Key responds to Cook Islands allegation by Panama Papers leaker

Key at the 1pm Saturday stand-up

Prime Minister John Key took the unusual step of arranging a 1pm Saturday press conference to respond to allegations from the anonymous source behind the Panama Papers.

This morning, the source – named only as John Doe – released an 1800 word statement on the website of the International Consortium of Investigative Journalists (ICIJ), the group that has released various documents leaked from Panama-based law firm and foreign trust specialist Mossack Fonseca.

Mr Key was the only world leader named in the statement.

"I have as much responsibility for tax in the Cook Islands as I do for Russia," said Mr Key this afternoon.

"Prime Minister John Key of New Zealand has been curiously quiet about his country’s role in enabling the financial fraud Mecca that is the Cook Islands," John Doe wrote (in his statement's only reference to Mr Key or New Zealand).

But at his 1pm press conference, the PM said, "The whistleblower has got confused about my responsibilities. I have no responsibilities fro the tax jurisdiction of the Cook Islands. New Zealand has responsibilities for foreign policy and defence of the Cook Islands, but not for tax. I have as much responsibility for tax in the Cook Islands as I do for tax in Russia."

Video of Key's full stand-up

Closed down after 1988
Asked about why the Panama Papers leaker would tie the Cook Islands to Mr Key, he said he asked tax officials about it this morning and they replied with the theory that "He or she is likely to be European, and Europeans get terribly confused about the Cook Islands because they use New Zealand dollars."

It's also possible, however, that the "confused" European was making a reference to the winebox controversy.

And the prime minister did make an oblique reference to that scandal, saying "Prior to 1988, there were issues with New Zealanders avoiding their tax by having a structure in the Cook Islands," he told reporters at his 1pm stand-up. In 1988 that all closed down and subsequently there have been no issues."

Since 1988, New Zealanders have been taxed on their worldwide income, the prime minister noted.

He also added that the Cook Islands tax controversy was before his time.

No responsibility, but some care
Commentator Bernard Hickey was quick to take issue with the prime minister on social media, saying, "Has New Zealand pressured the Cook Islands to change its trust secrecy/info sharing laws? If not, why not? The Cook Islands uses the New Zealand dollar and Cook Island citizens are New Zealand citizens."

Mr Hickey added, If New Zealand is serious about not being tarred with the tax haven brush, why not stop the Cook Islands from being a tax haven?"

"New Zealand does actually try to support the Cook Islands in improving its tax and the way it operates its system," Mr Key said this afternoon, though qualifying, "It has its own double tax agreement, its own tax – sharing agreement and, over the years since 1988, New Zealand's been working with the Cook Islands to make sure they've got a better structure, and that they're operating in a way with much greater transparency."

The New Zealand government doesn't get directly involved but officials try to provide support and encourage the Cook Islands to have best practice, Mr Key said.

Earlier today, the Prime Minister's office released a statement saying an independent review of foreign trust disclosure rules is now under way by former PwC chairman John Shewan.  Mr Shewan is due to report on June 30. Additionally, Inland Revenue is participating in an OECD review of international tax arrangements.

Overnight, there was more Panama Papers grief for the prime minister, with the Australian Financial Review name-checking his personal lawyer, Ken Whitney, in an extended report on how a controversial Mexican construction tycoon put $100 million into three tax-free New Zealand trusts.

More to come
Today, Mr Key called New Zealand a "footnote" in the Panama Papers. That may be true so far but more could be revealed when a fully searchable version of the leaked Mossack Fonseca papers is released on May 9.

Peter Bale, the New Zealander behind the ICIJ, has already said he thinks there is more to come on New Zealand in the Panama papers.

And this morning on the Nation (where he was interviewed on the same programme as Mr Bale), Winston Peters said he agreed – and hinted he was ready to reopen his winebox.

