Controversial Mexican construction magnate Juan Armando Hinojosa Cantu put $US100 million into three tax-free trusts in New Zealand, according to a report by Neil Chenoweth – the only Australasian journalist who has been granted access to documents leaked from law firm Mossack Fonseca and known as the Panama Papers.
Correspondence published by Mr Chenoworth indicates Mr Hinojosa's $US100 million in three trusts (formed in 2015) could be just the tip of the iceberg. Mossack Fonseca has been on a marketing drive to promote New Zealand trusts, he says. He also highlights a letter from Ken Whitney (Prime Minister John Key's personal lawyer at the time) in which Mr Whitney offered a professional endorsement for Auckland law firm Cone Marshall, which was seeking professional accreditation with Mossak Fonseca.
Mr Chenoweth doesn't make any accusation that any laws were broken, and NBR politics editor Rob Hosking says allegations of Mr Whitney's influence on foreign trust policy don't stack up. Nevertheless, Mr Chenoweth's article has become a fixture in the Australian Financial Review's top five most-read list – providing another spotlight on the foreign trust issue that the government will find unwelcome.
UnitedFuture leader Peter Dunne says Panama Papers revelations – and more are expected involving NZ once the ICIJ's database becomes searchable on May 9 – are potentially very negative.
"If the label ‘tax haven’ is being bandied about now as it is, sticks, then that’s extremely damaging. You think of the way we perceive other countries that we’ve historically labelled as tax havens. We don’t view them credibly, and I think that’s the big risk to New Zealand," he says, closely echoing concerns raised by IRD in 2013.
According to a New York Times report, Mr Hinojosa has been close to Mexican President Enrique Pena Neito since Mr Pena Neito was a young political aide.
Mr Hinojosa struck controversy in early 2015 after he built a $US7 million house for Mr Pena Neito's wife, but only $US3 million was paid upfront (the balance was covered by a promissory note).
Around the same time, media highlighted that Mr Hinojosa had been awarded several large government contracts that did not go to tender. Several ran far over budget, to the benefit of his companies.
Mr Hinojosa was not charged with any wrongdoing but companies associated with him did subsequently see several of their government contracts cancelled, including a $US3.7 billion rail contract.
The government has drafted former PwC chairman John Shewan to review rules around foreign trust disclose. He is due to report on June 30.
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