Credit: Forbidden Stories, OCCRP

More dirty laundering in New Zealand

Daphne Caruana Galizia
Maltese journalist Murdered in October 2017 while investigating corruption

by David Dunsheath

Transparency Times Newsletter Co-editor

Investigative journalist members of the ‘Daphne Project’ have recently linked an Auckland wealth management company, Denton Morrell, with an international money laundering controversy. (See Transparency International New Zealand (TINZ) media release on 20 April 2018)

New Zealand manipulations

As reported by RadioNZ, the Daphne Project has revealed that many of the companies in the Daphne-researched Azerbaijan-Pilatus network link back to Denton Morrell. It outlines the company’s multi-company and secret trust manipulations undertaken for foreign “ultra-high net worth” clients, to hide foreign beneficial ownerships and their likely ill-gotten assets. 

However, “there is no evidence or any suggestion that Denton Morrell or Mr Butterfield were aware of any allegations of money laundering by the Azerbaijan-linked companies, but it appears that the structure created by Denton Morrell may have been used to hide the ultimate beneficial owners of those assets.”

Deficient legislation

New Zealand law remains deficient for protection from foreign money laundering because real ownership of companies and trusts can remain legally hidden from public and regulator scrutiny. TINZ Chair, Suzanne Snively, noted “The work of The Daphne Project highlights the value and need for a public repository of the overseas beneficial owners of assets registered in New Zealand for all legal entities.”

Following the embarrassing 2016 release of the leaked Panama Papers, New Zealand’s foreign trust tax laws came under intense international scrutiny for allowing non-transparent business ownership structures to be easily exploited. The subsequent Government-commissioned narrowly focussed, Shewan Inquiry failed to address a number of fundamental issues brought to light by the Panama Papers. (see The EU and New Zealand tax transparency post Panama Papers, August 2016 Transparency Times.)

 TINZ’s recommendation to the 2016 Shewan Inquiry for establishment of a national registry of beneficial ownership of all relevant asset-ownership structures consistent with international initiatives, was not addressed. (see Shewan Inquiry on foreign trusts.) TINZ is now, once again, urging the establishment of a beneficial register with adequate funding to enable reviews and audits by law enforcement and compliance bodies.

The Daphne Project

The Daphne Project was established to continue the research on political corruption and money laundering being undertaken by Maltese journalist Daphne Caruana Galizia, when brutally murdered by a car bomb in October 2017. Her research included secret financial links between the Malta and Azerbaijan governments and respective country’s elite, together with a private bank in Malta called Pilatus Bank. 

Three men accused of her murder have been held in prison since their arrests in December. Each has pleaded not guilty and now awaiting the setting of their trial date. 

The five-month old Daphne Project comprises a team of approximately 45 journalists representing 18 news organisations – including New Zealand’s RadioNZ – from 15 countries.

It is coordinated by the Paris based ‘Forbidden Stories’ organisation established specifically to continue the work of killed, imprisoned, or otherwise incapacitated journalists. Forbidden Stories has a mission to provide journalists with a secure backup database for their research and if necessary, provide further research to complete an interrupted story and publish it, censor-free, using its collaborative network of news organisations. By this means it sends a powerful signal to enemies of a free press:

 Even if you succeed in stopping a single messenger, you will not stop the message.

Furthermore, the Organized Crime and Corruption Reporting Project (OCCRP) facilitates the international sharing of documents and information across its participating organisations such as the Daphne Project and assigns researchers and reporters to investigations in their pursuit of money laundering, drug trafficking, public corruption, the offshore industry, and privatisation fraud.

 “The sun was shining on the day assassins took Daphne’s life. Now her colleagues will shine many lights onto the stories that killed her.

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