Mossack Fonseca bites National on the arse..

by: MICKYSAVAGE

Maybe there is a God and if so she has to be a left winger.  Latest events are trashing John Key’s carefully constructed persona of being an ordinary dude who is good to have a beer with and cares about everyone and have highlighted his fundamental weakness.  He is not a former Housing Corp house dweller done good trying to make New Zealand a better place for all of us.  He is part of the 1% and totally indifferent to the damage to societies and governments that tax evasion by the rich causes.

The trouble with issues surrounding Mossack Fonseca is that there is that much information and so many deals to be investigated the Government must feel like it is playing whack-a-mole in trying to deal with the fallout.

One recent issue was disclosed by David Cunliffe yesterday.  The Overseas Investment Organisation had allowed a Mossack Fonseca associated entity to purchase a farm in the Taranaki.  From Radio New Zealand:

Labour has found, using written Parliamentary questions, the date of the transaction and we were then able to search back through the OIO’s papers to find which one it was.

“And there’s only one it can be.

“[Ceol & Muir] has three directors which have together been associated with about 1400 other company purchases – most of those registered in Panama.”

Mr Cunliffe told Morning Report the two people who effectively own the station now were not currently directors of Ceol & Muir.

He said he was not claiming Ceol & Muir had done anything wrong – his concern was that the OIO must be relied upon to conduct a robust investigation of every application to buy sensitive land.

“We do not know and it must be now told to the public exactly what good character test was applied to whom when the application was made.

“As the minister herself has said that good character test is actually an ongoing test so we need also to know whether the OIO has recently satisfied itself that all the conditions have been met.”

Mr Cunliffe said the OIO was internationally known as a “wet bus ticket” having approved more than 99.75 percent of all applications since 2011.

And it emerged this morning that the two people behind the purchase were found criminally responsible in 2011 for polluting a river in Argentina with toxic material from a tannery they owned.

You have to wonder how an entity or individuals can pass the good character test given all of this.  The OIO has power to review decisions to check on compliance.  It should do so.

The second and potentially the most damaging issue is the disclosure that John Key’s lawyer Ken Whitney lobbied Key to not change rules surrounding foreign trusts.  Key told Whitney to speak to revenue minister Todd McLay.  He then did so and despite IRD advice that the issue be addressed the Government refused to do so.

A timeline based on an OIA response obtained by the Greens is fascinating:

• December 3, 2014 – Whitney emails Todd McLay, mentions that he had raised the issue with Key and was told he should meet with McLay to discuss concerns. His email also said “[w]e are concerned that there appears to be a sudden change of view by the IRD in respect of their previous support for the industry. I have spoken to the Prime Minister about this and he advised that the Government has no plans to change the status of the foreign trust regime.”
• December 4, 2014 – McLay’s staff writes to IRD to say that “after further reflecting on the discussion yesterday, he expressed some concern that one of the options that will be presented in the report to him before the end of the year would be the removal of the foreign trust regime.” A senior IRD official replied saying they will “bear this in mind in how we write the report.”
• December 12, 2014 – IRD urges the Government to add a review of foreign trusts to its work programme on the basis that the trusts regime has attracted adverse international comment because New Zealand based trusts with a foreign settlor and beneficiaries do not have to pay tax in New Zealand and New Zealand was perceived as a tax haven in that regard. It did not include an option of removal of the foreign trust regime but the option of reviewing the operation of foreign trusts was the next best thing.
• December 18, 2014 – Todd McLay meets with representatives of the industry at Whitney’s office. Nice that a Minister of the Crown should make a house visit and so soon after the request was made.
• January 22, 2015 – Olivershaw Ltd states in a letter “[f]oreign trust industry very pleased with their meeting with Minister”. A further meeting on February 19, 2015 is confirmed.
• March 18, 2015 – the NZ Trustee Companies Association Ltd writes to Paul Goldsmith and states “[l]ast year a report to ministers by tax policy officials was publicly released raising the possibility that this year the government might initiate a review of the foreign trust tax rules with a view to taxing such trusts on offshore income. This would be likely to close the New Zealand industry down – foreign investors can have their funds managed in many other countries that do not levy additional taxes on them, hence they would shift their funds to those countries.”
• May 15, 2015 – McLay decides that no review will occur.
• April 4, 2016 – The Panama Papers leak is announced.
• April 11, 2016 – Key announces review of foreign trusts regime, reversing the earlier decision although former PWC director John Shewan and not the IRD will conduct the review.
• April 12, 2016 – Key’s register of pecuniary interests is published and his deposit with Whitney’s Foreign Trust company is disclosed.
• April 14, 2016 – Key told media that “one of the [lobby] groups asked me about it [the IRD report].” He said he told the individual that “I haven’t got a clue about any changes but go and take it up with the minister”. He did not mention that the individual was his lawyer. It is surprising that the Government response was so immediately negative given Key’s presentation of the issue in such a passive way.

So basically Ken says to John changing the rules will destroy Ken’s business.  John tells Ken to talk to Todd.  Ken emails Todd and Todd immediately tells IRD to not say that foreign trust rules should be changed.  IRD says to Todd that it thinks foreign trusts should be reviewed.  Todd makes a special visit to Ken’s office to speak to Ken’s friends.  Ken’s friends are happy with the meeting.  Todd decides not to even review the foreign trust rules.  Of course there is nothing to see here and it is all an unfortunate series of coincidences.

Make of it what you will. I suspect that over the next couple of weeks the media and political focus on this issue and on Key’s actions will be intense.  And his Teflon coating will be shown to have been scoured.

http://thestandard.org.nz/mossack-fonseca-bites-national-on-the-arse/