"Well, I said some time ago that these papers would be very, very serious revelations because 11 and a half million documents and New Zealand mentioned 60 times and us being positioned here in the South Pacific giving aid to countries who were at the same time running tax haven utilities or using all sorts of fancy phrases for cheating and fraud and money laundering, I think that the mention of Mr Key relates to where they’re going to go in one part of the world on this matter," Mr Peters said.

For his part, John Doe said he (or she) was willing to cooperate with authorities "to the extent that I am able", expressing a willingness to help authorities but also noting actions taken against recent whistleblower including Edward Snowden, currently exiled in Russia.

Tune into NBR Radio’s Sunday Business with Andrew Patterson on Sunday morning, for analysis and feature-length interviews.


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51 Comments & Questions

Commenter icon key: Subscriber Verified

Only world leader named here by a "hacker".
Only world leader to be attacked with illegally obtained emails prior to an election.
Only world leader with a large computer loving German awaiting extradition.
Dots
Join

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Is that a 'conspiracy theory', Joindots? Interesting that Key's response this morning was a no-show for his spot on RNZ. Guyon Espiner was going to question him on this matter and he bottled it. Very telling!

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... he fronted plenty of other media though ...

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Well, Guyon does have a history of not letting Key get away with attempts to dodge questions. I can see why Key wouldn't have wanted to front up to him today.

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It's was either George Soros or the CIA. Interesting they target Key.... Is he too cozy with the Chinese?

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Yes.

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The NBR should maybe contact Garry Muir who set up a Tax haven in Niue in the early 1990's with ex Strategic Finance directors and Mossack Fonsecca - with the full knowledge of the National Government

NZ has a history of turning a blind eye to tax havens - even in jurisdictions like the Cook Islands and Niue whom the Government fund annually to the tune of tens of millions of dollars.

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Tends to prove, in my view, what a totally meaningless CROCK is the Transparency International 'Corruption Perception Index' - in which New Zealand used to do so well?

What sort of purported anti-corruption 'yardstick' - is based upon the subjective opinions of anonymous business people, and fails to measure 'financial secrecy'?

ie: where the corrupt and criminals hide their ill-gotten gains - in TAX HAVEN$ - of which New Zealand is obviously one?

Penny Bright
2016 Auckland Mayoral candidate.

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Paid your rates yet? Over $40,000 now....

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A shameful comment. How very few people have the moral courage to pay the price for their principles. Would you?

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Penny's right about the utter lack of objectivity about the Transparency International 'Corruption Perception Index. Very useful to have the big boys ticking their own boxes.

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Saturday press conference? One can smell the fear a mile away. Surely John Key isn't hiding anything?

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They are coming for you Mr Key. Clearly they have a lot more evidence to come, and they are just starting to make Key dance.....

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Suppose we should ask Mr Peters,when we are on the subject of "TRUSTS".Whatever happened to your own trust Mr Peters,with Owen Glenns donation of $100,000. Lest we or anyone else forgets. The name of Mr Peters 'trust',was Spencer Trust.

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Offshore trust administering Ken Whitney is John Key's personal blind trust operator . Tell me that doesn't stink?

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I d recall a very good INVESTIGATE article where Ian Wishart interviewed Peters on this. A full and fair reply was given. A pity it hasn't had wider coverage.

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If the Cooks continue as a tax haven, with little intervention by Key's government, perhaps their citizens' dual residency right and their use of the New Zealand dollar need to be reconsidered. Doing nothing is now considered by the rest of the world as being complicit - that's is why Key is running scared.

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Rubbish, get real.

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Are you al serious!! Do you think that 80 percent of the world knows where NZ is !! 4.5 million people do not control the world
We live in Gods Own and need to appreciate what we have!!

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The reality is that NZ-domiciled trusts are being used for large-scale tax avoidance in other jurisdictions. Key uses the OECD's rulings as an excuse to keep these trusts, but the OECD doesn't govern this country - his government does. Furthermore, it is naive to think that Key couldn't exert more influence on the Cooks to prevent it from being used as a tax haven. Perhaps it is time for the National-led government and some of its supporters to "get real".

