Key attempts misdirection, blind trust questions remain unanswered

Written By: - Date published: 4:36 pm, May 28th, 2010 - 56 comments
Categories: accountability, Politics - Tags: , ,

John Key has just issued a press release answering questions no one asked. Mr Key says he doesn’t have a beneficial interest in Whitechapel – the ‘key hole’ to seeing his blind trust. But Key doesn’t answer the central question surrounding this issue. Why does Whitechapel clearly seem depict the interests of his so-called ‘blind’ trust?

Key says in his statement:

“The advice from the law firm that established Aldgate, my blind trust, states I don’t have ‘any ownership or other interest in Whitechapel’, and that it is not correct for Mr Hodgson to claim the assets I did own were ‘transferred’ to Whitechapel Ltd.  They were in fact sold to Whitechapel.

“All this means that I have no beneficial interest in Whitechapel Ltd, which is central to Labour’s claims of a conflict of interest.

But that’s not the point. The point is why do Mr Key’s private interests appear to be perfectly visible through Whitechapel, making his trust anything but blind? Labour MP Pete Hodgson says the following in reply to Mr Key’s statement:

Prime Minister John Key’s statement refuting conflict of interest allegations has taken the debate precisely nowhere, Labour MP Pete Hodgson said today.

‘The central question remains ‘How can John Key prove that he could not see into his own blind trust through viewing Whitechapel Limited’,’ Pete Hodgson said.

‘Mr Key’s lawyers have not addressed that question.

‘Incidentally, their advice in paragraph two would seem to suggest that they have a different view of what is meant by ‘blind trust’ than does the Cabinet Manual in paragraph 2.70(f).

If Mr Key’s trust is not blind, which it appears not to be, then serious conflict of interest issues arise. The PM has said nothing so far to clear up that crucial point.

Misdirection is not answering the question.

56 comments on “Key attempts misdirection, blind trust questions remain unanswered”

  1. Bright Red 1

    No-one ever claimed he has a beneficial interest in Whitechapel.

    He has a beneficial interest in Aldgate, Aldgate has the beneficial interest in Whitechapel. It puts a distance between Key and Whitechapel but only as a legal fiction. The reality is what is in Aldgate is in Whitechapel and Key can see what is in Whitechapel.

    • Lanthanide 1.1

      Thanks, that finally clears this up for me as I’ve been lost on this issue.

  2. Mr Key says he doesn’t have a beneficial interest in Whitechapel

    Possibly not but it appears that he has a beneficial interest in a trust that has a beneficial interest in property which is nominally owned by one company and the shares of that company are owned by another company that his trust may or may not have a beneficial ownership in.

    Talk about misdirection.

    EDIT – probably what Red said I think.

    • Jim Nald 2.1

      It may not be blindingly obvious just yet but …. sniff sniff …. it smells fishy.

  3. MikeG 3

    I’ve just posted this on the other “Key” thread, so apologies to those who read it twice!

    Key continues to make statements that are on the wrong side of the truth, and the the so-called legal advice does nothing to clear things up.
    1. He says that the shares were ‘sold’ to Whitechapel if so, why did he say a month or so later that he had shares in a vineyard?
    2. He says that he doesn’t know the other shareholders in the vineyard. This at best is not believeable to own 10% of a company with only 10 other shareholders, and not know them! Hard to prove either way I admit, but most people would check out the other shareholders before buying a 10% stakeholding.
    3. The wine is not from the vineyard stated on the label. OK, not a lie, but certainly a mis-representation. Just as well they were not being sold or this would definitely be bigger than paintergate.
    4. The connection between the vineyard that he doesn’t know if he has a share in or not, and the winery that did the bottling, trademark registration etc. Just coincidence?

    • ghostwhowalksnz 3.1

      Exactly , you have a minority interest with a small group of shareholders, yet you dont know who they are? ( are they drug dealers , unlikely but you get what I mean)
      Beggars belief that he operates as ‘mum and dad’ investor.

      As for the wine not being from the winery, its semantics as most vineyard based wineries use grapes from other vineyards, whether small or large

    • B Ormsby 3.2

      John Key does know (at least) one of the other shareholders in the vinyard, because I know one of the shareholders. He is my friend’s boss, and he has told her that he owns said vinyard with John Key.

  4. Santi 4

    From the right: I’m fed up with Key. Sack the corrupt PM!

