Dodgy tax havens and even dodgier Peter Dunne’s memory
.
.
“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;
.
.
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?
.
.
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“.
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;
.
.
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;
.
.
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.
“Tax evasion is completely against the law. Tax avoidance means that it’s a responsibility of your accountant to actually look to minimise your tax as best you can within the bounds of the law.”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’
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
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!
.
.
.
.
= fs =
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
‘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?
Since the early 80s! 🙁 🙁 🙁
KA – BUMP !!!!
OOF!!!
The sound of the New Zealand public hitting its head as they go in through the Looking Glass…..
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.
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.
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…
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…
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!
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.
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.
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.
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?
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 ?
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?
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?
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.”
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)!!
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
convenientlyoverlooked; disremembered; ignored; neglected to remember; skipped my memory; discounted; disregarded ;omitted from memory.buydisregard;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 AlzheimersLiar, 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’