- Date published:
9:00 am, April 21st, 2016 - 192 comments
Categories: brand key, Economy, john key, Minister for International Embarrassment, national, same old national, slippery, tax, you couldn't make this shit up - Tags: tax havens
John Key, explaining why he had an account with tax avoidance specialists Antipodes Trust Group, said he used the firm because his long-term friend, Ken Whitney, is a principal at the firm and has been his private lawyer for many years.
Trouble is Whitney is not a lawyer.
According to the NZ Law Society, Whitney surrendered his legal practicing registration in February.
“If you provide any legal services without a current practising certificate you must not describe yourself as a lawyer, law practitioner, legal practitioner, barrister, solicitor, attorney-at-law or counsel. To do so is an offence under Section 21 of the Lawyers and Conveyancers Act,” the Law Society’s Senior Solicitor Regulatory, Charlotte Walker, told TS.
When TS contacted Whitney to ask him if he was Key’s lawyer, he said: “Yes.”
Later he conceded he was retired from legal practice, although he said he was a consultant with Alexander Dorrington Lawyers, the practice that bought Whitney’s practice, Ross & Whitney, in February 2014, which he shared with Ian Ross.
Whitney said he was aware he was not registered. “I’m not calling myself a lawyer, Mr Key is.”
Alexander Dorrington do most of the actual legal work on his advice, he said.
Asked if, given the publicity generated by the revelation that Key had an account with Antipodes, which specialises in offshore trusts, that Whitney did not have a responsibility to clarify the situation, Whitney said: “No, I didn’t feel any need to comment.”
Key, who surely is also aware of Whitney’s non registration as a lawyer, has also seen fit not to clarify the situation.
Michael Macaulay, Director of Victoria University’s Institute of Governance and Policy Studies told TS that anyone can take legal advice from whomever they you want to – a friend or a former lawyer – “but when it comes to matters of such national importance as the trust issues, which is clearly going to have ramifications for a long, long time to come, it is just common sense to use transparent, legal advice.”
“Anyone who uses a firm for serious legal advice, they should be aware of the status of that person in that firm, particularly if you are the prime minister.”
“If you are taking legal advice and you are using that to make your public and political judgements, you want to be aware of that status of that person in that firm.”
Key said Whitney was “highly ethical” and that was why he chose him as his lawyer.
“I don’t deal with people unless they’re highly ethical and they do things well. He’s changed firms and that might get everyone else excited but from my point of view it’s situation normal.
“I have to look down the barrel of the camera and make sure everything’s right”.
“I’ve covered my affairs the entire time I’ve been Prime Minister exactly the same way. My lawyer’s changed firms; that’s the end of the matter.
“It wasn’t embarrassing seven years ago, it’s not embarrassing today.”
Whitney letting his registration lapse is not a simple matter of oversight. He surrendered his law practicing registration when he set up Antipodes, which clearly was done with the intention of cashing in on New Zealand’s tax haven status, that John Key has been instrumental in maintaining.
Whitney openly told TS he specialises in setting up trusts for foreigners. On its website, Antipodes describes itself as “a specialist provider of trustee services for foreign trusts using New Zealand as their jurisdiction of choice.” Such trusts offer “a well-established vehicle for carefully managing the inter-generational transfer of wealth”.
It points to the tax-free benefits, as well as the lack of inheritance taxes and laws that protect client confidentiality and “limited” reporting requirements which mean the identities of settler and beneficiaries do not need to be disclosed.
Whitney said Antipodes doesn’t give tax advice at all. “We are simply trust administrators.”
The aim of his “discreet personal service” is to carve out a slice of the $25 million to $50 million in fees that John Key thinks is an important part of the economy, whereby foreigners are able to use New Zealand’s legal tax-free status for foreign trusts to dodge tax at home.
The Companies Office registry show Whitney and Ross are directors of scores of firms, a good proportion of which have offshore owners and many of which are no doubt taking advantage of NZ’s lax disclosure laws and the no tax provisions for foreigners that Key says do not amount to being a tax haven.
Key said foreign trusts are a legitimate business and aren’t “the devil incarnated”.
Given the release of the Panama Papers, where 11.5 million documents have revealed a pandemic of tax dodging, Whitney’s timing may have been inopportune.
There are very serious questions raised about Key’s relationship with his “lawyer” and long-term friend Whitney, who is running what amounts to business that facilitates tax avoidance.
Given that Key says he has been friends with Whitney for many years, and Whitney says on his Linked-in profile that he has had expertise in offshore trusts for years, presumably Key has been fully aware of Whitney’s dark skill sets.
And to what extent is Key influenced in his belief that New Zealand is not a tax haven and has adequate disclosure rules by the fact that his mate and lawyer has just established a business that is dependent on such a regime continuing.
As well, following the public uproar about his claim that New Zealand is not a tax haven, did it sway his decision to appoint John Shewan, a declared proponent of low tax and an adviser on the Bermuda tax haven, to review New Zealand’s offshore tax and disclosure rules?
Key was blindsided when Parliament’s Register of MPs’ Pecuniary Interests showed he had a short-term deposit with Antipodes.
He insisted last week that if the Panama Papers included anything that showed him in a bad light, it would be out by now, not the most convincing declaration of innocence.
Since becoming Prime Minister, Key has put his investments in a blind trust, the Aldgate Trust. He is also a beneficiary of the Key family trust. Whitney is a director of Whitechapel, the corporate trustee of Aldgate.
Questions have been raised about how much Key knows about his blind trust. Having as a director of the trustee someone who heads a business which proclaims to be a specialist provider of trustee services for foreign trusts using New Zealand as their jurisdiction of choice, makes you wonder if some of Aldgate/Whitechapel’s funds have been invested in foreign trusts.
Macaulay said the Panama Papers exposure, which has revealed people in high places around the world using tax havens to dodge taxes, had raised immense issues of ethics and justice and these papers were likely to be just the beginning.
“I think this is the tip of the tip of the iceberg. The Panama Papers are just one set of papers – god knows what exists in other tax havens around the world,” he said.
“People need to be transparent about these things because the whole issue is about secrecy.”
Macaulay noted that Key said one of the reasons why people use trusts is that they don’t trust the system “but that doesn’t seem a good reason to go and hide things offshore, does it?”
Using offshore trusts may not be illegal in a concrete sense, “but the question then becomes, how fair are the laws? There you have a massive ethical gray area because some laws are skewed towards the benefit of some rather the benefit of all – that’s not an ethical issue, that’s a justice issue.”
“When you look at the trillions and trillions of dollars stashed away, we probably could have solved most social problems many times over.
“The majority of people in New Zealand have enough to have a reasonable life, but a lot of people have absolutely nothing and it’s absolutely wrong.”
Simon Louisson formerly worked for The Wall Street Journal, NZPA, Reuters and was most recently a political and media adviser to the Green Party