A dispute between warring directors of a gold mining start-up has again thrown up complaints that misused shell companies are making New Zealand synonymous with "scamsville".
Asia Pacific Gold Mining Investments was delisted from the Danish alternative exchange GXG last month. At around the same time the company's broker and adviser (and New Zealand-registered financial services provider) London Capital NZ was similarly struck off and its sole director, Australian Bryan Cook, arrested in an ostensibly unrelated investigation by German authorities specialising in white-collar crimes.
The actions of GXG pruning its register came after millions of dollars were apparently raised in off-market sales of APGMI to investors in Asia.
APGMI, majority-owned by UK-registered and Cook-connected London Capital Advisers, was once listed on the GXG as having a market capitalisation of 233 million.
Steering a nine-figure company came as a shock to APGMI director David Mapley, who joined the board only in May to find the eye-popping valuation was established by the July 2013 sale of only 100 shares in an apparent related-party deal involving Cook's UK-based sister.
Mapley said he believed the book value of the company was only $1 million, suggesting a more realistic price for the company's shares to be 1c.
He said an inspection of the share register had shown nearly 18 million shares in the company had been sold by LCA last year - mostly to investors in Asia - with proceeds paid to the Polish bank account of London Capital NZ.
LCA, through Wellington lawyers Crengle, Shreaves & Ratner, said the company was in a legal dispute with Mapley over control of APGMI and as the matter was before the courts of New Brunswick, Canada, would not be commenting further. Crengle said Cook "continues to maintain his innocence of any wrongdoing" and said the investigation by German authorities leading to his arrest did not involve LCA or APGMI.
Both London Capital NZ and affiliated company Asian Finance Corporation are registered in New Zealand as financial service providers and Mapley said he had laid complaints over their operations with the Financial Markets Authority.
"I worked two years in Australia and have a high regard for Kiwis. Unfortunately, the rest of the world also thinks this way: when you turn up and say, 'We're an FSP from New Zealand', people take you seriously. But now when I see a New Zealand company, all I think [is] 'scamsville'," he said.
FMA chief executive Rob Everett told Mapley in correspondence that claims he was refusing to take action were "factually incorrect and insulting and deliberately so" and demanded an apology from Mapley.
The director said he would happily tender an apology "when you [Everett] apologise to the bloody poor bastards who have lost thousands of dollars".
An FMA spokesman later clarified that Everett was referring to the FMA's lack of jurisdiction over offshore activities when corresponding with Mapley, and that FSP status was mainly an "administrative process" that did not involve regulation.
The spokesman would not comment when asked if the FMA was co-operating with the German investigation into Cook.
The misuse of New Zealand shell structures has been an ongoing problem that gained international prominence with the 2009 seizure of a gun-laden cargo plane in Bangkok destined for Iran. A New Zealand-registered company had leased the plane to ship the sanction-busting cargo from North Korea.
Subsequent years have seen government officials express concern in reports to ministers that lax registration processes could see New Zealand become a domicile of choice for international criminal groups, and such structures were likely used every year to launder billions of dollars. Law changes tightening registration requirements proposed by then-Justice Minister Simon Power in 2011 were passed by Parliament only last year.
A key part of this law change, requiring all New Zealand-registered companies to have a resident director who is available to answer questions from regulators and law enforcement officials, does not come into force until May.
The FMA has also recently been granted more powers to proactively deregister FSPs where there are concerns about a company.