  5. Tigger 5

    The lawyer’s letter only makes Key look more shonky. Lawyer’s letters are rarely a good idea when honesty is under fire.

    This should have been saved for any investigation but being released now has only put more fuel in the fire.

    Key’s PR is usually so good. Methinks panic has caused this kneejerk response.

  6. Herodotus 6

    I hope this sticks otherwise a few more nails in the coffin RIP Labour. You cannot keep thowing dirt it will stick somewhere either the target or the thrower. Dont forget the Indain women that was closer to Lab than the party let on regarding the Worthy case, was it emails, texts I cannot tell the difference and they were not as juicy as Mr Goff initmate.
    If there was anything of real conflict of interest I would have thought it would have been released a few days before the budget. Especially as on the surface the budget over delivered on the so called short commings Lab was spouting off. i.e Not enough money to the less well off. Well the budget delivered more. Well it did deliver more before we feel the impact of the small print.
    Other wise all we the public will be getting is a Tease and no delivery, we do lose interest after a while and if something or importance arises then it will be missed.

    [lprent: That is a particularly bad example of the stupid troll diversion tactic. Go away for a two week ban. Learn not to do such daft diversions. ]

    • ianmac 6.1

      Deflection/diversion Hero? A bit thin old chap.

      • Herodotus 6.1.1

        Not at all. Remeber the boy who cried wolfe. He already has used up at least his 1st get out of jail card.
        Next it could be scaled down in that John Key acted according to the law BUT his actions are not moral …
        I just hope that there is a backup plan if we find nothing has been breached. But then the political game will just move on. The players will play and the public will be more dispising of the politicians who never what to progress for the public. This has been seen before this play. butthen I could be wrong and this could be the real thing.

    • Crosby Textor alert, Crosby Textor alert

      When in trouble do the following:

      1. Bring up the Indian Woman even though she did nothing wrong and Goff acted like a gentleman.
      2. Say it will cost Labour support.
      3. Deny there was a conflict even though the blind would see there was.
      4. Say it is just “Labour being political”
      5. Talk about the Budget.
      6. Talk about anything even if it makes no sense.

  7. tc 7

    Whilst I can’t say I follow the detailed legal issues for me and alot of punters it comes down to the reasonableness test i.e. would a self made man just give over millions of his investments and be totally unaware of the composition of what he’s giving over ? Would he be unaware of any changes to the investment portfolio in the ‘blind’ trust ?

    Let’s remember the man is PM and has a far higher duty of care then he’s ever been used to as a dealer and it shows…..vineyards aren’t great investments and any adverse impact on wine consumption effects the value so the conflict is clear in terms of the alcohol excise issue.

    I have no issue with his wealth but a big issue with the influence his investments has on his decisions as PM (Tranzrail, mining shares, a vineyard etc) and yet again he’s lied…..if it’s blind how do you know you have shares in a vineyard sideshow john?…….now watch his msm apologists go into overdrive to help the lying toad out again…..what a disgrace he is.

  8. Bright Red 8

    The lawyer’s letter (http://img.scoop.co.nz/media/pdfs/1005/Letter.pdf) says Key is not a trustee of a named beneficiary of Aldgate trust but the Pecuniary interests register says he is. Dodgy.

    The lawyer’s letter also explains that the legal fiction is the other way round than I described. I thought the layers ran Aldgate, which runs Whitechapel. Turns out Whitechapel run Aldgate and holds its assets as trustee. The lawyers run Whitechapel.

    Doesn’t make any substantive difference. And one is still left asking why Whitechapel exists except to make the assets that are in Aldgate open to anyone who looks in Whitechapel.

    The bit about Whitechapel buying the assets at value is obvious, never in question. Anyone who has set up a family trust knows about the legal fiction where you loan the trust the money at zero percent, which it then uses to buy your assets and you forgive the 0% interest debt over time to avoid gift duty.

    • Lanthanide 8.1

      Ahh, I wondered how it was possible to transfer large $$ into trusts to avoid gift duty.

      However the lowest threshold is something like $27.5k/year, so wouldn’t this essentially mean that any transfers of say $500k into a trust would take ~18 years to fully clear? That’s quite a long time, and I imagine it could be problematic if you were transferring a few million into one?

      • $27k per person. The Keys could do $54k a year.

