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The link between tax havens, criminals and the amoral rich

Written By: - Date published: 2:23 pm, May 9th, 2016 - 160 comments
Categories: capitalism, john key, tax - Tags: , , , , , , , ,

What the Panama Papers expose, and what John Key and his supporters, fail to grasp, or wilfully

Former RBNZ Governor and Nat and Act Party leader Don Brash

Former RBNZ Governor and Nat and Act Party leader Don Brash

won’t grasp, is that there is no possible justification for tax havens.

Key quibbles about whether New Zealand is a tax haven, but his government set up a regime via a minor rule change in 2011 that opened the floodgates to criminals, oligarchs and the mafia as well as the plain wealthy, using a zero rated tax regime for foreigners.

This regime allows foreigners who register entities here to legally pay no tax on earnings outside New Zealand and disclosure rules are so poorly drafted, possibly deliberately, that they may as well not exist.

It allows companies and trusts to be shrouded in secrecy via nominee companies run by firms such as Antipodes Trust Group, run by Key’s “lawyer”, Ken Whitney, and Bentleys New Zealand, the local arm of Panama law firm Mossack Fonseca, whose leaked files are now the focus of a global scandal.

Key might not accept it, and he can spin all he likes by saying that because Nicky Hager is involved, it is just a Left Wing conspiracy. But in anyone objective person’s books, New Zealand is a tax haven.

“It looks likes one, it smells like one, and it’s been used as one, then to all intents and purposes it is a tax haven,” Green Party Co-leader James Shaw said.

Former Reserve Bank Governor who is also a former National Party and Act Party leader, Don Brash, told The Standard, “if we were setting up a system that allows people to evade tax, that would be wrong.”

“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.”

Brash said everyone has to pay their fair share of tax. “I myself would never attempt to hide anything in a tax haven. There is an ethical question.”

“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. “

Brash, who has previously chaired four national committees of inquiry into tax matters said that if the zero tax regime for foreigners was doing damage to New Zealand’s reputation, “it isn’t worth 25 million bucks. But I don’t know how much damage it is doing.”

That begs the question as to why New Zealand has not just tolerated the establishment of the current tax regime, but actively facilitated it and supported it.

Key claims the $25 million in fees gathered by accountants and lawyers who administer these schemes are the justification. But surely, that is not worth sullying New Zealand’s “100 percent pure’ low corruption/high transparent reputation that is worth megabucks?

A recent story about HSCB bank, one of the world’s largest and murkiest banks, by International Consortium of Investigative Journalist (ICIJ), which has been given full access to the Panama Papers, shines light on the intersection of international crime and legitimate business.

Secret documents obtained by ICIJ via French newspaper Le Monde, reveal that HSBC profited from doing business with arms dealers who channeled mortar bombs to child soldiers in Africa, bag men for Third World dictators, traffickers in blood diamonds and other international outlaws. As well as Hollywood stars, monarchs, political leaders, businessmen and women, every kind of low life imaginable is in the files.

The leaked files, based on the inner workings of HSBC’s Swiss private banking arm, relate to accounts holding more than US$100 billion.

“The documents… show the bank’s dealings with clients engaged in a spectrum of illegal behavior, especially in hiding hundreds of millions of dollars from tax authorities,” ICIJ states.

Switzerland’s notorious secret banking system plays a vital part in the circle of dirty money.

Tax havens such as Niue, the Cook Islands and New Zealand also play a vital role, but it less important, as they can be relatively easily replaced by new havens, such is the simplicity, of setting up havens. Once the cash has been washed and laundered and declared ‘tax paid” via such havens, it can be stashed with more security and legitimacy in Switzerland.

The Mossack Fonseca files reveal what is so great about the New Zealand tax haven is its reputation as a good and clean place to do business.

The great thing about New Zealand, Mossack says in its promotional material , is that New Zealand has a reputation for its transparency and fiscal compliance. It is member of the UN, the OECD, IMF and belongs to the British Commonwealth.

The HSBC documents show celebs of all kinds including soccer and tennis players, cyclists, rock stars, Hollywood actors, royalty, politicians, corporate executives and old-wealth families held accounts in its Swiss private bank and many made special trips to Geneva to withdraw large wads of cash, sometimes in used notes.

The files also document huge sums of money controlled by dealers in diamonds who are known to have operated in war zones and sold gemstones to finance insurgencies that caused untold deaths.

How the offshore banking industry shelters money and hides secrets has enormous implications for societies across the globe.

Academics conservatively estimate that US$7.6 trillion is held in overseas tax havens, costing government treasuries at least US$200 billion a year.

That would pay for an awful lot of taxes that the likes of you and I have to pay.

French economist Thomas Piketty, author of Capital in the Twenty-First Century, told ICIJ: “The offshore industry is a major threat for our democratic institutions and our basic social contract.”

“Financial opacity is one of the key drivers of rising global inequality. It allows a large fraction of top income and top wealth groups to pay negligible tax rates, while the rest of us pay large taxes in order to finance the public goods and services (education, health, infrastructures) that are indispensable for the development process.”

The secret files obtained by ICIJ — covering accounts up to 2007 associated with more than 100,000 individuals and legal entities from more than 200 nations — are a version of the ones the French government obtained and shared with other governments in 2010, leading to prosecutions or settlements with individuals for tax evasion in several countries. Nations whose tax authorities received the French files include the U.S., Spain, Italy, Greece, Germany, Britain, Ireland, India, Belgium and Argentina.

A US senate investigation in 2012 found that HSCB had lax controls that allowed Latin American drug cartels to launder hundreds of millions of ill-gotten dollars through its US operations, rendering the dirty money usable.

