Transparency Times February 2017

Hero or traitor? The role of whistleblowing in our society

Wellington whistleblowing event

Banner VU IGPS and TINZ
Banner VU IGPS and TINZ

Tuesday 21st February 2017
5:30pm – 7:00pm
Rutherford House Lecture Theatre 2
Victoria University of Wellington, Pipitea Campus

The whistleblowing dilemma is one that many grapple with – upholding loyalty versus acting in the public interest. Nevertheless, whistleblowing is essential in uncovering corruption and preserving strong integrity systems. To be a truly democratic society, we must all feel empowered to speak out and ‘blow the whistle’. Hero or Traitor? The Role of Whistleblowing in Our Society will bring together experts from the Institute of Governance and Policy Studies, the New Zealand Police, Crimestoppers and Transparency International New Zealand to discuss the importance of whistleblowing within New Zealand and how we can all contribute in order to achieve greater levels of transparency and integrity.


Michael Macaulay

Victoria University IGPS Director

John Perham

Crimestoppers Board Chairman

NZ Police


Come along to hear the latest research and thinking about the role whistleblowing plays in New Zealand!

Please click here for: directions to VUW Pipitea Campus Maps

Inland Revenue’s multinational enterprises compliance focus

Lexi Mills

Lexi Mills

Lexi Mills

TINZ board member with delegated authority for events and AML.

We now live in an age of collaboration and partnership between government and communities. To foster that relationship takes high levels of accountability and transparency. As part of Inland Revenue’s role in furthering these principles, it has published the Multinational Enterprises Compliance Focus to achieve a “no surprises” approach to the taxation system within New Zealand. This report outlines the revenue collected for the 2015-16 financial year from multinationals and how it was spent. As well, compliance activities and corporate tax governance strategies are being pursued by the IRD to ensure multinational enterprises are paying their share of taxes.

A key feature of an effective democracy and strong integrity systems is a high level of engagement with stakeholders. The report achieves this by setting clear expectations for multinationals as to their tax obligations under New Zealand law, while highlighting the contribution made by multinationals to the economy. The “no surprises” approach should support an increase in compliance with New Zealand law which, in time, could lead to a more positive perception of multinational enterprises by our communities.

In recent years, a topic that has experienced particular scrutiny is tax base erosion and through shifting profits (BEPS). BEPS refers to tax base erosion and profit shifting that is the result of unintended gaps and mismatches between different countries’ tax systems. These gaps are used to shift profits to locations where there is very limited real activity by the business, or it is completely absent. This results in low taxes, and little or no overall corporate tax being paid. This report includes Inland Revenue’s response to the issue, outlining the past, present and future action items and strategies being deployed to combat base erosion and profit shifting.

In order to tackle BEPS, the 15-point plan developed by the Organization for Economic Cooperation and Development (OECD) has been adopted by Inland Revenue. These strategies cover key requirements, metrics and enforcement measures to respond to the threat of BEPS. Through the actioning of the plan, New Zealand will contribute towards the global efforts to combat BEPS and achieve a stronger taxation system. In order for this to be successful it is essential that there is strict enforcement, as well as continuous development of policy to prevent the use of alternate methods to achieve tax neutrality.

Through its open approach, Inland Revenue demonstrates its transparency and good governance. In this way, it further contributes to New Zealand’s position as the number one ranked country for ease of doing business. It demonstrates that ease of doing business is different from ease of tax avoidance. Transparency International New Zealand congratulates the Inland Revenue on its informative and easy to follow publication and looks forward to many more like it.

Hard evidence of corruption funded offshore trusts lands in New Zealand courtroom

Bombardier Global Express

According to reports, the family trusts of Malaysian businessman Low Taek Jho are the direct owners of assets including a Bombardier private jet valued at $49 million, a hotel in Beverly Hills and a $55m Los Angeles mansion. According to the US Department of Justice these assets were acquired with part of $5 billion misappropriated from the Malaysian state.