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Yes Judith Collins has been very quiet on all this - was she one of the MPs who refused to answer radionz's question about trusts?

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It seems the NZ press and NZ Labour are very keen (sometimes) to criticise the NZ Gov. should it stray outside OECD rulings, then again the NZ press and NZ Labour are very keen (sometimes) to criticise the NZ should it stay within OECD rulings!
Can we please have some consistency from our free NZ press and NZ labour party? Or, is that asking too much?

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The consistency needed is that companies and wealthy individuals should pay their taxes. That, surely, is National Party policy. It is hypocritical of Mr Key to talk about going after multinationals who pay little tax in NZ, while supporting trusts here that allow such entities to avoid tax in other countries.

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OH! So you are saying that Mr Key is, "supporting trusts here that allow such entities to avoid tax in other countries." ?
Mind repeating that using your real name?

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Aren't you keeping up with the news John? -The Panama Papers? the Mexican 'Duke of Influence' Hinojosa Cantu??!! Losing your touch.

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Could these be called bullying?

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Good comment. Sums it all up, really.

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It's time for them to go. They've caused a great deal of damage to this country - and most disappointingly, the lack of spine from among the Nats who should have stood up to Key does rather produce a curl of the lip...

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So John Doe is smart enough to hack and orchestra one of the world's largest ever hacks and global media campaigns, but can't distinguish between the the sovereignty of the Cook Islands and New Zealand - that dog doesn't hunt

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Haha - best comment on this topic yet!

Poor John Doe is probably sitting in their ex-communist bloc apartment complex somewhere in Eastern-Europe right now staring at their wall poster world map furrowing their brow quizzically trying to work out if New Zealand and the Cook Islands are one and the same.

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Sounds like an inside NZ personal attack on John Key. Part of the wording by our NZ based "John Doe" says. "Our very own John Key" . Even a person ,in any type of reading or understanding,would quickly realise,that it is once more Dirty Politics revisited, by , use your own imagination,or intelligence,who the culprits are.

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You seem to be referring to the blog post by Anthony Robins who doesn't use the name John Doe.
http://thestandard.org.nz/panama-leakers-statement-singles-out-john-key/

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NZ doesn't have a TIEA (Tax Information Exchange Agreement) with Russia.

But NZ does have a TIEA with the Cook Islands.

PM John Key should know this - HE signed it - IN the Cook Islands 10 July 2009.

Miss this?

Has NZ Prime Minister John Key completely forgotten the TIEA (Tax Information Exchange Agreement) HE personally signed in the Cook Islands on 10 July 2009?

Was any information on tax avoidance and tax evasion by NZ citizens using the Cook Islands tax 'structures' every actually 'exchanged'?

Yes?
No?

If yes - what was the outcome?

http://www.newstalkzb.co.nz/news/politics/peters-key-shirking-responsibi...

Winston Peters says tax avoidance in the Cook Islands has happened under the watch of prime minister John Key.

Key has rubbished accusations from the Panama Papers leaker that he has enabled financial fraud in the Cook Islands, which exists in free association with New Zealand.

But the New Zealand First leader, who triggered the Winebox Inquiry in Cook Islands tax avoidance in the 1990s, said the prime minister does have a role to play.

He said New Zealand and the Cook Islands have an ongoing Tax Information Exchange Agreement which was updated in July 2009.

"That updating was to do with exchange of information about two things, tax avoidance and tax evasion, so Mr Key is 100 percent wrong about his responsibility."

Penny Bright
2016 Auckland Mayoral candidate.

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NZ does not control Cook Islands: Correct.
However, NZ can exert significant influence over Cook Islands if it wishes to do so.
USA exerts its influence over many countries that it doesn't control.
Foreign Account Tax Compliance Act (FATCA), AML/KYC requirements and many other aspects show how the Americans exert their influence.

