The findings of an investigation carried out by Radio New Zealand, TVNZ, and investigative journalist Nicky Hager into the Panama Papers leaks were released last Monday, exposing New Zealand as a “prime destination” for the tax avoiding rich.
It was revealed that Bentleys, an Auckland accountancy firm run by chartered accountant, lawyer, and former IRD employee Roger Thompson, is the registered office in New Zealand for Mossack Fonseca—the Panamanian law firm at the heart of the international scandal.
The team found that the process to establish a trust went as follows: for a $4000 fee, Bentleys created anonymous and tax-free trust in New Zealand. Thompson and two other Mossack Fonseca directors would become the board members of the trust in New Zealand, in order for the trust to seem legitimate.
Nicky Hager said it is not illegal in New Zealand to provide these services, meaning Bentleys are technically not breaking the law.
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Despite this, they are helping wealthy people from overseas break the law of their own countries by avoiding paying tax. By this definition, Hager said, New Zealand is “conclusively… functioning as a tax haven.”
The investigation also revealed the kinds of trusts that have been established in New Zealand, many functioning as intermediary bank accounts to pass money through to accounts in other tax havens so the transactions became harder to trace.
Four other accountancy and law firms mentioned in the Panama Papers have been linked to a lobby effort in 2014 to keep the current foreign trust system, including Auckland-based firm Cone Marshall, whom Prime Minister John Key’s advisor and lawyer Ken Whitney has ties with.
This revelation contradicts Key’s statements made in late-April that Whitney was not linked to any foreign trusts or firms associated with Mossack Fonseca.
Opposition parties have been highly critical of the government’s response to the Panama Papers.
Greens co-leader James Shaw believes that it is clear “that New Zealand has become an integral part of the global tax avoidance network,” and that John Key needs “to stop defending the tax avoidance industry and broaden the review of foreign trusts into a full scale inquiry into tax avoidance.”
Labour leader Andrew Little sees Key’s denial of the facts as damaging to New Zealand and is calling for a tightening of the tax law loopholes in New Zealand in order to shut down the foreign trust industry. Labour and the Greens are calling for a secondary independent inquiry into the issue, stating that they do not see the primary inquiry under John Shewan, a former head accountant of PwC, as sufficiently distanced from the government.
Key came under fire after falsely claiming that Green MP Mojo Mathers had a foreign trust in the United Kingdom. Mathers responded by stating that it was “dirty tactics” to conflate a foreign trust with a family trust established in the UK by Mathers’ relatives, which she has always declared herself as a beneficiary.
Many opposition MPs defended Mathers, Labour MP Grant Robertson called the Prime Minister’s claim a “disgraceful slur from a desperate man,” and Green MP Julie-Anne Genter called the move “unbelievably low” and that Key was “full of shit.”
Key also claimed that Greenpeace New Zealand, Amnesty International, and the Red Cross each had undisclosed foreign trusts. Greenpeace Executive Director Dr Russel Norman has refuted this claim, and has asked for an apology from the Prime Minister. Executive Director of Amnesty International NZ Grant Bayldon said that non-profit organisations were often used as covers for those trying to hide money in foreign trusts, and that any involvement from these NGOs are actually scam organisations.
During the May 11 session of Question Time, James Shaw asked Key to apologise to Greenpeace, Amnesty, and MP Mojo Mathers for inflating their involvement with foreign trusts. During the heated discussion Key was ejected from Parliament, his first time while Prime Minister, after ignoring the Speaker of the House calling for order.
John Key continues to deny that New Zealand is a tax haven, and has said that the IRD is beginning to follow up on the foreign trusts established under Mossack Fonseca NZ. Key stated on May 10 that the IRD had found only 200 foreign trusts in New Zealand that had links to Mossack Fonseca, and all had been declared.
The Panama Papers database was released online by the International Consortium of Investigative Journalists on May 10, and more revelations about this scandal are sure to come to light in the coming weeks.
Winston Peters said of Key’s response “He’s like a boy who’s had a widdle behind the couch and he’s denying it to mum”.