Later in 2012, HSBC agreed to pay more than US$1.9 billion to settle U.S. criminal and civil investigations and entered into a five-year deferred-prosecution agreement. The beauty of such settlements from the bank’s perspective, is that its dirt is never aired in public.

As well as high profilers such as Tina Turner and the late David Bowie, the reporters found the names of current and former politicians from Britain, Russia, Ukraine, Georgia, Kenya, Romania, India, Liechtenstein, Mexico, Tunisia, the Democratic Republic of the Congo, Zimbabwe, Rwanda, Paraguay, Djibouti, Senegal, the Philippines and Algeria, among others.

None of this will come as any great surprise. Nor is it certain that having such an account, guarantees you are involved in dirty business. But there is certainly a smoking gun as to why you would use such an account.

In many ways, the most instructive comments on tax havens come from Mossack Fonseca principal Jurgen Mossack, who gave the most extraordinarily revealing interview to Pacific journalist Mike Field as far back as 2000, when he was already on the case and reprised recently in The Spinoff.

He told Field his business involved people “trying to avoid paying taxes in their home countries,” and it was all legitimate because it was avoidance, not evasion.

The OECD was using money laundering as a pretence to go after tax, he claimed.

“If OECD countries want to be serious about unfair tax competition they are going to have to close down their own operations first.”

The tiny state of Niue, population 1,100, where Mossack Fonseca set up in 1996 with thousands of clients, was not useful for criminal money laundering, because Niue had no actual banking system, he said.

Mossack correctly noted that money laundering via states like Nauru could only be done with the complicity of the world’s big banks such as HSBC because they have no proper banks for safely holding money.

Field has reported that vast amounts of Mexican drug money was laundered via US-based banks using shell New Zealand company fronts, mostly set up by father and son operation Geoffrey and Michael Taylor, who have registered a huge percentage of companies registered in New Zealand.

“Every operation of that scale needs the intervention of the big international banks,” Mossack told Field.

“When they see an unusual operation they must know it, and if they then continue the business it is because, either they are not interested in the morals of the story, or they see it as good business to continue these operations.”

“If you have figures of that sort… then the international banks know what they are doing.”

But according to Key, it’s all okay.

(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)

 

160 comments on “The link between tax havens, criminals and the amoral rich”

  1. Anno1701 1

    Jesus wept, If Brash the libertarian thinks it looks dodgy ……..

    well what else can you say really !

  2. Magisterium 2

    [removed]
    [lprent: You were banned here. Added another week. ]

  3. ianmac 3

    Their bottom line is that Tax avoidance is legal and that Trusts are legal so why make a fuss Simon? John Key says it is all OK. He has avoided any disclosure improvements so lets just go back to our knitting. Yes?
    No. Thankyou Simon for a fullsome expose. My limited knowledge is steadily improving with your help. Keep it up.

    • aerobubble 3.1

      Key wanted to brand upgrade NZ with a change of flag, now he’s clueless to the undermining of our brand, and his lie that its to complex for him to understand how such legal entities can be used by criminals, and well Labour introduced them to that makes it all right, all damned by politician ineptitude.

  4. roy cartland 4

    Surprising no one’s come up with the argument on what the US wastes it’s taxes on. Are we up to 50% on Military spending yet? Close if not.

    I imagine if I had m/billions I could deceive myself into thinking I’d done the world a favour by not paying US tax and hiding it; with the intention of giving the other 50% I owe to worthy causes, you know, when I’m good and ready.

  5. john 5

    Some maths and perspective for you: (apart from none of this is illegal or immoral and only the ridiculous socialists think they are entitled to other peoples money).

    11.4 million DOCUMENTS.
    NZ mentioned 61000 times…how many times per document?
    Suggested example:
    Blah Blah (NZ) Ltd
    24 whosit street
    sometown
    New Zealand

    PO Box XXX
    Anytown
    New Zealand

    Blahblah@init.co.nz

    http://www.blahblah.co.nz

    Would this be at the top of each page, of each document and therefore in a 2 page document (would suggest this is the minimum) if NZ is mentioned say 5 times per document in the text then NZ was mentioned 15 times per document.

    So out of 61000 mentions…that would be 4067 documents out of 11.4 million

    ie 0.036%.

    approximate size of NZ population….0.06% of the world population, means we are mentioned in the panama papers about half as often as you would expect on the world stage.

    • Richard@Down South 5.1

      You realise of course that money is owned by a government, and is only distributed for you to use?

      • john 5.1.1

        untrue.
        Governments are, even the ridiculous socialist ones, of the people either by vote or default.
        So the money belongs to those who EARN it. Not those who administer it.

    • One Anonymous Bloke 5.2

      It all adds up to the conclusion that NZ is a tax haven. I note that the document drop covers decades, whereas our “industry” has ballooned in just the last five years.

      • john 5.2.1

        Must be a VERY small haven then…..0.036% of a haven perhaps.

        • One Anonymous Bloke 5.2.1.1

          Was the point about decades a bit esoteric, sweety?

          I shall use your argument in court: “Your honour, my client only beat John about the head with a copy of the tax code for 0.036% of his life…”

        • North 5.2.1.2

          John brings into play the discussion between the ‘lady’ and George Bernard Shaw. Quantum is all that matters. To hell with principle.

        • Pat 5.2.1.3

          care to establish the dollar percentage to add to this amoral display?

    • Cowboy 5.3

      That comment needs to be called on the bullshit that it is.