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It would assist if those commenting could be clear whether they are referring to NZ residents avoiding/evading NZ tax using offshore Trusts or non NZ residents using NZ (or Cook Is) domiciled trusts to avoid tax in their own countries. The former is obviously a NZ concern. The latter, in the past, NZ has not regarded as its concern but clearly it impacts on our reputation.

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Why don't we do away with all trusts in NZ.
answer....TOO many people have them to avoid rest home costs,paying for medical treatment etc.
They are a complete rort on the hard working average kiwi.

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I am inclined to agree with you, but I cannot blame the likes of Doctors, hoteliers, bakers and candlestick makers et al for protecting their family home from litigation should things go pear shaped for them professionally. Apart from that trusts are an evil, they only exist to hide something or to try and control, from the grave, descendants choices.
As for John Doe? I have no respect for "whistleblowers" who hide behind a nom-de-plume. If he/she is confident in the truth of what is released then they are in no danger. BUT if he/she is liabling people with untruths then John Doe is in very grave danger indeed.

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So far the world has not been kind to the whistle blower - ask Chelsea Manning, ask Snowden, ask Assange

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>"As for John Doe? I have no respect for "whistleblowers" who hide behind a nom-de-plume. If he/she is confident in the truth of what is released then they are in no danger. BUT if he/she is liabling people with untruths then John Doe is in very grave danger indeed."

In other words, come out where we can assassinate your character in the grandest of traditions. This is a ridiculous argument. Whistleblowers have learned from example the need to protect themselves from retaliation.

We've seen that first hand in NZ, where scientists, school principals and the like do not feel free to speak...and where even the head of the FMA is not safe from attacks from pet attack dogs.

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The average kiwi should set one up then.

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While we're on this sort of thing, is Simon Bridges still using a private superannuation scheme with one of his houses in it to have the taxpayer pay his rent for that house? (There was another MP doing this too, IIRC.)

As Ken Whitney described, there's sometimes a difference between legal and ethical/moral.

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Seems that paying tax is mandatory for the poor NZ wage slaves - but arbitrary and avoidable for the NZ rich?

How is that fair?

I predict that on this very politically significant issue - which (in my view) cuts to the heart of how many New Zealanders view themselves - there will be numbers of decent National voters / supporters who will switch their allegiance to Winston Peters and NZ First.

Question time in Parliament this coming week should be fascinating ...

Penny Bright
2016 Auckland Mayoral candidate.

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Quite right, And I recall Key sneering at a suggestion Andrew Little made some time back with Key saying the only ones who'd have to pay this would be those who wouldn't be able to structure their affairs (into a trust, implied) to avoid it .

Ah, the poor peasants ?

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Whistle-blowing against 'NZ Foreign Trusts' - nearly 4 years ago.

Good work Tim Hunter.
__________________________

NZ foreign trusts among global tax havens
|
Last updated 05:00 22/08/2012

CHALKIE - TIM HUNTER

New Zealand slack company registration setup has come in for a kicking of late - and deservedly so. It's one thing to have a quick and easy registration process but quite another to have shell companies used for shadowy purposes, hidden behind foreign nominee directors.

Much sport has been had by Chalkie's colleagues exposing these New Zealand shell company links to international money laundering and arms dealing. One of the trails they follow towards such unusual activity is the appearance of an obscure person or address linked to numerous companies with no apparent local purpose.

Similar observations have led Chalkie to another kind of Kiwi entity capable of being exploited by the unscrupulous. It's called a New Zealand foreign trust.
........

Chalkie reckons New Zealand's foreign trust regime is an important part of the tax haven network, not just because it allows income to be collected tax-free - that's par for the course in the offshore tax business - but because it allows ownership to be hidden so easily.

When you combine foreign trusts with a shell corporate trustee, as administrators often do, and then with trusts and shell companies in other offshore jurisdictions, as administrators often do, you get a virtually impenetrable web protecting the wealth of the super rich from tax assessment.
.....
___________________

Penny Bright
2016 Auckland Mayoral candidate.

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Re "you get a virtually impenetrable web protecting the wealth of the super rich from tax assessment."

