Dodgy tax havens and even dodgier Peter Dunne’s memory

By   /   May 6, 2016  /   28 Comments

TDB recommends Voyager - Unlimited internet @home as fast as you can get

Against a swirling back-drop of revelations surrounding the Panama Papers, Mossack Fonseca, John Key’s lawyer, Ken Whitney, then-Revenue Minister Todd McLay, the IRD dumping a review into foreign trusts, and New Zealand’s reputation for offering secret trusts as part of the tax-haven industry, TVNZ’s Greg Boyd interviewed former Revenue Minister, Peter Dunne for Q+A on 2 May;

.

ft-paraisos-fiscales

.

“To put it bluntly, if the label ‘tax haven’ is being bandied about now as it is, sticks, then that’s extremely damaging. You think of the way we perceive other countries that we’ve historically labelled as tax havens. We don’t view them credibly, and I think that’s the big risk to New Zealand.” – Peter Dunne, TVNZ’s Q+A, 2 May 2016

.

Against a swirling back-drop of revelations surrounding the Panama Papers, Mossack Fonseca, John Key’s lawyer, Ken Whitney, then-Revenue Minister Todd McLay,  the IRD dumping a review into foreign trusts, and New Zealand’s reputation for offering secret trusts as part of the tax-haven industry,  TVNZ’s Greg Boyd interviewed former Revenue Minister, Peter Dunne for Q+A on 2 May;

.

peter dunne interviewed on Q+A by Greg Boyd

.

Boyd’s first question to Dunne seemed innocuous enough, setting the basis of the interview. Dunne’s response appeared unremarkable;

Greg Boyd: “When you were in the job, if the IRD had concerns about this country’s international reputation, how seriously would you have taken that?”

Peter Dunne: “Very seriously. And the way it works is that they report on a series of issues that are both current in the New Zealand tax environment or the international tax environment, and clearly the Government would be foolish not to take heed of that advice. I have to say that at the time I was minister, the big issue of concern that was just beginning to bubble related to the Googles and the big multinationals and the share of tax they were paying. The issue of foreign trusts was on the edges of that, but I didn’t receive any specific advice from the IRD at that time that they were a problem.”

To put some context to Dunne’s response above, first bear in mind that Dunne was Revenue Minister across two governments, Labour and National, from October 2005 to  June 2013, when he abruptly resigned

…after an investigation into how a top-secret report on the GCSB was leaked to media pointed to him.

Eighty-six emails were sent between Mr Dunne and Dominion Post reporter Andrea Vance in the lead up to the leak but Mr Dunne turned down requests to make them public.

Edited copies of the emails from Mr Dunne show 44 of them discussed the GCSB report, and he planned to meet with Ms Vance the day before she went public…

But how credible was Dunne’s assertion on last week’s Q+A that;

“…The issue of foreign trusts was on the edges of that, but I didn’t receive any specific advice from the IRD at that time that they were a problem.”

– when in May 2012, New Zealand and Russia had been removed from the  European Union banking and corporate “white list” over this country’s frighteningly inadequate  money-laundering controls?

.

New Zealand removed from EU 'white list' - money laundering - tax havens

.

As reported by Fairfax’s Michael Field, Latvia’s Deputy State Secretary on financial policy issues in the Ministry of Finance, Arina Andreicika, stated;

“I would like to inform you that Latvia has intended to exclude New Zealand and Russian Federation from the list of countries whose legal requirements of money laundering and terrorist financing prevention are equivalent to legislation of the European Union.”

Our removal from the EU “white list” had put New Zealand in the same league as the corruption-ridden Russian Federation.

Gareth Vaughan, from Interest.co.nz, reported;

New Zealand’s dumping from the list also comes amid growing publicity around New Zealand registered companies being linked to crime overseas. This includes a report by the Organized Crime and Corruption Reporting Project on how Tormex Ltd, a New Zealand registered company, allegedly laundered US$680 million through a Latvian bank account. It’s just one of many examples of entities exploiting New Zealand’s simple company registration regime. Another is the General Equity Building Society, which claims to hold about US$5.5 billion of equity through unnamed mines, gold, silver and granite ore.

In the same story, Vaughan added,

The World Bank and International Finance Corporation rank New Zealand the easiest of 183 countries surveyed in which  to start a business. Commerce Minister Craig Foss told interest.co.nz in April the Government had no plans to tighten company registration rules.