      I don’t want a single cent of ill gotten gain laundered through this country. No one has yet come up with a good reason why we should provide these services apart from a few lousy mil in lawyers fees. Anyone who thinks it’s acceptable to condone the trashing of New Zealand’s hard won international reputation for such a pulpy amount needs to examine their own values.

      • Cowboy 5.3.1

        For clarity my comment was for John.

      • john 5.3.2

        and you proof or even evidence that any money administered here is ill gotten???

        • One Anonymous Bloke 5.3.2.1

          🙄

          …is invisible to John. Apparently.

        • joe90 5.3.2.2

          and you proof or even evidence that any money administered here is ill gotten???

          Not a sausage, yet, because the beauty of the scheme being sold is that there’s no mechanism to deem riches ill gotten or otherwise.

          But should the authorities look at your accounts the onus is on you to show that indeed, your deposits have been gained legitimately.

          See the problem…..

          • Psycho Milt 5.3.2.2.1

            The right-wingers have been running this one in their comments since the story broke. The foreign trust rules make it impossible to establish whether said trusts are being used for tax evasion and money laundering; and instead of saying “Holy shit, that needs fixing immediately,” our right-wing commenters say “You can’t prove it!” Classy.

            • McFlock 5.3.2.2.1.1

              Indeed.

              I wonder if they expect customs to have the same attitude – only give customs officers the power to examine bags if they know the exact serial number of the bag that needs to be searched. And then claim that although people might have used similar arrangements in other countries to smuggle drugs, there’s no evidence that any of the uninspected boxes were used to smuggle drugs into NZ. So therefore there’s no problem with the system.

              I suppose it only counts when rich people do it, though.

            • International Rescue 5.3.2.2.1.2

              For clarification…that’s not the line I’m running. I’m calling people out on claims that are revealing a> a profound ignorance of NZ’s laws and b> a profound and irrational hatred of John Key. If, in amongst the foreign trusts set up n NZ there is a single trust used to evade tax or launder ill gotten gains, we need to fix that. But the fact remains, there is no evidence that that has occurred.

              • wtl

                You said:

                …that’s not the line I’m running…

                Yet,

                …there is no evidence that that has occurred…

                is pretty much equivalent to “You can’t prove it!”.

                Edit: Plus, you also said “because at the moment nothing untoward has been proven.” in comment 8.1

                • McFlock

                  Doesn’t work – IR has installed logical contradiction filters, so pointing out their hypocrisy doesn’t result in their head frying like a Star Trek robot. They just reset and go on with more bullshit.

                • International Rescue

                  Yep you can’t prove it. When you can, come back with something.

                  • wtl

                    If you can’t see any contradiction in those statements, there is absolutely no point engaging with you, since you seem to be either completely clueless or deliberately disingenuine.

            • Jack Ramaka 5.3.2.2.1.3

              Typical legal argument deny, deny, deny?

              JK is not showing any leadership on this issue?

        • framu 5.3.2.3

          the actual question is “Does our regime make it possible?”

          if it does allow money laundering then it is, by design, a bad system that needs to be replaced

          no one has to prove any actual money laundering – all that needs to be proven is that it is possible using NZ law

    • dv 5.4

      There is that pinhead again (dancing in cause you get offended john)

    • Tony Veitch (not the partner-bashing 3rd rate broadcaster) 5.5

      It seems to me that it’s not the frequency of NZ’s name appearing in the 11 million documents, which apparently date as far back as 1977, but the time we are mentioned.

      Key set this country up as a tax haven in 2011, so I imagine NZ is mentioned much more frequently in more recent documents.

      So, overall, we may have only been mentioned 60,000 times, but those 60,000 times may have all occurred in the last five years – a much more damning fact!

      • International Rescue 5.5.1

        The current foreign trust laws pre-date Key.

        • One Anonymous Bloke 5.5.1.1

          Apart from the ones that don’t.

          …reduces tax for non-residents…

          Keep twisting, I’m having fun.

          • International Rescue 5.5.1.1.1

            The foreign trust laws pre-date Key. The 2011 changes were minor, as excellently outlined here http://thestandard.org.nz/key-changed-the-law-to-turn-nz-into-a-tax-haven/#comment-1159088

            Figured out the difference between inequality and poverty yet?

            • One Anonymous Bloke 5.5.1.1.1.1

              Yes, tax avoidance makes both of them worse.

            • Sacha 5.5.1.1.1.2

              From that link:
              “In fact investors in a PIE – even if they are overseas – must meet full anti-money laundering regs which includes verified copies of passports and utility bills and this info is available for both the FMA and the IRD.”

              Where ‘available for’ means ‘only if they ask for it’. And why would they? Overseas jurisdictions also cannot see who the settlors or beneficiaries of any given trust are, just the carefully selected beige NZ names like Roger Thompson that won’t attract interest.

              Nice try.

              • International Rescue

                So? All you’re doing is confirming there are disclosure rules. And confirming the way things ave been for years. Thanks.

              • Andrew

                wrong, that info is needed for investing in PIE’s. the “only if they ask for it” stuff is the other trusts we are talking about, you know, the ones that have been around since the 80’s. the ones that the panama papers are actually taking about.

                • One Anonymous Bloke

                  How do you know what they’re talking about: had time to read them have you? Speed reading champion of the universe.

          • Andrew 5.5.1.1.2

            you missed a bit … “investing through New Zealand portfolio investment entities” …

            you were saying?

            • One Anonymous Bloke 5.5.1.1.2.1

              Yes, I was saying that changes were made by this government in 2011. If you look a little closer, IRD are very helpful:

              The [2011] Act introduces two new categories of PIE: “foreign investment zero-rate PIE” …Zero-rate PIEs are generally only able to invest offshore…

              You were saying?

