Mossack Fonseca's NZ company and related NZ trust business operate without having to comply with NZ's anti-money laundering laws

The New Zealand director of the Kiwi offshoot of a Panamanian law firm embroiled in an international scandal is declining to comment.

Mossack Fonseca, the Panamanian law firm labelled as the "gatekeeper to vast flow of murky offshore secrets," has a New Zealand registered firm in Mossack Fonseca & Co (New Zealand) Ltd. 

The so-called Panama Papers, issued by the International Consortium of Investigative Journalists (ICIJ) following a giant document leak, highlights Mossack Fonseca as a firm with a "client roster that includes drug dealers, Mafia members, corrupt politicians and tax evaders - and wrongdoing galore." International media including The Australian Financial Review have highlighted Mossack Fonseca's use of NZ trusts, including the use by members of Malta's government, of trusts operated by trustee company Orion Trust (New Zealand) Limited.

Both Mossack Fonseca NZ and Orion Trust have Bentleys Chartered Accounts at 205 Queen Street as their address for service and registered office. Roger John Thompson (pictured below), director of Bentleys Chartered Accountants, is listed in Companies Office records as the NZ resident director of both Mossack Fonseca NZ and Orion Trust. Both entities have two other directors listed each who are resident in Panama.

Asked by interest.co.nz for comment on the international attention focused on Mossack Fonseca and Orion Trust and their NZ links, Thompson said: "You will appreciate that under NZ law and professional ethical standards we cannot provide any information regarding any of our clients."

Thompson's LinkedIn profile notes he was formerly managing director of accounting firm Staples Rodway, an associate at law firm Kensington Swan, and in the 1980s had stints as both an inspector at IRD and as a manager at Allan Hawkins' Equiticorp.

Meanwhile, Bentleys Chartered Accounts later released the following statement to interest.co.nz via a Sydney-based spokeswoman;

Bentleys Chartered Accountants Ltd of Auckland has provided professional services to the New Zealand arm of Mossack Fonseca since 11 August 2014. Bentleys works with clients in a manner that strictly complies with all relevant laws, including anti- money laundering and tax laws.

Further, Bentleys ensures that all clients undergo a rigorous due diligence process before any trust or company formation services are provided. Due to client confidentiality requirements, and under the code of ethics with the Institute of Chartered Accountants, Bentleys is unable to provide client-specific information.

Sitting outside the AML/CFT Act

After this recent post by Richard Smith on the Naked Capitalism website, interest.co.nz asked the Ministry of Internal Affairs, a key supervisor of NZ's Anti-Money Laundering and Countering the Financing of Terrorism Act (AML/CFT Act), whether it supervised Mossack Fonseca & Co (New Zealand) Ltd and/or Orion Trust (New Zealand) Ltd, for compliance with the Act.

 "We have had no dealings with either company. Both entities have their registered address at chartered accountants. Accountants are not captured under the AML/CFT Act, and we do not capture accountants as Trust and Company Service Providers (TCSP). It is only businesses that provide TCSP services as the only or principal part of their business that are captured under the AML/CFT Act," a Department of Internal Affairs spokesman said.

The Australian Financial Review has highlighted Mossack Fonseca's use of NZ trusts noting; "New Zealand's 12,000-plus offshore trusts pay no New Zealand tax on foreign earnings. Their beneficiaries are not registered and their accounts are not filed with any public body. New Zealand regulators may demand this information, but it is not disclosed to foreign governments." 

The AFR highlights the use by Keith Schembri, the chief of staff for Malta's Prime Minister Joseph Muscat, and Malta's energy minister, Konrad Mizzi, of "New Zealand's secrecy laws to set up two offshore trusts. These were to be linked to a secret Dubai bank account and to two Panama companies that Schembri and Mizzi had set up in 2013 through a Panamanian law firm." 

"Release of tax haven records through the ICIJ underline the ease with which even foreign politicians can use New Zealand to hide their wealth."

Mossack Fonseca reportedly set up the Rotorua Trust for Mizzi and the Haast Trust for Schembri, with ownership of two Panama companies transferred to them. As foreign trusts operated by trustee company Orion Trust (News Zealand) Limited, Rotorua and Haast face no tax scrutiny in New Zealand of any Panama income, the AFR notes.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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33 Comments

Perhaps Bentleys Chartered Accounts at 205 Queen Street - Roger John Thompson need a refresher ...
"All CA, ACA and AT members are required to complete four hours of ethics training over a five-year period".

http://www.nzica.com/News/Archive/2013/November/Maintaining-your-profess...

Given the actions of Russia financing terrorist groups who initially entered Ukraine there is reasonable grounds to consider that at least the Russian portion of these trust funds has been used to finance terrorism.

When they "invaded" the money to pay for the equipment was suspected to have come from the Russian's pension fund. Now it seems it may have originated from these trust accounts.

Why would an accountant have any involvement with something that smells like money laundering but even worse is potentially funding terrorism?

