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Category: Tax / Government and Politics / World Politics / International Financial Institutions / Business, Economics and Finance

NZ identified as pivotal for the rich hiding their money in Panama Papers

Monday, 9 May 2016 12:24:08

New Zealand PM John Key says his country is a footnote in the Panama Papers. (AFP: Marty Melville, file)

New Zealand is at the heart of a tangled web of shelf companies and trusts that are being used by wealthy individuals to channel funds around the world, according to a report based on leaks of the so-called Panama Papers.

Key points:

Radio New Zealand, TVNZ and an investigative journalist find 61,000 documents relating to NZ
Mossack Fonseca actively promoted NZ's tax-free status, high levels of confidentiality and legal security
"New Zealand is barely ever mentioned, it's a footnote," Prime Minister tells TVNZ

A joint report by Radio New Zealand, TVNZ and investigative journalist Nicky Hager analysed more than 61,000 documents relating to NZ, part of the massive leak of offshore data from Mossack Fonseca, a Panama-based law firm.

The papers have shone spotlight on how the world's rich take advantage of offshore tax regimes.

Mossack Fonseca ramped up its interest in using NZ as one of its new jurisdictions in 2013 by actively promoting it as a good place to do business due to its tax-free status, high levels of confidentiality and legal security.

The company's main contact in NZ was allegedly Robert Thompson, co-founder and director of accountant firm Bentleys New Zealand, the registered office of Mossack Fonseca New Zealand, according to the report.

Mr Thompson was listed in more than 4,500 documents, the report said, but has claimed that in his experience the use of trusts for tax evasion was not common and his firm did not assist people to illegally hide assets.

"I think the assumption that all New Zealand foreign trusts are being used for illegitimate purposes is unfounded and based largely on ignorance," he was quoted as saying by Radio New Zealand.

The NZ Government said last month it would begin a review of its foreign trust laws after the Panama Papers highlighted vulnerabilities in its legal framework that made it a possible link in international tax avoidance structures because its foreign trusts are not subject to tax.

Explainer: Inside the Panama Papers

Why does this matter? Is it illegal? How do they operate? These questions and more are answered in our explainer.

Prime Minister John Key dismissed concerns that international tax avoidance was rife in NZ.

"New Zealand is barely ever mentioned, it's a footnote," Mr Key told TVNZ in reference to the Panama Papers.

Governments across the world have begun investigating possible financial wrongdoing by the rich and powerful after the leak of more than 11.5 million documents.

The papers have revealed financial arrangements of prominent figures, including friends of Russian President Vladimir Putin, relatives of the prime ministers of Britain and Pakistan, and of China's President Xi Jinping and the president of Ukraine.

The International Consortium of Investigative Journalists and German newspaper Suddeutsche Zeitung, which broke the original story, gave Radio New Zealand and TVNZ access to the leaked papers.

In Australia, the ABC's Four Corners program had access to the documentation.

This article includes interactive enhancements which are not supported on this platform.

For the full interactive experience in this article, you will need a modern web browser with JavaScript enabled. Find out more about browser support at ABC News Online.

Panama Papers: Who's who

Vladimir Putin's associates

Vladimir Putin holds his hand to his face as he listens to someone asking a question.

Photo: Russian President Vladimir Putin listens during a press conference in March, 2016. (AFP: Kirill Kudryavtsev/Pool)

The ICIJ's findings reveal the Russian president's associates shuffled as much as $2 billion through banks and shadow companies.
Putin's childhood friends Arkady and Boris Rotenberg amassed a fortune in part through lucrative contracts with state and state-owned companies, according to the ICIJ.

Sigmundur Davíð Gunnlaugsson, Iceland's Prime Minister

Photo: Iceland's Prime Minister Sigmundur David Gunnlaugsson attends a news conference in Stockholm June 19, 2013. (Reuters: Bertil Enevag Ericson)

Gunnlaugsson resigned in the wake of the document leak, making him the first major political casualty.
The data revealed accusations he used an offshore company to hide millions of dollars in investments in Iceland's major banks.

Lionel Messi, soccer star

Photo: Lionel Messi is one of the high-profile football identities named in the Panama Papers. (AFP: Pierre-Philippe Marcou)

The ICIJ found a Panama company set up for Lionel Messi by Mossack Fonseca in 2012, Mega Star Enterprises Inc, adding a new name to the list of shell companies known to be linked to him.
The Barcelona star's family has denied that he is involved in tax evasion.

Wilson Security

Photo: The revelations come via a massive leak of over 11 million documents (ABC News)

The leaked documents revealed that two brothers embroiled in a massive Hong Kong corruption scandal were ultimately in control of the Australian security company.
Wilson Security earned roughly half a billion dollars in lucrative Australian Government contracts.

Family of Chinese president Xi Jinping

Photo: China's president Xi Jinping and Singapore's president Tony Tan review the guard of honour during a welcoming ceremony at Istana presidential palace in Singapore, November 6, 2015. (Reuters: Mohd Fyrol)

According to the ICIJ, the files reveal offshore companies linked to the family of China's top leader, Xi Jinping, who has in the past vowed to fight "armies of corruption".

Jackie Chan, movie star

Photo: Actor Jackie Chan attends 'The Forbidden Kingdom' press conference in Tokyo, Japan, on July 10, 2008. (Akihiro I, file photo: Getty Images)

The files show movie star Jackie Chan had at least six companies managed through Mossack Fonseca.
As with many of the law firm's clients, there is no evidence that Chan used his companies for improper purposes.

And many others

Who is involved in the Panama Papers leak?

The unprecedented leak has the hidden financial dealings of 12 current and former world leaders and 128 more politicians and public officials around the world.
See the ICIJ's full list of power players.

Reuters