In 2016, the Panama Papers spawned hundreds of news articles, and even a feature film, but also saw Inland Revenue collect $13.5 million in evaded taxes.
In 2016, the Panama Papers spawned hundreds of news articles, and even a feature film, but also saw Inland Revenue collect $13.5 million in evaded taxes.
A cache of documents from a Panamanian law firm leaked almost a decade ago enabled New Zealand tax authorities to recover $13.5 million, documents show.
The Panama Papers, a 2016 International Consortium of Investigative Journalists (ICIJ) investigation sparked by 11.5 million leaked documents from Mossack Fonseca, caused waves internationally andled the then-prime minister to launch an inquiry – the Shewan Report – that saw New Zealand’s trust sector reformed.
The ICIJ went on to receive a number of other large-scale leaks concerning firms involved in international finance and tax structuring, published as the Paradise Papers (2017) and the Pandora Papers (2021). The author is a member of ICIJ, with the Herald contributing extensive reporting for the Pandora Papers.
The $13.5m figure comes from a response to the Herald to requests under the Official Information Act seeking recoveries linked to ICIJ reporting projects.
“Inland Revenue compliance activities using data made public by the International Consortium of Investigative Journalists resulted in $13.5m in tax deficiencies,” the IRD’s strategic adviser John Nash said.
Inland Revenue strategic adviser John Nash.
IRD said it was unable to provide similar information for subsequent projects, such as the Paradise or Pandora Papers, due to the recent $1.5 billion “Business Transformation” overhaul of its IT systems, which has seen much information lost.
“Over the period covered by your request, Inland Revenue has undertaken significant transformation in our technology and computer systems. Due to these system changes, the information requested is no longer available and I am unable to provide it to you,” Nash said.
Gerard Ryle, the ICIJ’s executive director, said New Zealand’s haul was only a fraction of the tax evasion uncovered by the 2016 investigation.
“We’ve been measuring the impact of the Panama Papers over the years, and over US$1.4b has been recovered from that one investigation,” he said.
He said when the stories began to break he got visited by officials from the United States demanding to see the source documents – which their whistleblower had already provided to the IRS, and tax authorities in Australia and the United Kingdom.
“Men in black suits turned up at the door, demanding access. It turned out a few weeks later that they’d had them all along, but hadn’t looked at the time,” he said.
He said the Panama Papers proved it was possible to manage hundreds of disparate journalists internationally to assess large quantities of data, and led tax authorities to better co-operate and share information amongst themselves.
“What we’ve found is you’ve got to constantly make people angry to demand actions from leaders. You almost need a new Panama Papers every three or four years, which we’ve somehow been able to do.”
He said the United Kingdom had raised the most from ICIJ projects – largely due to London’s role as a financial hub, and a bevy of Crown dependencies that operated like tax havens – but reforms had been slow to progress.
Then-UK Prime Minister David Cameron had promised in 2013 to introduce a beneficial ownership register – listing who controlled or owned a company, rather than nominee shareholders or directors – but this had still to progress, with current UK Prime Minister Keir Starmer the latest to prevaricate.
A similar register for New Zealand has been worked on by the Ministry of Business, Innovation and Employment since 2018, and in 2022, then-Commerce Minister David Clark said Cabinet had agreed to proceed with the policy, but it was not progressed during the government term.
Earlier this year, new Commerce Minister Andrew Bayly did not include a beneficial ownership register in his refresh of the Companies Act, citing compliance costs for business, with his Cabinet papers noting concern over its exclusion from police, the Serious Fraud Office and the Public Service Commission.
Reforms triggered by the Shewan Report, including the creation of a non-public register of locally-based foreign trusts, saw the number of these exotic legal vehicles decline precipitously: From 12,000 in 2016, four years later, only 3000 remained.
Matt Nippert is an Auckland-based investigations reporter covering white-collar and transnational crimes and the intersection of politics and business. He has won more than a dozen awards for his journalism – including twice being named Reporter of the Year – and joined the Herald in 2014 after having spent the decade prior reporting from business newspapers and national magazines. He is one of two New Zealand members of the ICIJ.