In the previously mentioned Fairfax story, Michael Field reported;

On the Auckland shell company accused of laundering $680m at a Riga bank, Foss said it was removed from the register in 2010 because it failed to file an annual return.

Too late. The damage to our reputation had been done.

In May 2012, when the European Union’s announcement became public, Peter Dunne was still Minister for Revenue. (His resignation after his alleged involvement in the leaking of the GCSB report was still thirteen months in the future.)

In November 2013, then co-leader of the Green Party, Dr Russel Norman, warned;

“Our secretive foreign trust regime and lax company registration requirements are damaging our international reputation.  Anonymous shell companies and secret trusts are one of the most common ways of moving tainted money into the banking system.”

Yet, only months earlier, as the full implications of the EU’s moves were becoming clear, evidently then-Revenue Minister Peter Dunne “didn’t receive any specific advice from the IRD at that time that they [foreign trusts] were a problem“.

However, whilst  then-Revenue Minister Peter Dunne had not received “any specific advice from the IRD at that time that they [foreign trusts] were a problem“, the Tax Justice Network had, by November 2013, “ranked New Zealand for the first time on its Financial Secrecy Index [at number 48 – see page 17 here]. New Zealand features on the Index due to our lack of transparency around foreign trusts and registered companies, and our below-average levels of co-operation with other countries when it comes to fighting international tax evasion”.

Is it Dunne’s  assertion on Q+A, really credible;

“…The issue of foreign trusts was on the edges of that, but I didn’t receive any specific advice from the IRD at that time that they were a problem.”

No, it is not credible.

As far back as October 2012, Dunne was certainly aware of the problem of secret trusts in New Zealand;

.

Dunne dismisses tax haven suggestions

.

The Herald report goes on to state;

Mr Dunne today dismissed the idea that New Zealand was a tax haven for foreign trusts.

“The key identifying characteristics of tax havens are secrecy and lack of transparency. Those are simply not factors here in New Zealand. Our legislation for taxing trusts is fully transparent.”

Dunne’s dismissive attitude toward tax havens and foreign trusts is starkly summed up in this excerpt from 60 Minutes on TV3’s website;

.

Govt rejects tax haven claim - peter dunne - revenue minister - 60 minutes

.

However, Dunne’s defensive assertions were made to look foolish and mendacious when Herald reporter, Matthew Backhouse , added;

The trusts must be registered with Inland Revenue, but are not required to pay tax and their ownership is effectively anonymous.

At the time, our esteemed Dear Leader also supported New Zealand’s involvement in secret foreign tax trusts;

Prime Minister John Key was today unconcerned by Mr Dunne’s comments.

He had not seen the 60 Minutes interview but Mr Dunne would have been using “the absolutely correct technical terms”, he said.

Mr Key said servicing foreign trusts in New Zealand was a strong and legitimate business that employed a lot of professionals and added to the New Zealand economy.

“It’s a very sensible place to house a trust.”

It is difficult to believe Dunne’s assertion that he “didn’t receive any specific advice from the IRD at that time that they [foreign trusts] were a problem“.

Especially as revelations on 60 Minutes clearly revealed that a problem with tax evasion existed; trusts were central to the rorts; and Dunne was responding to it.

Even Key referenced foreign tax trusts as he rushed to defend his then-Revenue Minister;

Key who said Dunne was right. “He’ll be using the absolutely correct technical term. There are two things, going back to my days at university – tax evasion and tax avoidance. There is actually quite legitimate business in New Zealand for servicing foreign trusts”.

In response to Dunne’s denials, Labour’s then-Revenue spokesperson, David Clark, showed amazing prescience when he warned;

“We are in danger of losing our hard-one reputation as an ethical and respectable country. Peter Dunne’s relaxed attitude to overseas tax avoidance and National’s failed attempts to create a foreign funds hub shows the Government has no concerns about us becoming the Cayman Islands of the South Pacific.”

And Dunne is now telling us that he did not know that foreign trusts were a problem?

In 2012, Dunne stated;

“The key identifying characteristics of tax havens are secrecy and lack of transparency. Those are simply not factors here in New Zealand. Our legislation for taxing trusts is fully transparent.”

The legislation may be “transparent”.

John Key, Todd McLay, and Peter Dunne are not.

.

.

.

