Today journalists from across the world, and co-ordinated through the International Consortium of Investigative Journalists, have started to publish stories from the biggest ever leak of commercial information. All the prospects are that the flood of information will continue over the days and weeks to come. There are more than 11 million documents which “show heads of state, criminals and celebrities using secret hideaways in tax havens”.
Meanwhile New Zealand has had a well known problem that has been unaddressed for years that means we are a haven for channelling the money of tax avoiders and profits of criminals just as readily as the well-known tax havens like the Channel Islands or Cayman Islands.
Transparency International’s 2013 National Integrity System Analysis said specifically “An overly permissive regime for company incorporation has allowed “shell companies” involved in questionable activities to incorporate in New Zealand. An IRD report of 2013 came to the same conclusion
The Transparency International report recommended amongst other things “establishing registers that record the owners or beneficiaries of companies and trusts” (page 335)
Meanwhile in 2014 the government committed to a response to the TINZ National Integrity System’s report’s recommendations as part of the Open Government Partnership Action Plan 2014-16. Almost two years later NOTHING has happened to achieve this.
It gets worse though. In a paper on emergent themes for the next iteration of New Zealand’s Open Government Partnership Action (2016-18) plan this important issue of a response to Transparency International’s report (and the possibility of more open company transparency) has fallen off the radar without ever being discussed. With the Prime Minister arguing strongly that there is no problem as he did today “blind” companies and trusts are unlikely to be on the agenda no matter the cost to our international reputation for integrity.
There is another concern that arises if no action is taken to correct this in company law loophole in the near future. If the TPPA comes into force could it be too late for the government to take action? Is it too far-fetched to imagine our country being threatened for compensation for loss of profits or ‘expropriation’ by shadowy individuals acting on behalf of political &commercial tax avoiders and criminals because making company and trust ownership transparent would wreck their lucrative business models? So long as they have an office in a TPP or most favoured nation country the way would seem to be open.
Having just read Christchurch IT entrepreneur Dave Lane’s extremely perspicacious select committee notes such a dark possibility no longer seems far-fetched. Dave identifies that the very point of a document which runs to 6000 pages of impenetrable text is to provide a life-time meal ticket for corporate lawyers, and opportunities for corporations and powerful private interests to employ them, to monster elected governments.
In the meantime over the past three years the government have forced well run, open and transparent New Zealand owned financial institutions and businesses to be closed down because top heavy regulatory overheads meant that they couldn’t meet the government’s new governance and probity requirements. Examples are the ethical investment company Prometheus, various friendly societies which have had to amalgamate and locally owned and run superannuation schemes as well as crowd sourcing prediction software i-predict.
The contrast could hardly be more ridiculous. Well run companies are forced to close while we host the world’s tax-avoiders, criminals and their shady deals. All the while government commitments go unmet and, despite the evidence and the prior commitments, the Prime Minister denies that a problem exists.
The PWC position statement for Prometheus shows it was trading profitably