        Transferring the asset from one trustee to another trustee does not require gift duty to be paid. This is where the transactions are probably happening and Oh to see the paperwork.

        It should be remembered that there are two law firms involved acting for different entities. There is Ross and Whitney acting for Key and Taylor Grant Tesiram acting for who knows.

        The letter misses the point. The problem is that Key as PM can make decisions that directly benefit a trust which will result in his family getting a pecuniary advantage and he pretty well knows what assets the trust has.

        As MF said the issue is not control of the trust, it is benefiting from Government decisions.

        And Key fails the smell test.

    • Rosy 8.2

      I was wondering where the trust got the money to buy his assets, thanks. Maybe this needs explaining to us people who don’t have trusts, otherwise we might believe Key. Heaven forbid!

  9. Craig Glen Eden 9

    The reason he cant address the major issues is he has lied and now all he can do is spin, Mickey is spot on I think. On top of that Pete Hodgson is no fool and he will have done his home work he is not prone to the same sloppyness as Mike Williams.
    The way Hodgson has asked specific questions of Key has really set up the inexperienced PM well and truly. Its very clear why all the wingnuts are out in full voice because Key has taken a big hit in the credibility stakes.

  10. Ron 10

    He ripped off New Zealanders in the 1980’s and he’s ripping them off now. He’s gotta go.
    captcha: smile

  11. ianmac 11

    On TV News tonight Key used the words “transferred” as opposed to “sold”

  12. I dreamed a dream 12

    Question: Why is Key not getting legal advice from Crown Law/Solicitor General instead of those private lawyers? This is an issue of public interest in relation to the Prime Minister. So, why is he not getting advice from Crown Law?

    • ghostwhowalksnz 12.1

      Its Keys style to bring a document which he then ‘claims absolves him completely’

      Doesnt matter that it is just a legal doughnut, its his peg to hang his hat , and hell repeat it until hes blue in the face.

      English did it with his QCs opinion about his family trust. Trouble was the Auditor general ran her eye over it and demolished the QCs arguement, but then ducked the issue by saying it’ wasnt intentional so was OK’

      Smile and wave a legal document

  13. I think I have an understanding of the issue. There is not one trust but two.

    In 2008 Key disclosed the existence of the JP & BI Key Family Trust in the Parliamentary Register of Pecuniary Interests. It is possible that this trust has transferred to the Aldgate Trust its assets.

    I have set out what I think may have happened at http://waitakerenews.blogspot.com/2010/05/can-you-trust-john-key.html

  14. Gooner 14

    The point is why do Mr Key’s private interests appear to be perfectly visible through Whitechapel, making his trust anything but blind?

    If they’re “perfectly visible”, what does Whitechapel own?

  15. Gooner 15

    Micky, that explanation seems plausible. If it is then Key is vindicated. The directors of Whitechapel make decisions for its beneficiary – probably the trustees of Key’s family trust and Key has no input – he is not a director of Whitechapel and probably not a trustee of his family trust either.

    Story over. Key 1 – Hodgson 0.

    • Sorry Gooner but I see it entirely differently.

      1. Key has directly or indirectly made decisions that result in a winery and a Dairy Holding Company in which his trust had an interest benefiting.
      2. His family probably benefit from this.
      3. He should have declared an interest before taking part in the decisions.

      No matter how complex you make it Key should have declared an interest. And it seems likely he was a trustee of his family trust.

      Hodgson 2 – Key 0

  16. ianmac 16

    Remember that Trevor M asked for replies to written questions regarding conflictsof interest in Cabinet but the reply was in effect no comment. As Mickey Savage says:
    “1. Key has directly or indirectly made decisions that result in a winery and a Dairy Holding Company in which his trust had an interest benefiting.
    2. His family probably benefit from this.
    3. He should have declared an interest before taking part in the decisions.

    No matter how complex you make it Key should have declared an interest. And it seems likely he was a trustee of his family trust.”

  17. Gooner 17

    We just don’t know any of that Micky. That’s the real problem and is the reason trusts are set up as you know.

    In terms of Key being a trustee of his family trust, didn’t the companies office show a transfer from John and Bronagh Key and some third party to Whitechapel Limited?

    Just found it – it seems the trustees of hi family trust were him, his wife and Ken Whitney. They owned the shares in Earl of Auckland and Devils Limited et al which were resettled on Aldgate – Whitechapel Ltd.