              • Andrew

                I’m still trying to understand what you are getting at.

                We all know that the 2011 law change was to zero rate investment returns in PIE funds for foreign investors where the fund invests in overseas investments. Non-tax resident, you don’t pay NZ tax on income generated off-shore. Simple.

                But the facts are these, you can’t anonymously invest in a PIE and you can’t own more than 20% (ish) of a PIE, therefore they are extremely unlikely to be used to evade tax as the IRD knows exactly who is investing in these entities.

                The panama papers have nothing at all to do with these types of investments. Therefore this whole Key made us a tax haven with the 2011 tax changes to PIE funds, is, in a word, bollocks.

                • One Anonymous Bloke

                  Perhaps you can explain what the changes to “Sections CP 1, CX 56, CX 56B, DB 54B, HM 1, HM 2, HM 6, HM 6B, HM 7, HM 8, HM 11 to 13, HM 19B, HM 19C, HM 31 to 33, HM 35C, HM 41, HM 44, HM 44B, HM 47, HM 51, HM 53, HM 55C to 55H, HM 60, HM 61, HM 64, HM 65, HM 71B, HM 82, IC 3, LS 1, LS 2, YA 1 and schedule 6” mean then.

                  The IRD says:

                  The PIE rules have had time to bed down and the relevant legislation is now relatively settled. At the same time, various reports (most recently, the report of the International Funds Services Development Group) noted there is the potential for New Zealand to become a “financial hub”, providing back-office services to international managed funds. To take advantage of such an opportunity, the over-taxation of non-resident investors in PIEs would need to be resolved. This is the objective of the new foreign investment PIE rules.

                  Key features

                  The Act introduces two new categories of PIE: “foreign investment zero-rate PIE” (referred to as “zero-rate PIEs”) and “foreign investment variable-rate PIE” (referred to as “variable-rate PIEs”). The rules for these PIEs aim to align the tax treatment of non-resident investors in the PIE with the tax treatment of direct non-resident investors. Resident investors in a foreign investment PIE will continue to be taxed as if they were in an ordinary PIE.
                  The new rules are optional. PIEs do not need to elect to become one of the new types of PIE and can continue to apply the existing rules, where PIEs are taxed at 28 percent on the income attributable to non-residents.
                  Zero-rate PIEs are generally only able to invest offshore. De minimis levels of New Zealand-sourced income are allowed, however. This allows such a PIE to finance its day-to-day operations with a New Zealand bank account, for example.
                  Zero-rate PIEs are taxed at zero percent on all PIE income attributable to certain non-residents.
                  Variable-rate PIEs can invest into both New Zealand and offshore assets.
                  Variable-rate PIEs face a variety of different tax rates on income attributable to non-residents, depending on the type and source of the income.

                  Which looks like something that was taxed at 28% became taxed at 0%, and is only available to offshore investors. And forget you ever heard the term ‘financial hub’. Just erase it from memory.

                  • Andrew

                    there is the potential for New Zealand to become a “financial hub”, providing back-office services to international managed funds

                    Financial hub != tax haven. “providing back-office services to international managed funds” != tax haven.

                    There is absolutely nothing wrong with the above. It is all above board, fully legal and compliant with the anti money laundering laws.

                    Once again, PIE managed funds are NOT used to avoid tax … sheesh … Off shore trusts in NZ have ALWAYS been zero rated for overseas income. Nothing has changed there. The change was only related to managed funds that were created in 2007/08 to bring them inline with the existing laws around overseas investments for foreign owned trusts.

                    You are putting 2 and 2 together to make 6.

                    • One Anonymous Bloke

                      28 ≠ 0

                      I get that you believe what you’re saying, and yet we’ve learned how the “zero-rate” trick can be used to avoid tax – because it still counts as a tax rate.

                    • Andrew

                      I really don’t think that “trick” applies to managed funds. They would still have to declare income in their home country. To not declare income would be tax evasion.

                      Anyway, will leave it there. Ill go off and see if i can see anything about the “yes i have paid tax in NZ, it was just zero tax” trick that you mention.

                      Would be handy if an actual tax professional could clear this all up as there is a “lot” of reading between the lines going on.

                      Cheers

        • Tony Veitch (not the partner-bashing 3rd rate broadcaster) 5.5.1.2

          IR @ 5.5.1

          You’ve missed the point I made – deliberately?

          The fact may be that NZ may be mentioned relatively frequency in papers dating from 2011, when the tax regime was changed by the National Government.

          This makes the 60,000 mentions of much more significance.

        • Pat 5.5.1.3

          you really are a broken record …it has already been established (and pointed out again today by tax experts) that the 2011 changes were what supercharged the desirability of FTs in NZ

    • Lanthanide 5.6

      How many ‘documents’ are emails which are idle chit-chat or unimportant office administrivia?

      Like – we need to buy a cake for X who is leaving today.

    • Richard@Down South 5.7

      Your math fails… if NZ was responsible for 99% of the ‘tax haven business’, im sure NZ wouldnt be mentioned in 99% of the documents… they could just say ‘NZ is responsible for by far and most of the ‘tax haven’ business… the fact we are mentioned so often, should be a badge of shame

      Let me put it this way…

      replace tax haven, and replace with ‘contact killings’… if that were the case, we’d be down right upset

      • International Rescue 5.7.1

        NZ is not a tax haven. NZ isn’t responsible for any contract killings.

  6. shorts 6

    this is possibly a dumb question, and a bit off topic – but where is the money?

