By Maria Slade, The Spinoff*
Leo Shao is an unlikely caped crusader. The softly spoken 20-something looks like any other student striding around Auckland’s CBD in his dark duffle coat, takeaway cup in hand.
Yet behind this understated exterior lies an alter ego. Shao and a band of fellow young Kiwi Chinese are on a moral crusade to expose wrongdoing among their countrymen. PhD and Masters students by day, by night they work to fulfill a duty they believe they owe to their adopted nation and the Chinese migrant community alike.
There is an unsavoury side to the business of building a new life in Aotearoa, the group says. Immigration fraud, worker exploitation, tax evasion, mortgage fraud – you name it, they have it in their sights, and their reach is surprising.
The students have established a non-profit think tank called Youth Startup Herald, or YS Herald (no connection to the NZ Herald itself). On the surface YS Herald’s website looks like a collection of musings on New Zealand immigration and economic news, international affairs, and the like.
But dig a little deeper and you will find details of investigations it has conducted into Chinese Kiwis it claims have established themselves here by less than legal means.
While the group publishes high level details of these cases on its New Zealand website, it says it releases the real oil via Chinese social media – both because it seeks to publicly shame the alleged perpetrators in their home country, and in order to circumvent New Zealand’s privacy and defamation laws. The law is less stringent in China, the group says.
YS Herald has received threats, so only Shao speaks publicly while the other members remain anonymous.
Shao came to New Zealand four years ago to study for a PhD in mathematics, and now works as a system analyst at an Auckland luxury vehicle services company. Although he views this country as his new home he hasn’t started applying for residency just yet.
But most Chinese who come here are on a mission to create a better life and this quest can lead to desperate actions, he says.
“Because they care about residency they lose their mind so sometimes they will do bad things, this kind of thing happens every day,” the YS Herald spokesperson says.
“They lose their business honesty, they will try to defraud people to get money, residency, everything.
“We warn all Chinese people, ‘you should follow the rules, you should not forget your traditions. Be an honest man, do good business, be a nice person.’
“Everything has a cost. If any person believes that he does the wrong thing but there’s no cost, that’s not right.”
The wheels of justice move slowly, however, and government agencies rely on tip-offs, says the YS Herald spokesperson. And so they have taken matters into their own hands.
Its access to information about its targets is impressive. The Spinoff has seen copies of emails, personal bank statements from both New Zealand and China, passports, drivers licences, visas and other documentation.
“Some people are very scared [of] us because we can research very deeply,” Shao says.
Initially YS Herald tried working with local Chinese media, but felt these outlets were more concerned with keeping their advertisers happy than breaking stories.
“They care about money things too much, they don’t want to create conflicts among the Chinese community, so they cover each other,” Shao says.
YS Herald has no such qualms.
Its extensive investigations into the activities of a local businessman and his cousin are a case-in-point.
One of the cousins – we’ll call him W – ran a west Auckland fast food outlet. YS Herald alleges that between 2014 and 2017, W funnelled proceeds from the restaurant through a bank account in the name of his cousin – X – in order to avoid paying tax.
In return, it is alleged, W gave his cousin X a job as a chef at the restaurant so that he could get a New Zealand work visa. But, YS Herald claims, X never actually worked at the fast food business, and in addition had to pay W thousands of dollars for the privilege of getting the visa.
X got his work visa in April 2017. The Spinoff has seen copies of bank statements from 2017 which support YS Herald’s claim that X was making large payments to his cousin.
W also had another business, an auto company providing services such as car grooming and nano coating. YS Herald says this is where X actually worked, and once again it claims payments to the company were being channeled through X’s mother’s bank account to avoid tax. The Spinoff has viewed copies of the account statements from 2017 showing deposits with descriptions such as “car wash”, “Qashqai Cam”, “Passat” and “car clean”.
Meanwhile W appears to have become a prosperous man. YS Herald says between October 2014 and July 2017 he bought five Auckland properties – one each in Mt Albert, Mt Eden, Hillsborough, and two in Epsom. The Mt Albert property was sold after a year at a profit of $260,000, while one of the Epsom homes was sold after just three months for a profit of $170,000.
