May 28 2012

More on New Zealand as a rogue financial state

Posted by: Nick Shaxson in: Thoughts

Something I just wrote over at the Tax Justice Network:

We have written periodically about New Zealand and its poisonously lax company incorporation regime, serving as a cover for all kinds of crimes. We’ve had the Indians complaining about it recently, and of course the Australians:

“ATO commissioner Michael D’Ascenzo last week warned Australian taxpayers against avoidance schemes that use New Zealand administered trusts as a way to gain tax-free income. The warning is another blow to New Zealand’s financial standing, coming as news broke that the country had, along with Russia, been turfed off a European Union anti-moneylaundering “white list” because of weak regulation.”

Now we have Naked Capitalism, following an exploration of the Mexican Drugs Lords connection, continuing its excellent New Zealand series, with a new headline: New Zealand, Fresh From Its Service to Mexican Drug Lords, Helps Out the Russian Mafia. It takes a cue from the NZ newspaper Stuff:

“Another New Zealand shell company has been linked to an alleged fraud worth more than US$150m – this time involving Ukrainian state-owned companies.

The company, Falcona Systems Ltd of Albany, Auckland, was struck off the New Zealand Company Register last October but only after it was used to gain $150m in kickbacks for Ukrainian and Latvian officials, according to East European media reports.”

And behind all this, it seems, lurks the Russian Mafia. And it has gems such as this:

Two years ago another New Zealand shell company, SP Trading Ltd of the same Queen Street address, was found to have chartered a Georgian registered plane to fly embargo-busting arms from North Korea to an unknown Middle Eastern state. They were intercepted in Bangkok.

Classy stuff. And then the sign of the capture of policy making by criminal financial interests:

“New Zealand companies can be created online for just $153.33 and while Commerce Minister Craig Foss has said action is being taken to tighten registrations, nothing has happened. Foss is in Japan and could not be reached for comment.”

We have seen this kind of behaviour from secrecy jurisdictions again and again. For pitifully small sums, jurisdictions can prostitute themselves out to the world’s criminals, for a handful of dollars. It’s not even very much money! An earlier Naked Capitalism headline captured the spirit: New Zealand Opportunity! Earn $$$ Working from Home, Creating Bogus Companies for Crooks!

These stories are packed with extra information.

In the past, there were relatively few people with bad things to say about New Zealand. That is changing, very fast indeed.

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