    Is NZ a conduit to these peoples money going elsewhere or does some/most/all of it reside here?

    • Matthew Hooton 6.1

      It doesn’t even necessarily come here at all.

      • Anno1701 6.1.1

        yes no one is showing up at the airport with suitcases of Yuan/euro/pounds/pesos

        but there will be be (most likely) many many millions of $ worth of “assets” owned by these “structures”

        thats the point of them , say i live somewhere wth ooooh i dont know,how bouit a land tax, if my huge mansion is owned by an offshore company & i simply “rent” it from said company , then i aint liable for the tax…

        of course the double benefit is i can offset my payments (to myself via my offshore structure) as a cost for tax purposes

        i win both ways and my country of residence looses out….

        also a great way around currency controls (like in China ) as you can drip feed your money out of the country as “payments” to your offshore structure

        I would imagine quite a few foreign students here in NZ have there “rent” paid by the parents back home….

    • International Rescue 6.2

      A foreign trust can open accounts anywhere in the world. It is possible some of the funds will be invested here, but given our relative size, I would suggest a significant amount of the funds will reside offshore.

      • One Anonymous Bloke 6.2.1

        Yes, and forget that you ever heard the term “financial hub”…it’s a distant memory, fading away, and…gone, never happened. A bit like your financial expertise.

      • shorts 6.2.2

        thanks for that -wasn’t totally sure as its not clear in all the articles I’ve read

        So we’re a clearing house or broker then, one that legitimises other people doing dishonourable things, cool

        • International Rescue 6.2.2.1

          We don’t legitimise anything. If you know of people laundering money in or through NZ, tell the authorities.

    • Pat 6.3

      of course the odd 10 million or so may find its way here….

      http://www.immigration.govt.nz/migrant/stream/invest/investment/default.htm

  7. International Rescue 7

    “but his government set up a regime via a minor rule change in 2011 that opened the floodgates to criminals, oligarchs and the mafia as well as the plain wealthy, using a zero rated tax regime for foreigners.”

    That is nonsense, and you know it. The essence of our foreign trust regime was established under a Labour Gvt, unchanged by a Labour Gvt, and largely unchanged by a national Gvt. Even your header is dishonest, because Brash clearly said “IF”.

    Here’s what Peter Dunne said “I am especially concerned at the revelation that the numbers of foreign trusts established in New Zealand has gone up almost four-fold in the last decade.” The LAST DECADE! Not since 2011.

    That said, please keep going. The over-reach, the eye watering hysteria, the involvement of Nicky hager, the shrill and irrational reaction of Little, is once again ensuring a two point bounce for national.

    • One Anonymous Bloke 7.1

      Reality check: RNZ, the ICIJ and TVNZ involved Hager.

      Beyond that, everyone knows you agree with the Prime Minister. I note he has changed his story from “it isn’t happening” to “Labour did it too”.

      Polly wanna cracker?

      • International Rescue 7.1.1

        Media and Hager. A really credible combination lol. Oh and no-one’s arguing ‘Labour did it as well’ because there is yet to be proven that there is an ‘it’.

        “The government’s proposed foreign trust policy is another area where we have worked extensively with affected taxpayers to produce good, workable tax policy.
        Under current law, foreign trusts that have New Zealand-resident trustees but receive no New Zealand income are not required to provide information to Inland Revenue on a regular basis, or to keep New Zealand tax records. There is no need for that, since they are not taxed here, and rightly so, because they are outside our tax base. ”

        Who said that OAB? Sir M Cullen. April 2005.
        http://taxpolicy.ird.govt.nz/news/2005-04-29-tax-changes-announced

        • One Anonymous Bloke 7.1.1.1

          He said that too! Have another cracker.

        • One Anonymous Bloke 7.1.1.2

          Since you’re such a Google expert, explain precisely what changed in 2011 (it’s right there on IRD’s website). Oh damn, I looked it up by accident!

          …reduces tax for non-residents investing through New Zealand portfolio investment entities…look through company rules…

          Paging Dr. Dunning-Kruger.

          • International Rescue 7.1.1.2.1

            No much. Foreign Trusts began long before that.

            • One Anonymous Bloke 7.1.1.2.1.1

              Apart from reduces tax for non-residents 😆

              Oh look – it turns out your word ain’t worth shit. Who knew!

              • International Rescue

                You really have no idea what you’re talking about, do you?

                • One Anonymous Bloke

                  There were no tax changes in 2011 that affected foreign trusts. You’ve made clear you believe that.

                  • International Rescue

                    Have a read of this OAB. It is simple enough for even you to understand.

                    Key changed the law to extend NZ as a tax haven

                    http://www.ird.govt.nz/industry-guidelines/pie/intro/foreign/pie-intro-foreign.html

                    • One Anonymous Bloke

                      Ah, so “minor” changes that Chapman Tripp described as “foreign investments will now bear no New Zealand tax on their income, whether or not the fund distributes that income” and an “attractive alternative to funds resident in Luxembourg, Ireland or the Caymans.” The IRD described it as lowering the tax rate for non-residents.

                      I’m glad we sorted that out.

                    • International Rescue

                      Read the IRD material OAB. And the Standard link. It explains it very well. The changes were sensible and minor.

                    • One Anonymous Bloke

                      Sensible, minor, and reduced the tax rate for foreign investments to make us an attractive alternative to the Cayman Islands. That’s what the links say.

                    • International Rescue

                      “Sensible, minor, and reduced the tax rate for foreign investments to make us an attractive alternative to the Cayman Islands. ”

                      Not really. We have disclosure rules. We have many other impediments to being considered a tax haven. Educate yourself, OAB.