    Having said that, it certainly seems plausible that Key would make the odd phone call to Pravir Tesiram asking what Whitechapel Ltd is doing.

    • Gooner

      In terms of Key being a trustee of his family trust, didn’t the companies office show a transfer from John and Bronagh Key and some third party to Whitechapel Limited?

      It did. Usually the transfer is from the trustees, rather than the trust. If Whitney’s name was there it was likely that the trust was involved.

      So should we accept the possibility that our PM may be making decisions that result in his family benefitting?

  18. Gooner 18

    Not necessarily Micky because I keep coming back to the fact that since November 2008, after the resettlements, we just don’t know what Whitechapel Limited did with the assets it received, and since then has held on trust for the beneficiaries of the Aldgate Trust – who are probably Key, Key and Whitney, as trustees of the Key family trust.

    Since November 2008, Whitechapel could have sold many assets and bought many more, in NZ or overseas, or wherever, and Key quite properly would not know because he is not a director of Whitechapel, nor is he a shareholder and he is not legally entitled to know as a trustee of his family trust – the likely beneficiary of the Aldgate Trust.

    It sounds confusing I know, but legally quite okay, as the letter from TGT explains.

    • Tigger 18.1

      But in 2009 Key claimed ownership of a vineyard. Which the trust owned. So was he just blowing smoke, living in the past or did he know what was happening to his money?

      • I don’t get why he doesn’t say that when talking about the vineyard he was just sparing the wine critic a boring summation of the intricacies of NZ property law and the requirements of the Cabinet Manual. What’s so hard about saying ‘I was chuffed she knew something about me and I simply couldn’t be arsed explaining the situation regarding my assets’?

        I mean, he’s either lied to her or he’s lied to Parliament.

    • Since November 2008, Whitechapel could have sold many assets and bought many more, in NZ or overseas, or wherever, and Key quite properly would not know because he is not a director of Whitechapel, nor is he a shareholder and he is not legally entitled to know as a trustee of his family trust the likely beneficiary of the Aldgate Trust

      Agreed but Key sees to know that he still had some sort of interest in a Central Otago winery when he gave the wine out.

      It may be legally ok as far as the trust’s lawyers are concerned but in terms of a possible conflict of interest it sucks.

      The basic issue can be expressed simply,

      Should John Key be allowed to make decisions that may benefit his family financially?

      • Anita 18.2.1

        Should John Key be allowed to make decisions that may benefit his family financially?

        Yes he should. When a Minister of Health increases the subsidy for GP visits or prescriptions they benefit their own family.

        The test should be about the level of benefit, the relative benefit, the transparency and the honesty.

        • mickysavage 18.2.1.1

          Agreed Anita

          A refinement of the question could be

          “Should John Key be allowed to make decisions that may benefit his family financially more than the benefits received by an average Kiwi family?

      • Gooner 18.2.2

        No, of course he shouldn’t. And I agree with Tigger – he seems to know a bit of what Whitechapel owns/owned.

    • Anita 18.3

      Whitechapel’s stake in Earl of Auckland, Highwater Vineyards and Dairy Investment Fund have always been in the public domain. Anyone could check it in <2 minutes on the companies office website.

      It is also worth noting that those three shareholdings were the Keys’, the shareholding were held together by the trust and no additional shareholdings were added.

      It stretches belief somewhat to imagine that Key had no idea. It is a direct lie for him to say it was impossible for him to know.

    • Michael Foxglove 19.1

      Tracy Watkins’ piece is about as thick as a plank of wood. Do you think she’s paid to run John Key’s lines for him?

      • Carol 19.1.1

        Argh. I had about finished typing a reasoned response to Watkin’s Op Ed, when a slip of the finger closed the browser. Her piece is just another bit of MSM myth making. She seems totally (or wilfully?) ablivious of the right’s anti-Clark negative sniping away, long before the elctions. So then Key was able to present himself as being in the realm of “positive politics” while benefitting from both an uncritical MSM, and the legacy of all the negative, personalised whittling away at Clark’s image, and mostly based on far more tenuous evidence than we see so far with the Blind Trust, conflict of interest Key issue.

        How does one get to be such a skewed and very selectively critical op ed political commentator in the MSM?

        anti-spam word – analysis… which is sorely wanting in Watkin’s op ed piece.