Penny hits the nail on the head. Perhaps all those making disparaging comments about her would like to state which part of the above sentence is inaccurate?

In fact ,we know very well that basically greed and corruption are at the base of these provisions. Let those poor wage-earning mugs from the middle class be the ones taxed to pay for running the country - oh and for
the salaries of our useless MPs who simply cut their forelocks to the current party leaders to keep their ministerial positions, limousines, higher salaries etc.

We need a better political system than this.Why not look to the country which sorted all this out years ago with its 100 Days provision? ...which is why I support www.100days.co.nz. The Swiss people control their politicians - not vice versa. Why are we putting up with politicians on the make? Time for change, indeed, isn't it!

.....

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The Swiss also feature (more prominently than NZ) in the "Panama Papers". Then too the Swiss have their secret bank accounts. Bank accounts that were very useful to Nazi murders in the 1940s. May I suggest you look to moving there?

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Can't quite get to grips with whether this issue or Penny's comments are a local body issue. But at least I now know she is a mayoral candidate......

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Corrupt control by the corporate 1% is VERY much, in my view, an Auckland 'local body' issue.

Penny Bright
2016 Auckland Mayoral candidate.

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Remember this?

Are NZ foreign trusts 'legitimate tax avoidance'?

http://m.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10839227

Dunne dismisses tax haven suggestions

Monday, 08 October 2012

The New Zealand Herald

By Matthew Backhouse

Revenue Minister Peter Dunne is dismissing a suggestion New Zealand is a tax haven after criticism over his "legitimate tax avoidance" comments.

In an interview aired by 60 Minutes yesterday about foreign trusts, Mr Dunne said the term tax haven was an exaggeration because it implied illegal tax evasion rather than "legitimate tax avoidance".

"There's nothing sinister about that - minimising one's tax has always been within the law, that's the difference between avoidance and evasion," he said.

The comments sparked criticism, with Green Party co-leader Russel Norman labelling them "astounding".

"The tax system is being undermined by the minister in charge of it," he said.

Prime Minister John Key was today unconcerned by Mr Dunne's comments.
......"

Penny Bright
2016 Auckland Mayoral candidate.

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Gosh - has the former Minister of Revenue Peter Dunne, now moved away from supporting the 'legitimate tax avoidance' provided by NZ foreign trusts?

(Funny what an international public 'spotlight' like the Panama Papers can do?)

http://i.stuff.co.nz/business/79441479/panama-papers-wakeup-call-for-nz-...

Panama Papers 'wake-up call' for NZ tax system - Peter Dunne

Sam Sachdeva 18:12, April 29 2016

CHRIS SKELTON/FAIRFAX NZ

United Future leader Peter Dunne says the Government needs to keep working with the OECD on international measures to tackle tax avoidance.

The Panama Papers have provided a "sobering wake-up call" about how New Zealand's tax system is being misused by some foreigners, United Future leader Peter Dunne says.

However, he has stopped short of calling for a broader inquiry into how foreign trusts operate in New Zealand, saying instead that the country needs to know more about the people using them.

Dunne, who was Revenue Minister from 2005 until 2013, said the release of the Panama Papers was "a sobering and timely wake-up call" about the need to ensure people were paying their fair share of tax.

......"

Penny Bright
2016 Auckland Mayoral candidate.

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Is a "high quality jurisdiction for trusts with a benign tax system in certain circumstances" - the new, long-winded definition of 'tax haven'?

http://m.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11635826

But Roger Thompson, a former IRD staffer who runs Bentleys, said New Zealand is not a tax haven. Instead it is a "high quality jurisdiction for trusts with a benign tax system in certain circumstances", he told TVNZ.

His services are used for legitimate purposes in compliance with the law, said Mr Thompson, and clients are rigorously vetted.Offshore companies and trusts are routinely used for entirely legal purposes, and Mossack Fonseca maintains that it has always complied with international protocols.
......"

Whatever .....

Penny Bright
2016 Auckland Mayoral candidate.

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