                      “New Zealand has evolved one of the best and most comprehensive asset protection and offshore tax minimization systems in the world whilst at the same time avoiding any issues of blacklisting as an offshore destination by the OECD countries. This plus a comprehensive bundle of Free Trade agreements and Double Taxation Agreements mean that today a properly structured and planned asset protection strategy involving the use of New Zealand companies and non-resident trust ensures the safest and most efficient structure possible.

                      You must remember that New Zealand is not a tax haven. Nevertheless, it is considered by many international investors and businessmen as the best jurisdiction to form asset protection structures and tax regimes for non-resident shareholders and/or beneficiaries. So the country can provide all the advantages of traditional “offshore” jurisdictions and even more because it is not blacklisted by any jurisdiction or authority in the world and has no connotations as a tax haven. New Zealand is a full member of the OECD, FATF and World Trade Organization.”
                      http://www.trust-nz.com/en-nz-as-offshore.html

                  • adam

                    One Anonymous Bloke you know that the hundreds of hours of work and research by international group of trusted journalist – is nothing compared to International Rescue, and his what 10 minutes of research, OK maybe 15.

                    OMG I’ve been laughing all day, and then International Rescue turns up, and sets off the fit of giggles again. I have to go cook dinner, this is just fantastic.

                    • Tricledrown

                      International ridicule.
                      So how come Mexican peddler of influence was rejected by just about every other tax haven but allowed in here.
                      I’ll tell you why the US government is going after those in tax havens.

    • North 7.2

      You know they’re worried when they start straw man screeching like International (Needs) Rescue. The straw man being that everyone’s claiming The Fake Man Key is personally financially, Panama-ed Up.

      Whoever said that ? No one actually. Aside from International (Needs) Rescue who in protesting too much actually implies it. You’re obviously worried aren’t you ‘Troll Sans Frontieres’ ?

      Give yourself a break dickhead. Accept that just like the outrageous, lying, tory toff Jeffrey Archer, there’s an exponentially developing theme that Mr Key is, well you know, just a little bit ‘icky’ in yet a further way. And in contrast to Thatcher supplicant, fan boy and jailbird Jeffrey, not even literate.

      • International Rescue 7.2.1

        hahaha. You say:

        1> “The straw man being that everyone’s claiming The Fake Man Key is personally, financially, Panama-ed Up. Whoever said that ? No one actually. ”

        then

        2> “Accept that just like the outrageous, lying, tory toff Jeffrey Archer, there’s an exponentially developing theme that Mr Key is, well you know, just a little bit ‘icky’ in yet a further way”

        It takes a special kind of moron to shoot yourself in the foot within the same post.

        • North 7.2.1.1

          I know you’re not open to it International (Needs) Rescue but I repeat…….there is a developing theme. Which is in complete contrast to the down home ‘have a beer with this guy’ shit. You know it what’s more.

          “My God……what if there’s no God ?”

          PS: you missed the bit about your protesting too much.

          • International Rescue 7.2.1.1.1

            You’re simply demonstrating how out of touch with reality the left have become. NZ’er demand evidence before believing the hype. They also know a winner when they see one. Key is a winner, for NZ and for NZ’ers. And there is nothing tying him or his Gvt to any wrongdoing. His popularity is about to go up though, because of the hash you are all making of this.

            • Colonial Viper 7.2.1.1.1.1

              Yep, Key is a real winner. And you are right, Kiwis can see it.

  8. Cowboy 8

    Yes clearly it’s all Labours fault as usual. I must have been mistaken thinking National are well into their third term.
    Frankly I don’t give a damn who’s fault it is or what the damn polls say I just want it cleaned up and cleaned up properly.Key will of course do something of little consequence to make it all go away.

    • International Rescue 8.1

      It isn’t anyone’s ‘fault’, because at the moment nothing untoward has been proven. All we know is that NZ has had foreign trusts for many years. Some non NZ residents administer their funds through these trusts, some of the funds reside in NZ, some don’t. NZ has disclosed details of these trusts on every occasion a request has been made by a country with whom we have a joint agreement. If there is a smoking gun here, it must be very well hidden!

      • Paul 8.1.1

        Another troll who thinks tax havens are moral.

        • International Rescue 8.1.1.1

          NZ is not a tax haven. I haven’t even commented on the morality or otherwise.

        • indiana 8.1.1.2

          Why is morality even a question? In any country, the governments legally allow people to conduct their financial affairs and even assist in creating avenues to do so. When those citizens use these means, they are doing nothing that is considered immoral. Countries don’t live in silos – they negotiate deals with each other to create these financial avenues.

          • International Rescue 8.1.1.2.1

            I also find it humorous that the left scream when someone tries to impose morality on them, yet try to define and impose their morality on everyone else!

            • adam 8.1.1.2.1.1

              Really, and you are doing what with that comment.

              Man your logic is so flawed, mind you, I get a good giggle from you inane rants.

              • International Rescue

                “…and you are doing what with that comment.”
                Making an observation.

            • adam 8.1.1.2.1.2

              Really, and you are doing what with that comment.

              Man your logic is so flawed, mind you, I get a good giggle from you inane rants.

          • North 8.1.1.2.2

            So what’s ‘legal’ definitionally passes the morality filter Indiana ? You would’ve been a wonderfully content Frau Indiana/Herr Indiana way back when. History tells you why morality’s a question, fool. But congratulations to you Frau/Herr. Soooo John Key !

            • indiana 8.1.1.2.2.1

              I don’t understand the link you are trying to make…last time I looked there was nothing oppressive about these financial agreements between countries that bring morality into question.