References

TVNZ: Q+A – Peter Dunne Interviewed by Greg Boyed (video)

Radio NZ: Further revelations don’t blunt PMs faith in lawyer

TVNZ: Q+A – Peter Dunne Interviewed by Greg Boyed (transcript)

Wikipedia: Peter Dunne

Southland Times: Taxing Times – New Minister of Revenue still has work to do

NZ Herald: Key’s Government

TV3 News: Peter Dunne resigns as minister

Fairfax Media: New Zealand removed from EU ‘white list’

Interest.co.nz: How NZ needs to overcome ‘deficiencies” in bank and financial institution regulation to get back on EU anti money laundering and counter terrorist financing ‘White List’

Radio NZ: NZ struck from EU list over money-laundering controls

Scoop media: Foreign trusts earn New Zealand tax haven status

Tax Justice: Financial Secrecy Index 2013

NZ Herald: Dunne dismisses tax haven suggestions

TV3 News: Govt rejects tax haven claim

Scoop media: Dunne evades tax haven questions

Additional

Liberation: New Zealand cartoons about tax, transparency and the Panama papers

Parliament: The Anti-Money Laundering and Countering Financing of Terrorism (Requirements and Compliance) Regulations 2011

Dept of Internal Affairs:  AML/CFT Act and Regulations

NZ Herald: Fran O’Sullivan – Key chases luck o’ the Irish

Converge: New Zealand – A Tax Haven For Super-Rich Foreigners

Previous related blogposts

When National is under attack – Deflect, deflect, deflect!

.

.

scott cartoon - panama papers - tax havens

 

.

.

= fs =

***
Want to support this work? Donate today
***
Follow us on Twitter & Facebook
***

28 Comments

  1. plumington says:

    This is what happens when corporates and their lackeys take control of the democratic process
    Corruption, half truths, technical jargon (deliberately spun to decieve) seems rampant at the highest levels
    While the great unwashed pay the most taxes and receive less amd less social services

  2. Afewknowthetruth says:

    ‘even dodgier Peter Dunne’s memory’

    When you are a self-serving, lying arsehole like Dunne you cannot have a memory.

    A blight on NZ politics for how long now?

  3. dave says:

    DR Hudson explains panama is not even a country very interesting also what roles of other tax heavens are in the layered offshore system

    https://youtu.be/6DVjpuuJdC8

  4. countryboy says:

    Can I have the last laugh yet? Who’s been writing about NZ’s dirty, greedy little people who collectively take the form of The Great New Zealand Institutionalised Lie ?
    I have. Yes, me.

    NZ = size of UK but with only 4.3 mil people yet is hugely rich due to our farmers being fucked on every deal ever conceived since 1882 by having their funds diverted and laundered into the domestic money lending industry for shits and giggles and big, black 4×4’s with big wheels that slither up Ponsonby Rd with a toxic, gaseous purr.
    None of you dare to whine about the beastly farmer neither. Cows and sheep that shit and fart? Well, so do you. Remember that.
    Currently, and according to the Dept of Stats, 52 thousand people manufacture NZ’s foreign exchange earning raw materials in the form of agrarian product.

    That’s fuck all people making superb, world’s best foods, wools, leathers, fruits, wines etc etc etc. Interestingly? They’ve always got fuck all for it at the gate, so, it begs the question does it not? A question I asked that old rogue herself and opposition finance minister at the time; Lianne Dalziel.

    “Where’s our money? There are, from my rough calculations , billions of dollars missing from our country’s coffers so where is it? ”
    She looked down at her Jimmy Choos and said ” I don’t know. ”
    Well Lianne, maybe you know now?
    I have another question for Lianne. Can you contact my mother in the after life and explain why she had to die in poverty after roger douglas and don brash manipulated the currency markets at the time which saw mortgage rates soar past 18% AS the bank manager of the BNZ in Timaru swindled her and my dad out of their farm by using those interest rates to leverage them off their property as compounding interest on a missing $-conflict escalated between my dad and aforementioned manager? She died of cancer with tears in her eyes as she remembered her lands swindled away. Can you also pop over and visit my dad ? He died too. After four years staring at the ceiling of a hospice after having a stroke while he watched his stuff being dumped onto the neighbours paddocks because a mate of the BNZ’s manager bought his farm. 3000 acres for $310K in 1991. The original debt? $48K.

