ on behalf of a group he called ‘The Syndicate’.
But when he threatened to blow the whistle on the tax evasion scam, the ‘money mule’ claimed he was kidnapped, assaulted and told to keep quiet or he would be killed.
The illegal migrant is now cooperating with Inland Revenue investigators and police detectives in Tauranga but anxious about further retribution, or that he will be deported back to India before any prosecution takes place.
“I am frightened all the time,” the 32-year-old said.
Zespri, which sells billions of dollars of fruit each year globally on behalf of New Zealand growers, says any labour exploitation is unacceptable and it invests considerable resources each year to stop rogue contractors.
The company uses specialist investigators to find evidence of labour exploitation and tax evasion, with offenders blacklisted from the industry and reported to authorities.
While Inland Revenue and the labour inspectors from the Ministry of Business, Innovation and Enterprise (MBIE) do investigate and prosecute complaints, those who control the sham companies often stay out of reach by using ‘front men’ to distance themselves from the crime.
The practice of paying workers under-the-table in cash is also a known method of money laundering the profits of criminal activity like drug dealing.
Cabinet Minister Casey Costello said the issues outlined by the Herald investigation were the reasons why an expert panel was established earlier this year to advise the government on how to tackle organised crime.
Government agencies not only had to improve not only information-sharing and collaboration to identify organised crime, said Costello, but to “connect up the approach” to investigations and prosecutions.
“To achieve this, we need to be very clear that our priority is not only delivering protections against exploitation, but holding perpetrators accountable.”
The ‘money mule’ who has given evidence against the tax evasion syndicate continues to live in fear.
Wishing to be identified only by his surname, Singh entered New Zealand on a student visa which expired in 2017.
But Singh stayed to work under-the-table for a subcontractor who supplied labourers to work in orchards across the Bay of Plenty. He was paid $18 an hour in cash.
Struggling to make ends meet and repay a debt in India, Singh was introduced to someone in the kiwifruit industry who offered a way to make extra money.
All Singh had to do was open a bank account.
Each week, tens of thousands of dollars would be deposited into the account.
Singh would then withdraw the cash from ATMs, and give the money to his ‘handler’ who worked for a trio of men he now calls “The Syndicate”.
He was assured that the transactions were legitimate and was promised a 2% commission of all the money that flowed through the account.
When the bank closed the account because of the suspicious nature of the transactions, Singh opened a new account with a different bank until that was shut down too.
He said this happened “four or five” times between 2021 and 2022.
For just two of the accounts, bank statements obtained by the Herald show more than $3.2 million was deposited, then withdrawn in cash, in less than six months in 2021.
Singh believes the total across all the bank accounts was much higher - and he was never paid the 2% cut promised to him.
When a concerned friend explained the potential criminal culpability of his actions, Singh refused to open yet another bank account, and threatened to report the matter to New Zealand authorities.
Singh said The Syndicate warned him the consequences of being a whistleblower would be severe: he was told to “keep his mouth shut” or else his family in India would be hurt.
But because he was desperate to repay his own debt, Singh persisted in asking for the money he believed he was owed.
This continued for months until November 2023 when he alleges he was tricked into a meeting with The Syndicate in Paengaroa, east of Tauranga, and ambushed by a group of men who arrived in three vehicles.
Illegal workers are vulnerable. They can be abused, get them to work hard, pay them less, no holidays or sick days
Singh alleges he was assaulted by the men - including a member of The Syndicate who struck him with a baseball bat - and then forced into the backseat of one of the vehicles.
He was then taken to another location down a rural road, assaulted again, and forced to sign some paperwork.
“They said ‘Keep your mouth shut, don’t go to police, don’t go to authorities. If you talk, I will kill you’,” Singh said of the alleged kidnapping.
“They were punching me, hitting me. I was very frightened.”
He did not report the alleged assault to the police because, as an illegal immigrant, Singh was scared about being deported or going to prison in New Zealand himself for money laundering.
But he did seek food and shelter at the Sikh temple in Tauranga where he met Baljinder Singh, who has spent the past two decades working in the kiwifruit industry.
Singh convinced the overstayer to meet with investigators at Inland Revenue, and has also supported his efforts to secure a visa through an application to the associate Immigration Minister Chris Penk.
The Herald approached the Inland Revenue investigators in Tauranga working on the case and received a written statement from the department’s public relations adviser in Wellington.
“Inland Revenue staff are prevented by Section 18 of the Tax Administration Act from commenting or discussing the tax affairs of any individual and cannot say what investigations/prosecutions are, or are not, underway.”
Speaking more generally about tax evasion in the horticulture industry, the spokesperson said Inland Revenue takes the issue “very seriously” and prosecutes where appropriate.
“These cases do take time, however, we can’t be any more specific about any investigations or how the process works.”
A fear of being deported meant that Singh was reluctant to report the alleged kidnapping and assault to police.
But earlier this week, he agreed to meet with detectives from the Tauranga CIB to be interviewed about his ordeal.
The wider issue of migrant labour exploitation still exists in the kiwifruit industry, says Baljinder Singh, who knows of contractors providing labour to orchards who actually prefer hiring overstayers.
“Illegal workers are vulnerable. They can be abused, get them to work hard, pay them less, no holidays or sick days,” Baljinder Singh said.
“But they will keep their mouths shut otherwise they will be deported, and contractors will still charge full rates from orchard management.”
To disguise the labour fraud and avoid paying tax, Baljinder Singh said contractors used the services of groups like The Syndicate, which specialise in moving the money around using sham companies and the personal bank accounts of overstayers like the ‘money mule’ he is supporting.
“He has been used and thrown away,” said Baljinder Singh. “But he is not the only one.”