              • North

                We’re not talking about agreements between nations. We’re talking about enabling agreements between MF and some of the greediest, most amoral sociopaths on Earth.

          • Colonial Viper 8.1.1.2.3

            When those citizens use these means, they are doing nothing that is considered immoral.

            Except when bottom feeding scum suckers claim that there is not enough money left in the public purse to feed hospital patients correctly, to ensure single bunking in prison facilities, to lower student numbers in class rooms, to pay a living wage, or to keep uni fees low.

            Then it becomes a matter of morality, shit head.

            Or amorality, as is the case with you.

            • indiana 8.1.1.2.3.1

              So which countries that we have agreements with are claiming that they are tax poor?

            • International Rescue 8.1.1.2.3.2

              Whose morality? The left long ago conceded any claim to morality when it taught us morality as subjective. Stop being such a hypocrite.

  9. Colonial Viper 9

    HSBC fingered eh…how come the big US banks like GS, JPM and Citi never get fingered? Just their foreign competition.

    I guess HSBC doesn’t donate to US political campaigns like these boys do.

  10. Steve 10

    A crucial part of the set-ups we’ve been hearing about are LTCs (look-through companies).

    Why do they exist?

    How were they legislated for?

  11. Magisterium 11

    [removed]
    [lprent: You were banned here. Added another week. ]

    • Pasupial 11.1

      Magisterium

      Is there some point to that sentence fragment? Do you perhaps think that; the porn industry is entirely innocuous and that all performers are voluntary and paid lucratively?

      The context of the quote is Hager describing those who he is aware of having used tax havens:

      what I found was the full range of things people do in the shadows.

      Arms traders. Billionaires quietly shifting their profits out of impoverished countries. Business people eager to win big contracts in countries with corrupt leaders.

      Hard core pornographers, hiding the identity of those raking in the profits. Pharmaceutical company money invisibly moved around to buy influence. And, more than anything, huge numbers of people who appeared to be cheating their tax departments.

      None of this should greatly surprise readers. Tax havens say they sell “financial services” but what they mostly sell is secrecy.

      • Magisterium 11.1.1

        [removed]
        [lprent: You were banned here. Added another week.

        That is an additional 9 weeks plus 4 weeks for wasting my time. Set it until the 4th of July.

        If I see you writing any comments apart from one whine in spam before them, I will start doubling at 13 weeks per comment. ]

  12. Reddelusion 12

    Just change disclosure rules problem solved and move on , Albeit watching the left froth and thrash themselves in mock outrage is fun. new topic next week when this becomes fish and chip paper.

    • Paul 12.1

      Please find somewhere to spread your lies.

    • Gangnam Style 12.2

      “new topic next week when this becomes fish and chip paper.” Same thing was said last week about this topic.

      • Pasupial 12.2.1

        The; “fish and chip paper”, line is pretty old – dating from the days when printed newspapers were the news. Online discussions remain searchable and relevant in a way that was rarely the case with printed or broadcast (pre-filesharing) media. For example the ease with which I can reference this 2012 occurrence:

        New Zealand and Russia have been struck off a prestigious European Union banking and corporate “white list” over this country’s weak money laundering and terrorism financing controls.

        http://i.stuff.co.nz/business/industries/6938888/New-Zealand-removed-from-EU-white-list

        Likewise, anything published in the course of the Panama Papers story will remain fully accessible in the future. So I suppose the only viable response for those upset with the revelation of NZ’s tax haven status is to; spew forth as much nonsense as possible in the hope that it is their sound and fury that is remembered.

    • Tricledrown 12.3

      If Dotcom is targeted for very similar and in fact less serious than what Mossack Fonseca behaviour.
      Even if what they are doing in this country may not break our lax laws.
      What they are enabling is undermining the likes of sanctions on Putin’s Russia North Korea Drug Cartels etc.
      Very unlikely they are coming for any other reason other than laundering for legitimacy.
      TVNZ showed adds confirming that reason.

    • Tricledrown 12.4

      Blue Looney if your going to be John Key fanboy.
      Its fush’n’ships.
      Key speak.
      Running interference.
      Read who Mossack Fonseca does business with terrorists corrupt govt officials North Korea.
      Russia where sanctions have been imposed.
      These MF should be arrested and thrown in jail.

  13. Reddelusion 13

    Just change disclosure rules problem solved and move on , Albeit watching the left froth and thrash themselves in mock outrage is fun. new topic of mock outrage next week when this becomes fish and chip paper.

    • adam 13.1

      OMG this day just keeps getting funnier, you lot reaching back for every tried meme and trying to make it work for this. I’ve been laughing my head off.

      I think you want us to be upset when none of us are, we over being upset. This is just bizz as usual for this government, we all just enjoying watching them being exposed for the enablers that they are.

      Criminals and tax havens all hand in hand, a government selling our good name for 25 million pieces of silver.

      Lawyers, MP’s, downed PM’s, whistle blowers, more lies from Key, tax avoidance, corporations not paying tax, syndicates, tax not being paid, interconnectedness with the Cooks and other known odd tax countries, banks acting like money sharks, and the list getting longer everyday. Names named and you lot running like chickens with your head cut off.

      Nah mate it’s funny, no need for any of us to froth, will leave that to you and your’s.

    • Tricledrown 13.2

      Friends of the National Party who do business with North Korea Russia dodgy corrupt officials grifters and greasers peddlers of Influence.
      Don’t have the GSCB spy on them or have the police armed offenders squad arrest them.