The Hillsborough and Mt Eden properties are currently on the market.
YS Herald alleges W dealt with a mortgage broker at a major bank who was known in the Chinese community for taking on “tricky” situations. The broker has since left that role and is working for another major bank.
X has now returned to China. The Spinoff has heard various explanations for the move, ranging from from personal relationship issues to health concerns.
W denies all of YS Herald’s allegations.
“Who told you? What this person doing?” he told The Spinoff. “Before you call me you should do some homework.”
W says his cousin X did work at at the fast food restaurant, while it was X’s wife who worked at the auto service company. X got his work visa when he was employed at a restaurant in Christchurch, he says. “I never charged him any money.”
He also strongly denies not paying tax on the income from his businesses, saying everything goes through his accountant.
He insists the allegations are retaliation for a family falling out over rival auto service businesses. “We are not happy with each other,” he says.
Wherever the truth lies, YS Herald has reported the cousins’ activities variously to Inland Revenue, Immigration Minister Iain Lees-Galloway, the Serious Fraud Office, and both major banks.
Immigration New Zealand’s general manager of compliance Peter Devoy says he isn’t able to comment on individual cases.
However complaints to the agency about alleged immigration fraud have more than doubled in the last three years, he says.
In the 12 months to June 2016 it received 882 reports; by June 2018 that number had jumped to 1842.
REPORTS TO IMMIGRATION NEW ZEALAND OF ALLEGED FRAUD HAVE MORE THAN DOUBLED IN THREE YEARS. (SOURCE: IMMIGRATION NZ)
There is “evidence to suggest that the exploitative-type practices that you’re describing to me are becoming more prevalent,” he says.
“The amount of work that’s coming to us, getting my resources across it is difficult.”
Some complainants are migrants who have tried to buy their way in, he says. “People come to us when they get desperate, and quite often if a person has been complicit and they are borrowing money and investing significant amounts of money, as you’ve attested, when something goes wrong in the process, that’s when they complain.”
In cases of serious workplace exploitation migrants who come forward may be allowed to stay in New Zealand while they apply for a new visa.
People try to buy jobs in many ways, from working extra hours without being paid, to a work payback system and buying shares, Devoy says.
“That often involves a structure where Inland Revenue are being paid so that a work record can be established… but it may well be a non-existent job.”
One of the challenges is New Zealand’s “welcoming” structure, he says. A person who is here unlawfully can still get an IRD number and other documentation such as a driver’s licence, giving them the facade of legitimacy.
The agency does take a whole of government approach to immigration fraud, and in particular works closely with the Labour Inspectorate which looks at work standards such as whether people are being paid minimum wage, Devoy says.
Inland Revenue says it also co-operates with its fellow agencies to identify tax fraud and other criminal activity. It is a member of the Combined Law Agency Group (CLAG), a group of around 25 partners that looks at serious non-compliance against one or more agencies, it said in a statement.
It’s also a member of the Joint Assessment Group co-ordinated by the Ministry of Business, Innovation and Employment (MBIE) which applies another multi-agency lens to compliance risks. “The Labour Inspectorate is part of MBIE so topics such as aggressive labour practices, employee manipulation and non-compliance with wider labour laws do come up,” it says.
And cash jobs leave a trail, Inland Revenue says.
“People either spend the cash on travel, lifestyle, gambling or use it to acquire assets or pay the mortgage. We can trace all of those.”
However there are limits to the taxman’s ability to share. While the Privacy Act allows government agencies to pass information to each other, Inland Revenue also operates under the Tax Administration act which says it must keep taxpayer information secret. In short, tax law trumps privacy law.
Mechanisms that allow for better inter-governmental information sharing is “a discussion that needs to be had”, Immigration New Zealand’s Peter Devoy says.
Leo Shao describes YS Herald as “kind of freaky” in the local Chinese community. Another word for that might be “disruptive”, and the group says it has plenty more cases up its sleeve of immigrants sidestepping New Zealand regulation to better their situation. They are adamant that they will work to ensure corrupt practices that have flourished in other societies don’t take root in Aoteaora.
*This article first ran on The Spinoff here and is used with permission.