The Guardians of New Zealand Superannuation, the manager of the NZ Super Fund, confirms it had previously used Appleby, the law firm at the centre of the "Paradise Papers" document release.
The announcement follows a statement by Inland Revenue on Monday asking for any information from New Zealand taxpayers with exposure to Appleby.
The “Paradise Papers” refer to a set of 13.4 million confidential electronic documents relating to offshore investment. They revealed how several high-profile individuals including the Queen have used offshore trusts, along with information about the types of tax structures major corporations use outside the US.
In a press release, The Guardians says it has used Appleby to assist with local Bermudan law advice over reinsurance contracts and the establishment of separate accounts to hold reinsurance products as part of the fund’s natural catastrophe reinsurance mandates with external investment managers Elementum Advisers (2009/11) and Leadenhall (2013).
It also says Appleby is likely to have advised other parties with which The Guardians has dealt.
For the 2017 financial year The Guardians was the largest New Zealand taxpayer, paying a record level of income tax of $1.2 billion. The IRD says it will probe the papers and would do so with help from other international agencies.
However, Appleby cannot yet confirm whether The Guardians’ documents were stolen in the security breach. The Guardians said it was confident there would be no negative commercial implications for the fund even if documents were taken.
The Guardians says it has received information from the IRD that a wholly owned fund subsidiary, NZSF Private Equity Investments (No. 1) Ltd, is mentioned in the documents as a limited partner of Coller International Partners V (CIP V). Appleby was advising Coller in respect of this transaction, not The Guardians.
CIP V is a leading private equity fund, which has commitments from 200 of the world’s leading financial investors including US state pension plans, sovereign wealth funds and insurance companies.
The NZ Superannuation Fund committed $US30 million to the $US4.8 billion fund in February 2007 to provide access to the secondary segment of the global private equity sector. The investment has largely been realised, at an attractive return, and the NZ Super Fund’s residual interest in CIP V was therefore held at zero value in its 2017 financial statements.
The Guardians requires collective investment funds in which the NZ Super Fund invests to provide full tax transparency and information exchange for tax purposes, and compliance with all relevant laws.
It says the NZ Super Fund does not invest in schemes or arrangements that use secrecy laws to conceal assets and income that are subject to tax, or which create false tax deductions. It also has a Cooperative Compliance Agreement with the IRD.
“Under this agreement, we disclose tax positions taken on fund activities, including the tax treatment of new investments, to the IRD, before we file our tax return. In this way we can be confident that the IRD agrees with our approach before we file our return,” the release says.
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