Shewan denies Labour Bahamas tax claim

John Shewan's appointment as the expert for the review is being harshly criticised following revelations of his CV. Photo / File

The man charged with investigating New Zealand's offshore trusts industry says claims by the Labour Party that he helped the Bahamas preserve its tax haven status are "bizarre nonsense".

Labour and New Zealand First say former PwC chair John Shewan is the wrong person the lead the inquiry because he is too involved in the industry which he is being asked to review.

In response, Mr Shewan said he was unfazed by the challenges to his integrity, which were part of politics.

He had worked on tax issues for 38 years, he said, and it was "entirely normal" to have interactions with tax authorities and for some of those cases to go to court.

But he took issue with claims by Labour leader Andrew Little in Parliament today that he had advised the Bahamas Government on protecting its financial sector from tax changes.
In 2014, Mr Shewan and former National Party leader Don Brash travelled to the island nation to provide advice on GST changes.

The trip was arranged after a meeting between Prime Minister John Key and Bahamas Prime Minister Perry Christie.

Mr Little said in the House this afternoon 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 judgement, he said.

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 told Radio New Zealand Mr Little's claims were "a storm in a teacup".

"This is a complete red herring, a storm in a teacup and very disappointing," he told RNZ.

He said he would have happily taken a call from Mr Little's office to respond to his claims.

In relation to the financial services industry, he recommended that the Bahamas follow New Zealand's example and exempt them from GST. Linking this advice to protecting the country's tax haven status was "totally wrong," he said.

Dr Brash said that he and Mr Shewan were enlisted to help the country find other sources of revenue, and recommended a value-added tax.

Until it introduced the tax, the country had been unable to join the World Trade Organisation because of its high tariffs on imports, he said.

New Zealand First leader Winston Peters also took aim at Mr Shewan today, pointing out the role his former company PwC played in minimising tax for corporates Tegel and Rio Tinto in New Zealand.

Asked about the accusations, Mr Shewan said he retired from the company four years ago. When he worked there, his role was not in tax minimisation, he said.

Mr Peters has also pointed to Mr Shewan's past role in high-profile tax cases, including a landmark Supreme Court ruling in 2000 on tax avoidance by two Christchurch surgeons in which Mr Shewan's advice was set aside by judges.

In a press conference this afternoon, Prime Minister John Key reiterated his support for Mr Shewan, saying that he was "beyond reproach".

The criticism of him by Opposition MPs was "bitter and twisted", he said.