    The roof’s on fire you boring,crooked, bland, graceless little mother fuckers. Burn, burn, burn !

    https://youtu.be/ChmUC0OysoU

    • cync says:

      I always enjoy reading your posts COUNTRYBOY. You tell the unadulterated truth. This blog of Franks is the best, in my recollection.
      If only we could act together and get a better result for all.
      What needs to happen, in my view, is that we stand together to make this bullshit stop. There are nearly enough chinks in the armor of the ruling class to bring them down. It will be hard to overcome them, without a doubt . But together we can. Its not about demonstrations or any other act of pissing off the so called majority.
      We need to tell them the stories you have just told and the many more that are happening right now. These people have been conditioned not to care about beneficiaries and other “lowly”classes. So, we need to tell them about themselves, how are they going to cope with no money or resources when the bank comes a calling?

  5. WILD KATIPO says:

    KA – BUMP !!!!

    OOF!!!

    The sound of the New Zealand public hitting its head as they go in through the Looking Glass…..

  6. Jane B says:

    I recall watching the interview with Dunne and thinking that at the time he MUST’VE known about dodgy tax practices back then. Otherwise either he or his officials simply weren’t doing their jobs.

    Well researched, Frank. You’ve connected the dots nicely.

  7. Macro says:

    Another excellent piece Frank thank you for your continued well researched and documented work.
    This shows just how thin Mr Common Sense’s principles are, when he has obviously chosen to turn a blind eye to the growing misuse of “Companies” for tax evasion/avoidance if not downright money laundering in NZ under his watch.

    • Steve King says:

      I think you are being a little unfair. His time is obviously taken up monitoring the cannabis consumption of the nation, so he is simply unable to think about corporate criminals avoiding their legal and moral responsibilities. It all makes sense if you look at it, er, with your peripheral vision, or something…

    • Steve King says:

      I think you are being a little unfair. His time is obviously taken up monitoring the cannabis consumption of the nation, so he is simply unable to think about corporate criminals avoiding their legal and moral responsibilities. It all makes sense if you look at it, er, with your peripheral vision, or something…

  8. Andrew says:

    Sigh!

    You’re barking at passing cars again.

    For the vast majority of NZers this is all irrelevant and so you will gain no traction at all with it – just the same as all the other non-issues you’ve wailed about in recent times.

    That someone else, in a far off land, with someone else’s money, is evading tax from another country is of little more than passing interest for most of us.

    • WILD KATIPO says:

      ‘Passing interest’ ….funny that,.. various prominent NZ officials and political party’s don’t see NZ’s corruption index and international credibility as ‘ just a passing interest’…

      Are you anti business, ANDREW?

      Ill leave that one with you.

    • Sally's Husband says:

      “Barking at passing cars again”??

      Frank has substantiated every claim he’s made, Andrew, and your response doesn’t even begin to cover the points he raised. Simply saying “it ain’t true” doesn’t make it so.

      It is simply not credible that Dunne has no knowledge of foreign trusts being a problem in this country. His claims to the contrary either suggest he is lying – or hopelessly incompetent. Which do you think is the case Andrew?? Especially as seeing John Key also made reference to foreign trusts in NZ

  9. The Other Mike says:

    Another one out of the park Frank!

    Maybe the Aussie crackdown will also add some pressure on our corrupt rulers here http://www.stuff.co.nz/business/world/79591091/australia-cracks-down-on-multinational-tax-avoidance-in-2016-budget

    And them with a ‘conservative’ government…

    NZ does not have an austery problem, just like the USA we have a REVENUE problem!

  10. CLEANGREEN says:

    Top stuff frank, your blood is worth bottling as they say.

    The WiFi around parliament is destroying the politicians minds now, as the building is supposed to be full of WiFi sensors for security now and this fries their brain cells since they have few cells to begin with.

  11. Pete says:

    Peter Dunne should use all the power of his position to get Pharmac funding drugs to deal with memory problems. He needs them, John key needs them and some others in their rabble need them.

    While he’s at it maybe they have a link to where we can get some strong doses of Truth Serum for them to quaff.

  12. Mike in Auckland says:

    Of course, John Keys main concern is now to ensure that “hacking” is fought with the help of old and new agencies.

    http://www.radionz.co.nz/news/political/303111/panama-papers-a-cyber-security-warning-pm

    “The Computer Emergency Response Team (CERT) was first announced in December, and will be included in this year’s budget.”

    So he is most concerned to ensure that any such attempts (in the case of the Panama Papers it was leading investigative journalists worldwide, working for and with well reputed media organisations) by “hackers” to reveal what the rich and powerful do with their money, investments and business activities, are stopped.

    All else seems to be totally “ok” and “legal” in his view.

