New law to regulate arms brokering

A new law will regulate arms brokering. Photo / Michael Cunningham

New Zealanders involved in brokering the international movement of weapons will have to register and obtain a permit, under a planned law change.

There are currently no controls on arms brokering - the negotiation, arrangement or facilitation of a transaction involving the international movement of arms or military equipment.

Groups including Oxfam and Amnesty International have long campaigned for that to change, linking such trade to armed violence and human rights violations.

New Zealand in 2014 ratified the Arms Trade Treaty, which Foreign Minister Murray McCully hailed as a "major step" in global efforts to reduce the illicit arms trade.

All countries signed-up are required to have laws to control the international flow of weapons including guns, rockets and grenades and heavier weaponry.

The Government is currently drafting a "Brokering Bill", about which the Ministry of Foreign Affairs and Trade (Mfat) recently briefed a firearms community advisory forum set-up by Police.

The proposed new law will require individuals and entities to register and obtain a permit for brokering activities, and permits would be declined where there is a risk that the arms could move to "illegitimate users" or destinations.

Brokering without a permit will be an offence, and the regime would not only apply to people in New Zealand, but also New Zealanders and New Zealand entities abroad.

The change will not cover firearm imports and exports to and from New Zealand, or the domestic sale of guns - brokering is the movement of arms from one foreign country to another.

While a forum member was concerned the law change could increase import costs, Mfat advised it "should have no practical impact on New Zealand". A spokesman told the Herald its understanding was brokering by New Zealanders and entities was not significant.

Rachael Le Mesurier, executive director of Oxfam New Zealand, said the Arms Trade Treaty had brought the end of arms brokering "a good bit closer".

"But the Treaty itself could be stronger. That's why a Brokering Bill, which could close some of the gaps, is so important.

"For this legislation to be a real success, it should absolutely include clear definitions of brokering, which the Treaty is a bit weak on, and have clear provisions for offenses and appropriate penalties for illicit arms brokering."

In a 2010 report, Brokers Without Borders, Oxfam used the example how a New Zealand-registered shell company was linked to a shipment of weapons from North Korea to Iran.

When the 35-tonne cache of weapons was intercepted by Thailand authorities during a refuelling stop in December 2009, it was discovered that the plane chartered for the transfer was leased by a NZ-registered shell company.

Such arrangements came under further scrutiny after the release of the Panama Papers - a leak of 11.5 million documents from a Panamanian law firm.

An inquiry by former PwC chairman John Shewan concluded in June that the disclosure rules for New Zealand's foreign trusts were "not fit for purpose" and "light-handed".

It recommended that foreign investors should disclose much more information when setting up a trust and should file annual returns in New Zealand.

Once implemented, any foreigner who sets up, controls, or benefits from a trust based in New Zealand will have to disclose their identity, foreign address and tax details at the time of registration.

Then Finance Minister Bill English and Revenue Minister Michael Woodhouse responded by saying they had agreed to all of the recommendations in the Shewan Inquiry.