Who or what would register US $350.5 billion of US Government Treasury securities in Caribbean Banking Centres and for what purpose? View Table

Hard to say given the tax havens in that list don't like talking about their customers. Who would want bonds that are very liquid, exchange for USD and also produce tax free interest in USD?

Possibly Apple?

Much of Apple's money is trapped overseas, sheltered from the US taxman, who would demand a 35% cut were the money to be repatriated. But it can be invested at home. Apple's financial reports show it holds $21bn of US government debt – a vast sum for a single private investor. Foreign governments like investing in US securities, but Apple owns more than the $19bn held by Malaysia, and just $4bn less than Spain. Read more

Apple will hold a fraction of those. When they need to meet payment obligations in the US they borrow cheap money in the US so they have a tax loss then distribute dividends. TIPS or other bonds would generate enough interest to counter the losses from the borrowing.

Even the $21b in the quote is a fraction of the total. It does show the scale of corporate tax avoidance.

The Night Manager's friend Richard Roper perhaps!

The DIA spokesperson is of course correct that accountants and lawyers remain exempt from the AML/CFT Act, but they are subject to the "AML lite" of the Financial Transactions Reporting Act. In certain circumstances they are required to identify and report suspicious transactions and conduct due diligence/identity verification. In most cases of tax and trust advisory work, however, even that Act won't apply.

Professional conduct rules sometimes extend further than the FTRA, especially for lawyers. These ethical obligations can require or permit disclosure to appropriate authorities in certain circumstances, wider than the limited FTRA.

Think you are being a bit hard on Rodger, you assume a lot!!

I haven't done anything wrong,my Panamanian lawyer Manuel Noriega told me it was all above board.
I could be for the big house or a slap with a wet bus ticket.

Fear not, we are just small fry.

For financial advisers, the current state of play is simply a good business opportunity. In a draft of his San Francisco presentation, Rothschild’s Penney wrote that the U.S. “is effectively the biggest tax haven in the world.” The U.S., he added in language later excised from his prepared remarks, lacks “the resources to enforce foreign tax laws and has little appetite to do so.” Read more

Below is a statement from Minister of Revenue Michael Woodhouse. And there's more from Bernard here - http://www.interest.co.nz/news/80881/greens-labour-call-government-tighten-loopholes-allowed-panamas-mossack-fonseca-set

NZ tax rules strong

Revenue Minister Michael Woodhouse says New Zealand has a very sound tax system with world-class tax rules.

“We tax people who live, work and do business here. We don’t tax foreign income earned by foreigners,” says Mr Woodhouse.

“The same principles apply to trusts, and have done since 1988.

“It is ridiculous to suggest that New Zealand is a tax haven, as tax havens thrive on secrecy.

“Our tax rules require foreign trusts to be registered. We also have a strong tax treaty network with the express purpose of discovering and preventing tax avoidance by exchanging information between tax jurisdictions.

“We have an ongoing responsibility to ensure these rules are robust so we can comply with our international obligations.

“The OECD has looked at our foreign trust rules in the past and had no concerns with them. The tax treatment of foreign trusts may come up in the OECD’s Base Erosion and Profit Shifting work programme in which case we would look at our own rules in the context of everyone else’s.

“New Zealand has also been a very active participant in the OECD and G20 work to combat tax avoidance. We continue to be a strong voice in this area,” says Mr Woodhouse.

“We tax people who live, work and do business here. We don’t tax foreign income earned by foreigners,” says Mr Woodhouse.

Yeah right -Tim Hunter explodes this myth where foreign companies operate in New Zealand. Read more here and here.

up
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"We don’t tax foreign income earned by foreigners,” says Mr Woodhouse."

Unless it's someone's well earned pension (UK)........ right Woodhouse?

F**king BS artist

All animals are equal, but some animals are more equal than others.

So with google "shifting" the work offshore they dont pay tax I believe? Yet a NZ company trying to do such work would be taxed here, that is plain crazy and needs fixing.

..is there an apparent legitimate reason for allowing these foreign trust? Anyone know?

Yes. They can be used as vehicles for specific transactions, takeovers etc,or a layer of secrecy for legitimately earned income/assets. They can also be used by tax evaders, corrupt officials looting billions, and other criminals, as another layer of secrecy, or conducting their own transactions such as laundering proceeds of crime. It's often assumed the former percentage is bigger than the latter, but no-one really knows, nor if true by volume if it also holds true by value. Maybe these papers will prompt academic researchers to help shed more light on an inherently murky area.

What was the original rationale?

Is there anything in the archives setting out the purpose of the enabling legislation introduced by Roger Douglas in 1988 allowing these foreign trusts

Is it a case that the purpose and actual dominant use are two different things

New Zealand’s FMA, the Breder Suasso Conundrum, Mossack Fonseca, and #panamapapers

http://www.nakedcapitalism.com/2016/04/new-zealands-fma-the-breder-suass...