    • whateva next? 13.3

      You must be on overtime by now? Make sure you pay your extra tax on the extra payment though eh?.

  14. Lanthanide 14

    “Former Reserve Bank Governor who is also a former National Party and Act Party leader, Don Brash, told The Standard,”

    I thought the term “The Standard” refers to the machine that this site is running on, and not a thinking breathing person? Why would Brash talk to a computer server sitting in Lynn’s apartment?

    Or does that definition only apply when moderating comments?

    Also is Simon Louisson now a journalist reporting for The Standard?

    • Simon Louisson 14.1

      It is a standard (excuse the pun) convention that when someone talks to a reporter etc the way to report it is to say; told Reuters or told The Standard etc — most people know this

      • linda 14.1.1


        could be john key

      • Lanthanide 14.1.2

        Yes, most people do know this. My point is that this site, for many years, has had the convention that “The Standard” is a computer that (now) sits in Lynn’s apartment. It is not a person, it does not have feelings or opinions, and it does not “post” anything. There used to be a username called “The Standard” until I pointed out the above, and so it was renamed to “Notices and Features” instead.

        Many people have been banned over the years for suggesting the “The Standard” holds an opinion on something, or that “The Standard” has posted something.

        So, I am asking if this established use of the term “The Standard” also applies to articles, or only when moderating comments.

        I suspect if we are now going to allow this use of the term “The Standard” in articles, that we can expect an increase of people using that term within comments. It would seem rather unfair to ban people for using that term, when articles on the site itself use it in the same manner.

        • lprent 14.1.2.1

          My point is that this site, for many years, has had the convention that “The Standard” is a computer that (now) sits in Lynn’s apartment. It is not a person, it does not have feelings or opinions, and it does not “post” anything. There used to be a username called “The Standard” until I pointed out the above, and so it was renamed to “Notices and Features” instead.

          It is an issue and always has been for the site. Hard to be a cooperative if we operate with a editorial group policy. So even our moderation policy is more a set of limits to prevent moderators (especially new ones) from going overboard and accidentally destroying community with personal in-group rules. We don’t have a hard and fast policy. Individual moderators tend to do their own thing.

          The line that I have always personally drawn and pushed (and got into the about) is that we do things individually. We cooperate despite our differences and what policy we have is there to restrain us. Amongst other reasons that is because I’m probably the most hard arse judgemental bastards on this site, and have the skills to over-express it. I need the restraints.

          On the other hand, Simon comes from a different tradition (journalism). He is a damn good writer coming into a quite different environment. So I haven’t bothered to point out that particular difference between blogs and journalism. I figure a commenter would tell him.

          No surprise who 🙂

    • North 14.2

      “The Standard” is a concept Lanthanide. Unrelated to the spectacularly broken promise of higher ones. The Fake Man had his tongue firmly up his arse when he mouthed the Crosby Textor script. We all know that’s true. The man’s as literate as an empty Cody’s can.

  15. When the money comes into NZ isn’t it converted to NZ $ ?
    Like they wouldn’t stash a million bucks worth of Pesos in someone’s bottom draw.
    So they must have to buy NZ$
    Is that why our dollar is so strong?
    And surely someone has a record of who or what is buying NZ$?

    • Kind of answered in the above comments. ops

      • Tricledrown 15.1.1

        NZ is being used as a half way house to give legitimacy to dirty money then it is transferred to Swiss bank accounts.

        • Colonial Viper 15.1.1.1

          Right, so the money looks like it is coming from a “real company” with “real business” activities in NZ.

          • Kiwiri 15.1.1.1.1

            So money does come in and the NZ currency gets traded with incoming/outgoing flow of funds?

            Is this one of the reasons (not the only, nor necessarily the main, reason) that the NZ Dollar is so highly traded and quite likely overvalued for such a small economy in the scheme of things in the world?

  16. Jack Ramaka 16

    This must be the reason why NZ currency is so heavily traded, like in the top 20 currencies world wide however our foreign exchange receipts imports & exports are 100 + in the world?

    • Kiwiri 16.1

      Argh. I’ve just seen your comment, Jack, after typing the above and scrolling down to read some more. Thanks. I’ll keep my comment anyway. Great minds and all that .. you’ve put it in sharper detail (than my comments) with the second part of what you have typed.

  17. whateva next? 17

    Thankyou for giving us the facts Simon, so we can actually decide for ourselves. Mr.Key’s version simply confuses me, as indeed it is designed to do. Being patronised does not work well with grown adults (who work hard AND pay our taxes) FYI Mr.Key.

  18. Venezia 18

    It doesn’t matter what the right wing trolls are arguing to rationalise the use of foreign trusts and shell companies. John Key enabled the massive increase in these vehicles in the law update 2011. His selling point was a financial hub for NZ – but as a financial whizz kid, he also knew the truth. Such vehicles may be legal but they go beyond evading taxes. They are also used to commit serious crimes.
    Check it out here (and wait for more to come):

    https://panamapapers.icij.org/20160506-john-doe-statement.html

  19. Tricledrown 19

    Mossack Fonsecca implicated in Britain’s biggest gold hoist.
    Directly benefiting by keeping £60 million pounds of stolen money from violent murderous bank robbers.
    Because these bank robbers were locked up and lost their ability to access foreign laundered money.
    Mossack Fonsecca pocketed the money.

  20. Chuck 20

    Oh deary me…it seems the NZ Green Party has a large donor linked to these “tax havens, criminals and amoral rich”

    http://www.stuff.co.nz/business/79814716/panama-papers-green-party-donor-listed-in-offshore-leaks

    Looks like the Green Party require some political advice on who’s money to take?

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