    As ordinary citizens we have state agencies exchange data on us, Bill English wants to create a “data highway” for government departments to use, to exchange sensitive data and profiles of “people of concern”, but the ones that have the power and money, they are supposed to be given extra protection.

    http://www.stuff.co.nz/national/politics/79078930/Government-data-highway-could-change-vulnerable-Kiwis-lives-Bill-English

    Does someone out there still not get it, what is going on?

    George Orwell’s book 1984 was only fiction when he wrote it, it is becoming reality now.

  13. Mike in Auckland says:

    Well, well, well, a “torrent” of South American money appears to have flowed into New Zealand trusts over the last year:

    http://www.stuff.co.nz/business/79714914/the-panama-papers-new-zealand-link-revealed

    It is getting more interesting by the day, and I look forward to what next week will bring us.

    This is really dodgy stuff, I wonder whether some private recommendations were made by John Key to business people in Colombia, Chile and other places, when he visited there last?

  14. Blake says:

    Thanks again Frank.
    Until we can jail the criminals, until we can get rid of a govt. that is not by and for the people but sheer corporate suck ups then we will slowly loose our good reputation. The world watches Iceland and the world watches Saudi Arabia; Israel; Iran and the world knows who the real terrorists are and who the REAL criminals are and which countries with Nato encourages war for profits. The sooner justice and integrity returns the better but I am afraid we have already lost some of our worldwide respect already.
    Thank you Jonky Donky for your destructive and greedy influences here in NZ. We deserved so much better and it is beyond embarrassing at this time. Bring on more truths on Monday with the leaks and lets clean house ! ! ! Enough is enough and we all have had a massive guts full.
    Shouldn’t Peter Dunne have been put out to pasture long ago ?

  15. Jack Ramaka says:

    The Hon Peter Dunne MP is a done deal me thinks.

    Maybe Nicky Hagar was right with the book Dirty Politics, I can see why JK was so keen to get the Brown Shirts aka NZ Police in to confiscate Nicky Hagars computers and resource material.

    JK’s little fiefdom here in NZ is starting to unravel, hopefully sooner rather than later.

    Doubt whether we will hear much from MSM?

  16. Jack Ramaka says:

    The Hon Peter Dunne MP is a done deal me thinks.

    Maybe Nicky Hagar was right with the book Dirty Politics, I can see why JK was so keen to get the Brown Shirts aka NZ Police in to confiscate Nicky Hagars computers and resource material.

    JK’s little fiefdom here in NZ is starting to unravel, hopefully sooner rather than later.

    Doubt whether we will hear much from MSM?

  17. Kam says:

    Wow. Little NZ gets a mention in the Guardian today:
    “In New Zealand, the Prime Minister, John Key, had been ‘curiously quiet’ about his country’s role in enabling ‘financial fraud’ in the Cook Islands.”

    • Sally's Husband says:

      Kam, and once that “curious silence” begins to percolate down into the reality-TV-addled-brains of the Public, then watch Key’s popularity plummet, and National’s support dissipate. Then they’ll begin beneficiary-bashing like we’ve never seen (to deflect public attention)!!

  18. Winnie says:

    Political Alzheimers.

    It’s catching. There must be some sort of transferable virus that lurks in the air-con at the Beehive. Who got it first? Key or Dunne?

    I can’t remember; I can’t recall; Nobody told me; It may have done but it escapes me at the moment; I don’t know the exact details because I wasn’t at that meeting, but from what I remember there’s nothing to worry about; Someone in my department is responsible for that and they withheld the information; I forget; I conveniently overlooked; disremembered; ignored; neglected to remember; skipped my memory; discounted; disregarded ;omitted from memory.buy
    disregard;ignore;let it go by my memory receptors;let pass;look the other way;pass over;wink at.

    And just when I was looking through an online dictionary for person with political Alzheimers Liar, the reference appeared see: Key et Dunne.

    …and from Orwell’s 1984:

    And if all others accepted the lie which the Party imposed – if all records told the same tale — then the lie passed into history and became truth. ’Who controls the past,’ ran the Party slogan, ’controls the future: who controls the present controls the past.’ And yet the past, though of its nature alterable, never had been altered. Whatever was true now was true from everlasting to everlasting. It was quite simple. All that was needed was an unending series of victories over your own memory. ’Reality control’, they called it: in Newspeak, ’doublethink’

  19. […] blogpost was first published on The Daily Blog on 6 May […]


 
Authorised by Martyn Bradbury, The Editor, TheDailyBlog,