And a big well done to Gareth

Cheers Andrew. I always enjoy Richard Smith's posts.

No Justice..

Those who make the rules to bend and sway one way or the other, now have an axe to grind and the pigs in the trough, need their swill, and it is coming in bucket loads.

I have never heard such bullshit in my life..as today..

But, did one ever think otherwise.

They had good teachers.

Animal Farm and 1984, dear George Orwell...they have followed the script, to a T.

And no matter how they bluster, you, the mugs, must pay and pay...and the Laundromat is working overtime, polishing the script into safe hands. Any denomination will do, any Country, any how.

Lead up the garden path...yet again.

No Justice, no sign of it.

I see HSBC once again are one of the incriminated banks. You wonder where they stand in the illegal money flows out of China.

-El-Presidente Xi has apparently put a total media ban on even mentioning the Panama Leaks as his family is perhaps, I say again, perhaps.. implicated.

So please do not mention this subject again. It has been censored.

I read somewhere, that censorship is often used to hide the truth,, so do not quote me.

Now that is what I call a real ruler, if true.......give him an inch, he takes a mile and papers over the cracks, to infinity...............

Bar this little crack....on the World Wide Web.

https://www.washingtonpost.com/news/worldviews/wp/2016/04/04/the-panama-...

At least the Icelandic Prime Minister has stopped blustering and quit whilst the getting was good, yet again a link, but do not quote me..

http://www.marketwatch.com/story/panama-papers-first-casualty-icelands-p...

Will there be prosecutions or is there a chopping off of the figure heads...

We will see...Panama, we will see.

What about all the other Tax Havens...we will see, we will see.

Maybe still one rule for the rich and one for the poor, as this is not a new phenomenon....it has just burst into light....via the Viral Highway, difficult to stop the flow, except via the Great Wall.

Maybe we should count our blessings we are not in bed with Xi and his machinations. Transparency is making things clear.

Maybe our previous and precious "Dear Leaders" are happy they have had nothing to do with his regime.

It might look bad for NZ, if they had owned up to the fact, so dear to their hearts, minds and financial relations.

So we have nothing to clamp down on, no need for censorship, no need for fear, no need for favour.

We are a free state and can afford to be so. We owe no debt to no one.

(TPP).

I do trust our trust is not misplaced and all is well in the Land of the Long White Cloud.

As the Cloud takes many forms these days, the world is becoming more transparent except where most of it is manufactured...must be the smoke screens I suppose.

And this might have come from the well wishers view point in the USA...

How ironic is that.

Clear and total transparency...or is it another smokescreen...of monumental proportions, designed and built in America.

The financial war to end all wars, keeps a pace with the times...or was it the herald of things to come...or was it a post from the dear old USA.

'Under my legal ethical standards', we need a revolutionary change and a New Ruling Political Party and a New Banking System.

We could be the first honest pairing in the entire World. We could start a trend.

Should have started in 2008..
(GFC was the first hint we needed change, not screwed over yet again)...but better late than....Never?

Any takers?.

I'm in for a dollar

That makes you nominated Treasurer, if you have a dollar to spare. Now we are in surplus, more than I can say for the Locum.

. (See we already have made progress..)

But the sad thing is where do we put the money, which bank do you Trust, when the money starts rolling in?.

How do we know we can trust you.

Trust has now become the Operative Word.

How can you trust even me.?

We could put some of the money in an offshore trust.

Maybe watch it grow, just like all the other Treasurers of the High and Mighty.

Who shall be nameless and blameless, they are just preparing for the worst.

Would you trust a Cayman with our loot, they might bite yer hand orf, initially, but as all money is corrupting, when you want it back, it may already have been spent, buying up houses in Awkland, a vicious circle, if ever I saw one.

Money Launderers work in a roundabout way. Until the penny drops. The dollar rises and the yaun becomes a fantasy of the imagination.

Ask any other person if you would always Trust...that.

Still want the Job Frazz...it might make you frazzled....?.

By the way, we would have funded the entire needs of ST Johns Ambulance Service, from that devil Johns Flag waving Campaign....Go figure that one, Mr/Mrs Treasurer.

I keep repeating myself...and I would not fund Helen Clarkes UN aspirations....either she gets it on merit....but never again funded by the whole of NZ, as she has been all her life.

No merit in that?.

The best government money can buy

The question is to what lengths the rich and powerful will go to to protect their position? Here is one possibility, by revisiting our darker past of human sacrifice. Actually I think Putin and a few of his ilk already do this don't they?

Roger Thompson has been a bit more forth coming today following the Radio NZ/TVNZ/Nicky Hager reports saying he's listed in 4500 Panama paper documents, there are 3500 mentions of Bentleys, and the Orion Trust crops up more than 9000 times.

http://www.radionz.co.nz/news/panama-papers/303356/nz-at-heart-of-panama-money-go-round

http://www.radionz.co.nz/news/national/303358/mossack-fonseca-nz's-registered-office-responds