Panama Papers: controversial Mexican construction tycoon put $100m into NZ trusts, report says

Ken Whitney

Rob Hosking: The PM's tendency to behave like Arthur Daley invites this sort of attack

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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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When the then Labour Government with Helen Clark and Michael Cullen aboard set up the trusts,in 1988,and also revisited them in 2006 by the same Government and mentioned Labour Party leaders.,Seems if they were the architects of such trusts and almost 20 years later with the 2006 review and all were given a clean bill of health. How come now under the National Goverment who inherited the trust legislation,as change of Government ,why are the so called labour Party MPs attacking their own past trust legislation. Maybe most of us have missed someting,or are Labour Party, the masters of hypocrisy, just confirming, what most people already know, they are hypocrits personified.

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John - no doubt the Labour Party want everyone to forget their involvement in the trust legislation. And to be fair to them, most of the uniformed masses have. Reading ignorant comments on a Stuff article is almost as bad as following The Donald on Twitter.

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If I stick with your argument John, no old law or regulation should ever be changed or repealed! 20 years is a long time in a fast moving world today.

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More recycling of the old Key argument "It's not my fault, Labour did it, 8 years isn't enough time to fix anything so please give me another term and I promise I'll really do something this time round".

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The laws were last revisited 10 years ago - since that time everything seemed to be working fine. We have signed and updated plenty of tax treaties with no other country questioning the disclosure regime in the foreign trust laws.

We've now got some evidence that, potentially, the disclosure regime may not be as robust as initially thought and so this is under review.

I really don't see how this is Key's fault, Labour's fault or anybody's fault - things move on and you adjust when you get new information; but only after taking stock of that information.

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New Zealand is NOT a tax haven, and it is completely irresponsible of our (unfortunately financially ignorant) media to make such a claim.

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disagree NZ's foreign trust laws in effect provide scope for foriegners (not NZers) to hid assets and income and thus avoid tax in the appropriate jurisdiction. Maybe not as cleanly as other tax havens, but then that is the risk someone takes - slightly less protection but also much less liklihood (until now) of tax authorities asking questions.

If there were not major tax and or asset protection advantages why would anyone promote NZ as a place to set up a foriegn trust etc.

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The 'uniformed masses' are in North Korea. Perhaps uninformed masses would better convey your point anonymous. Let's not be ignorant like the masses.

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Its interesting that everyone is missing the following two points.

Disclosure requirements
The IRD has form IR607 (form dated October 2012) regarding disclosure from "resident foreign trustees" of Foreign Trusts.

Income Tax requirements
Any income generated in NZ by a non-resident is always taxed in NZ and this includes any income generated by the Foreign Trusts in NZ. This is the same principle applied across all taxpayers. For NZ resident taxpayers, we need to include the income from as well as income that we may earn from our worldwide investments. Our overseas income maybe taxed in the country where we have the income and when we include into our NZ tax return, where we have a 'double tax treaty agreement' with a particular country, we get the tax credit any pay any differential tax in NZ on that overseas income.

I remain unclear about the fuss regarding the use of foreign trusts by overseas people. We have significant 'anti money laundering' rules for disclosure imposed on various organisations/professionals that it is near impossible to get round these rules.

I would love to figure out where exactly the gaps in the legislation/disclosure rules are

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