Written By: karol - Date published: 8:03 am, April 7th, 2013 - 104 comments
Categories: act, capitalism, overseas investment, tax, winston peters - Tags: cactus kate, global money maze, icij, nicky hager, tax havens, wine box
Yesterday I posted on how the international consortium of investigative journalists have exposed the global money maze that enable the wealthy to hide their wealth in trusts and tax havens. Today Nicky Hager’s article explains how Kiwis are at the centre. Lawyers, helped by accountants, lobbied each tax haven to write laws enabling their clients to use the tax havens. Some staff at the BNZ and ANZ helped clients move money in and out of such offshore accounts.
Hager outlines a complicated maze, involving the TrustNet, whose majority shareholder is Kiwi rich-lister, John Spencer. It winds through South East Asia, and Hong Kong. People now based in Auckland are associated with a Hong Kong arrest warrant against one TrustNet client – and Kathy Odgers (AKA Cactus Kate) is one of the people named as being involved (though not necessarily illegally) in that network.
Leaked documents reveal one of New Zealand’s richest families was for a time at the heart of a major international tax haven company that hit the news in the United States last week. John Spencer, New Zealand’s richest man in the 1980s and still incredibly wealthy, was – with his family – majority owners of the company called TrustNet, whose extremely secret client records have been leaked en masse to a Washington DC-based journalism organisation. …
Surprisingly, the leaks show New Zealanders are involved extensively in this shadowy world of offshore companies and secret bank accounts.
The company at the centre of the Washington leaks was set up by New Zealanders, has been staffed by many New Zealanders and for 14 years was majority-owned by the Spencers.
The Spencers have courted controversy. John Spencer waged a 19-year battle to stop public access to the Stony Batter gun emplacement on his Waiheke Island farm, including barricading a public road. The Star-Times revealed in 2005 that his son Berridge and daughter Mertsi were secret National Party donors. And now Spencer is the Kiwi connection to secret tax haven records that may be the largest leak of financial information in history.
Hager goes on to explain the role of kiwis involved in TrustNet, set up 25 years ago, and using the Cook Islands as a tax haven. He recaps the history of the Wine Box affair and Winston Peters’ role in it. A company associated with the Wine Box affair was later renamed TrustNet.
The European Pacific tax expert accused in court of leaking the Winebox documents, New Zealand lawyer George Couttie, had moved on to work for TrustNet in Hong Kong. But soon after this accusation was made, according to internal documents, senior TrustNet staff recorded a terse company resolution that “accepted” his resignation “effective from the date hereof”.
In contrast, European Pacific’s former senior executive Geoff Barry was later hired by TrustNet and rose to become the chief executive officer. Today, 10 years later, he is executive director of TrustNet’s Hong Kong office.
Spencer’s ownership of TrustNet was never publicised. It came to light only during analysis of the leaked records. A note about an obscure offshore entity says “Client is our big boss, John Spencer”.
Hager then outlines the involvement of Trevor Clarke, a TrustNet client and former European Pacific manager. He gives complex details of the involement of Penny Purcell, one of TrustNet’s NZ lawyers, in some dodgy Hong Kong operations. She mislead and/or misinformed some key people while investigations were in progress. Eventually Hong Kong police issued an arrest warrant for TrustNet client and Sound Financial Management shareholder, Canadian, Douglas Crankshaw. He lives near Bangkok.
Purcell has since returned to help run TrustNet’s office on Auckland’s North Shore. She remains part of a network of New Zealand offshore lawyers scattered in tax havens around the world. They include former TrustNet lawyer Barry Mitchell who, according to court documents, gave assistance during the setting up of the Trinity investment scheme, New Zealand’s largest tax avoidance case; and Act Party-aligned blogger Cathy Odgers (‘‘Cactus Kate’’) who has worked as an offshore lawyer in the British Virgin Islands and Hong Kong.
So it looks like many of the activities of lawyers like Cathy Odgers, while being ethically questionable, are most likely within the law. However, on occasions a few can step over the legal line into criminality, as appears at least one person seems to have done in the Hong Kong case. Odgers, while associated with the complex maze, doesn’t seem to be directly implicated in this. However, Purcell seems to have played a significant role.