He believed that large industry players were aware of The Syndicate, but said it was difficult to stop the tax evasion scam because they used ‘front men’ to run the sham companies and kept their hands clean.
Everyone knows who they are ... they like to support politicians and charities to make them look good.
As soon as one sham company was discovered, and deregistered by Inland Revenue or banned from the industry by Zespri, the directors would return to India and be replaced by another proxy of ‘The Syndicate’ to start a new one.
‘Money mules’ like Singh were also used to distance The Syndicate from the tax fraud offending.
And with millions of dollars of cash being moved around, Baljinder Singh raised the likelihood that gangs and other organised criminals were using The Syndicate to launder drug money.
“Everyone knows who they are. They are very wealthy but nothing is in their own names,” said Baljinder Singh. “They like to support politicians and charities to make them look good.”
The kiwifruit industry is worth billions of dollars to the New Zealand economy, with Zespri - the collective which represents local growers on the world stage- sending hundreds of millions trays of fruit to 59 countries each year.
A spokesperson for Zespri says the company has extensive systems to stop rogue operators.
To prevent poor practices in the first place, kiwifruit growers must be certified with an internationally recognised system for worker safety, health and welfare, as well as comply with Zespri‘s code of conduct.
Any contractors wishing to work on orchards go through a vetting process conducted by an investigation consultancy, AIM CRI, and also hold a compliance assessment verification (CAV).
To get a CAV, contractors must show they have the appropriate systems in place and are inspected by Zespri every year.
A list of contractors who have had their CAVs suspended or terminated is published so that growers know who can be hired.
The spokesperson said Zespri also worked closely with government agencies if the investigations by AIM CRI uncovered evidence of misconduct.
“These investigations will often result in us passing files on to enforcement agencies to take action against those who let the industry and our people down.”
In regard to the tax scams described by the ‘money mule’ Singh, the spokesperson said Zespri usually identifies the suspicious banking and invoices within a few months and is able to remove the contractors from the supply chain.
“In some cases, a full investigation is conducted before they are removed,” the Zespri spokesperson said.
“In all situations, any Zespri findings are shared with relevant authorities such as IRD, the Labour Inspectorate or the Police.
“Zespri is a private company with a limit to our ability to investigate and take action. We are also continuing to work closely with the government and highlighting the need for more legislative tools and enforcement options to help us manage the issue of non-compliance.”
The kiwifruit giant is believed to be the only corporate entity in New Zealand to vet the supply chain and investigate allegations of labour exploitation.
But the same issue - and associated crimes of tax fraud, money laundering, violence - also exist in other industries like construction and hospitality.
It’s a familiar story for Casey Costello, a former police detective who later developed expertise investigating labour exploitation.
After entering politics as a New Zealand First MP, Costello now sits around the Cabinet in the coalition government as the associate Police Minister and the Minister of Customs.
In February, the Government established a ministerial advisory group that reports to Costello on ways that New Zealand can tackle the growing threat of organised crime.
In the first two reports, the panel of experts has already highlighted two problem areas: the lack of information-sharing between government agencies, and the ease with which money can be laundered.
Costello said the issues raised by the Herald investigation were the reason why the Government appointed the ministerial advisory group.
“Unfortunately, I saw these issues first-hand when I was working to prevent migrant exploitation before entering politics,” said Costello.
“These criminal groups are basically illegitimate businesses, and motivated by money – they’ll do anything they can including exploit labour, and migrant labour is particularly vulnerable.”
In the most recent report released earlier this month, the expert panel said industries such as construction, horticulture and hospitality were “high risk” for money laundering and should be banned from paying wages in cash.
“Payment of wages with cash is common in a range of industries - usually increasing the risks of tax evasion and exploitation of migrants and other vulnerable workers,” the panel wrote.
“Numerous countries have introduced statutory requirements to ensure that wage payments are made through verifiable, electronic means, to enhance compliance and combat financial misconduct.”
Similarly, Costello would also like to stop cash payments to certain professions like lawyers and immigration consultants.
Government agencies not only had to improve information-sharing and collaboration to identify organised crime, said Costello, but also to “connect up the approach” to investigations and prosecutions.
“To achieve this, we need to be very clear that our priority is not only delivering protections against exploitation, but holding perpetrators accountable,” said Costello.
“This will require bold initiatives as well as better public awareness of the reality of exploitation in New Zealand.”
The ‘money mule’, Singh, now faces an uncertain future.
He does not know whether Inland Revenue will call him as a prosecution witness, and is concerned that he will be deported by Immigration New Zealand in the meantime.
If he is sent back to India, Singh feels that he will be more vulnerable to violent retribution from the tax evasion syndicate.
He is now waiting for Chris Penk, the associate Immigration Minister, to decide his fate.
His lawyer Ned Burke has asked Penk to use his discretionary powers under the Immigration Act to direct officials to grant a visa to his client.
Jan Tinetti, a Labour MP who lives in Tauranga, has also written a letter in support of the last-ditch visa application.
Penk confirmed that he had received an application for ministerial intervention in Singh’s case, but noted that Immigration New Zealand (INZ) officials had declined two previous visa requests.
It could take up to six months to make a decision.
“The process for deciding a case is incredibly thorough and undergoes rigorous checks. It can take up to six months for a decision, depending on its complexity,” Penk said.
“I’m assured by INZ that if the individual is sought to remain in New Zealand for the purposes of an investigation, no deportation action will be taken.”
While he waits for a decision to be made in Wellington, Singh continues to work under-the-table as a labourer in the kiwifruit industry in the Bay of Plenty.
Jared Savage covers crime and justice issues, with a particular interest in organised crime. He joined the Herald in 2006 and has won a dozen journalism awards in that time, including twice being named Reporter of the Year. He is also the author of Gangland, Gangster’s Paradise and Underworld.