Written By: - Date published: 8:01 am, May 10th, 2016 - 170 comments
Categories: accountability, don brash, Economy, john key, Politics, tax - Tags: andrea vance, antipodes trust, ken whitney, Mossack Fonseca, panama papers, The Spinoff, todd mclay
Contrary to Prime Minister John Key’s categorical assertion, his “lawyer”, Ken Whitney, has been found to have links to Mossack Fonseca, the Panama law firm at the centre of a global scandal on tax evasion and avoidance, TVNZ reported today.
When it was first revealed that Whitney, who is no longer a registered lawyer but is Key’s legal adviser, was integrally connected to New Zealand’s tax avoidance scheme for foreigners through his firm Antipodes Trust Ltd, Key was asked if Whitney had given him a personal assurance that Antipodes had no connection to Mossack Fonseca. “Correct,” was Key’s answer.
“I know that he is of the highest ethical level and that he has the greatest level of oversight,” Key went on.
Turns out its all not true.
TVNZ’s Andrea Vance reported her investigation of the Panama Papers in conjunction with Nicky Hager and the International Consortium of Investigative Journalists, found significant links between Antipodes and Mossack Fonseca through companies in the notorious tax haven, the British Virgin Islands.
Between 2012 and 2014 Whitney was a director of the New Zealand arm of Rothschild Trust Ltd, which owns two companies, Capewood Investments Ltd, and Exchange Securities. Mossack Fonseca’s branch in the Virgin Islands was the agent for both these companies.
The public release of the Panama Papers database today suggests that this will be just one of many embarrassments for the government, the amoral rich and criminals.
TVNZ also reported that New Zealand law firms which successfully lobbied the government last year to halt a review of the law foreign trust laws initiated by Inland Revenue, have had significant dealings with Mossack Fonseca.
Lawyers from Cone Marshall, Asiaciti Trust, John W Hart, Anchor Trust International acted as directors and liquidators for dozens of Mossack Fonseca-related companies.
Cone Marshall acted as an intermediary, known as an “eligible introducer”, for Mossack Fonseca, just months before lobbying Inland Revenue Minister, Todd McClay about plans to tighten up on the tax scam.
Whitney was also one of the prime lobbyists. Despite a clear and obvious conflict of interest, Key allowed Whitney to lobby him. Differing versions of what was said have emerged with Key claiming Whitney’s recollection as “sloppy” and Key also having a different version of what he told Revenue Minister Todd McClay, than what McClay recalled.
The upshot was that McClay had a meeting with the “industry”, incredibly in offices of Antipodes, where the industry put the case that the $25m-$50m earned by the industry was worth the resultant reputational damage to New Zealand.
Interestingly, even former National Party and Act Party leader, Don Brash, who was of course also a long serving Governor of the Reserve Bank, has come out strongly against the foreign tax regime.
“If we were setting up a system that allows people to evade tax, that would be wrong,” he said.
“The Panama Papers issue is either illegal, or verging on illegal; it’s tax evasion, rather than tax avoidance,” Brash said.
“It seems to me that people involved in Panama structures are almost certainly trying to evade tax and I think that’s entirely reprehensible.”
“If we do have a tax haven here, I’d be very unhappy. What’s going on in Panama seems entirely inappropriate, if not criminal. If that’s what’s happening, and New Zealanders are playing a substantive part in that, then that’s reprehensible. “
He said the $25 million or so of fees collected by lawyers and accountants for doing this dirty business is not worth the damage it is doing to sully New Zealand’s previously clean reputation for transparency and low level of corruption.
Key yesterday did further backpedalling from his original position that New Zealand is not a tax haven and has full disclosure.
While not accepting the clear and obvious evidence that New Zealand is a tax haven, Key in his weekly press conference allowed that a tightening of the disclosure rules would likely proceed after John Shewan had completed his review. The Government would fast forward a law change targeting money laundering.
Today’s Dominion Post editorial headlined “Fiddling as we lose our good reputation,” slammed the government’s slow reaction to respond to the release by an anonymous whistleblower of Mossack Fonseca’s 11.5 million files, known as the Panama Papers.
“The longer New Zealand is clearly linked to the Panama Papers, the worse its international reputation will become.”
It asks: “Why has New Zealand allowed itself to stand out from countries like Australia and Britain, encouraging this kind of behaviour.”
(Simon Louisson formerly worked for The Wall Street Journal, NZPA, Reuters, The Jerusalem Post and was most recently a political and media adviser to the Green Party)