    • Armchair Critic 20.1

      Pete Hodgson summed it up pretty well in just two sentences:
      The central argument gets lost in the blizzard of red herrings, essentially. The point is that John Key set up a blind trust that isn’t blind.”
      Source: Stuff
      He said in parliament he could not and does not know what is in his trust. So, if he can know, i.e. if he had the ability to know, he lied to parliament. And this lie was told irrespective of whether he knew or not, although there are strong indications he knew something.
      With the lawyer’s letter he is dancing on the head of a pin, and all the MSM can do is comment on how clever a dancer he is. Pathetic, again.

      • Gosman 20.1.1

        Do you have a different legal opinion on whether John Key’s blind trust is actually blind?

        If so then please provide some evidence of this so that it can be brought to the attention of the Speaker.

        If not then all you are doing is making unsubstantiated claims of inpropriety. If you like to engage in that sort of politics then be my guest but I won’t be joining you in the gutter anytime soon.

        • Armchair Critic 20.1.1.1

          Do you have a different legal opinion on whether John Key’s blind trust is actually blind?
          Why, yes Gosman, I do have a differing legal opinion on this very topic. By a mysterious coincidence I happen to keep an eminent QC on a retainer to provide me with advice on matters such as these. So I asked him and he provided a separate and differing legal opinion. And despite the exorbitant costs of keeping this QC on a retainer, I’m happy to publish it for your amusement on a blog site, for free. Destroying my anonymity in the process.
          Seriously – what a stupid question.
          I have an opinion. I’m not a lawyer, but that doesn’t prevent me from having an opinion on legal issues. I provided links in my comment to support my assertions. I support taking the issue about the trust to the privileges committee. Your apparent desperation to divert or shut the topic down are sad.
          In any case, this is not just a legal issue and you should stop pretending that that is all it is.
          The legal opinion from TGT opens up more questions than it closes.
          And in any case, it says exactly what one would expect. I mean, they were hardly going to say Dear Mr Key, sorry we stuffed up the legal stuff around your trust. Of course it is legal, it just doesn’t appear to be blind, like John told parliament it was.
          When TGT issue an opinion that tells everyone that the trust is blind, and convincing and comprehensively explains how it is made blind I’ll have confidence that the PM does not have any conflicts of interest, perceived or otherwise. This may take some time.
          Also, the opinion did not say the PM’s family do not have any kind of interest with the trust. Conflicts of interest, perceived or real, can arise even if a person is not a beneficiary of a trust. When family members are beneficiaries a conflict may still arise. When TGT issue a legal opinion that says the PM’s family have no interest in the trust I’ll have confidence the PM has no conflicts of interest around this trust. Again, this may take some time.

          If so then please provide some evidence of this so that it can be brought to the attention of the Speaker.
          Ummm, I’m not an MP, or even a member of a political party. In fact at present if an election were held tomorrow I’d probably vote for “Don’t Know”. Basically, it’s not my job, I jut hope Pete Hodgson keeps up his work. Why the Speaker would give a shit about my opinion is beyond me. But people here, such as yourself, seem to have some minor kind of interest in my opinion, so I’ll stick to expressing it here. If you don’t like it you have plenty of options.

          If not then all you are doing is making unsubstantiated claims of inpropriety.
          Well we won’t agree on this one. All claims are unsubstantiated until they are shown to have substance, through some kind of process and analysis. I’d like the claims about the PM’s so-called blind trust examined, the Privileges Committee seems to be a good place. Doncha think?

          If you like to engage in that sort of politics then be my guest…
          Thanks, I will.

          …but I won’t be joining you in the gutter anytime soon.
          Ah, yes, well a ban does have that effect.
          While I may well be in the gutter, you are arguing from the sewer. You don’t hold the high ground. Tosser.

          • mickysavage 20.1.1.1.1

            Well put Armchair.

            You are right. As soon as we can be convinced that Key’s family will definitely not benefit from Government decisions about Excise duties or Canterbury water supply to Dairy farming companies then we can admit we were wrong.

            Until then …

            • Armchair Critic 20.1.1.1.1.1

              Until then
              That may take some time…
              No one in the MSM seems to have picked up on the family link. Weird, huh?

  19. darth 21

    isn’t it up to you to show that Key can see what his beneficial interest is. you can’t. key wins.

    you can speculate. key can speculate. but only the trustees will know.

    that is a blind trust. QC said so.

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