For starters, anyone can register a company in New Zealand online from anywhere in the world.
Attempting to ameliorate the "tax haven" tag by saying New Zealand requires full disclosure of foreign ownership of trust companies registered here is simply wrong.
In the official IRD form IR607 the only detail a foreign trust company is required to provide is the name and address of its New Zealand agent - usually the legal or quasi-legal service that sets the company up for its anonymous owners, and then generally has nothing more to do with the business other than to authorise the shuffling of money through its accounts. These companies pay no tax, by the way. They are specifically zero-rated. Nor do they have to disclose any other facet of their dealings.
Yet many of the more than 12,000 such foreign trusts registered here manipulate millions if not billions of dollars of unsourced and often unverifiable funds for their unknown owners, via our shores.
Needless to say, in those cases where the clandestine connections have been exposed, some significant sums have been found to be illegally gained or at best of dubious background - salted away by sheikhs and mafia dons, oil barons and arms dealers, and laundered through little old NZ's liberally oh-so-open regulatory regime.
The kind of regulatory regime you have when you don't know and self-evidently don't want to know what's actually going on. In short, the perfect tax haven.
In the past five years NZ-registered foreign trusts have been exposed as being involved in:
- An alarming sanction-busting shipment of arms from North Korea to Iran
- A US-run $42 million Ponzi scheme
- Kickbacks of about $150 million for corrupt Ukrainian and Latvian officials
- Money-laundering $680 million for the Russian mafia
- With Kyrgyzstan's largest bank, laundering $1.2 billion for that country's ruling elite
- Hiding the identity of the criminal owner of Moldova's largest media company
- Channelling hundreds of millions in bribes to corrupt officials for oil equipment contracts worldwide.
These examples are the prime reason New Zealand has been repeatedly dropped from the European "white list" - those countries reputable enough to require only minimal due diligence on financial transactions. The scandal unfolding via 11.5 million documents leaked from Panamanian-based Mossack Fonseca - one of the world's largest shell-company creators - has not yet fully divulged all its New Zealand connections, but we do know our country is mentioned more than 60,000 times. Yet our Prime Minister says he is "comfortable" with all this. Well John, we're not. It strikes to the heart of our pride in honest dealing to suggest we might accept being so flagrantly abused. No wonder only 10 per cent of us any longer trust our parliamentarians.
Our reputation is in the gutter, and it is the ruling National Party that has dragged us down to join them there.
- Bruce Bisset is a freelance writer and poet.
- Views expressed here are the writer's opinion and not the newspaper's.