The release of the Panama Papers highlighted New Zealand's attractiveness as a haven for offshore trusts, which are used to hide the ownership of assets and legitimise funds.

Current trust regulations make it challenging to gather hard evidence about the workings and magnitude of these instruments as supporters of the status quo. The initial reaction to the Panama Papers was that New Zealand’s attractive regulations had not spawned a corrupt trust environment.

There continues to be new evidence emerging of New Zealand trusts being used to protect offshore assets gained through grand corruption. Court documents and media reports about the court appearance off Malaysian businessman Low Taek Jho's family offers a rare glimpse into the workings of New Zealand offshore trusts.

The family of Malaysian businessman Low Taek Jho appeared in an Auckland court on 20 February 2017 petitioning to replace the trustees of several of their trusts.

The trusts contain assets being seized by the United States’ Department of Justice as part of an investigation into the scandal-tainted 1Malaysia Development Berhad (1MBD) fund. More than $US3.5 billion (NZ$4.9 billion) was allegedly misappropriated. The trusts in question contain about NZ$368 million in assets, ranging from a private jet to American mansions.

Interestingly, the trustees being replaced included the Swiss based Rothschild and Auckland's Cone Marshall, both with ties to Mossack Fonseca and the Panama Papers. They declined to fight United States authorities out of concern for their liability in the face of the tougher international money laundering regulations in that country.

TINZ avoids involvement in specific cases of corruption and our knowledge of the merits and proceedings of this case is from news articles and online publications about it. What is important is that this is a documented example of Grand Corruption landing on our shores. New Zealanders owe it to themselves and the world to prevent continued use of our system in the hidden ownership shell game.

For more details, there are a number of well researched articles including:

In case you missed it

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Trust Us – New Zealand Can Hide Your Money! “Take an off-shore company and combine it with a trust; pay a couple of different firms of lawyers and accountants to manage your affairs (who are always deliberately a little confused about the exact role of the other) and bingo! You have the core ingredients for hiding your money or your property from taxmen and regulators across the world.”

1MBD scandal: Judge allows Malaysian businessman tussling for $370m in seized assets to take control of NZ trusts A judge has allowed a controversial Malaysian businessman and his family to take control of New Zealand trusts as they seek to fight the seizure of assets worth $370 million.

Malaysian government prepares to wind up 1MDB amid scandal State fund's assets to be transferred to two companies owned by the Finance Ministry

Jet, mansions figure in $232 million foreign trust case to be heard in Auckland court Auckland court to become scene of battle to prevent US seizure of assets

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Foreign Land Ownership Register

Clayton Mitchell: New Bill for all kiwis to enjoy “Last Thursday saw the defeat of the Bill, in Winston Peters' name, to set up a 'Foreign Land Ownership Register', so New Zealanders would be able to actually see the numbers.”

Land Transfer (Foreign Ownership of Land Register) Amendment Bill


UK MPs unite to push for greater transparency from tax havens The UK’s overseas territories face renewed pressure to abandon corporate secrecy after 80 MPs joined forces to demand greater financial transparency from offshore havens.

EU tax transparency plan voted down by national governments Plans for increased tax transparency across the European Union, which would have seen the details of the true owners of secretive companies made public have been watered down by national governments across the bloc.

Panama Struggles to Shed Its Image as a Magnet for Shady Deals

In Donald Trump’s Washington, corruption will be utterly shameless Washington Post

New Zealand transparency, integrity and accountability

Inland Revenue Commissioner’s call to action for multinationals 18 November 2016 Inland Revenue Commissioner Naomi Ferguson issued a call to action for multinationals to be more transparent about their tax affairs.

Value for money: Costing Open Government reforms How can governments ensure that they get their money’s worth when they embrace open government reforms?

The 9 countries best at fighting corruption The World Economic Forum has released its 2017 “Inclusive Growth and Development Report” — a major look into how nations around the world can best ensure that their businesses and institutions function as efficiently as possible.

“Inclusive Growth and Development Report” The World Economic Forum has released its 2017 report, a major look into how nations around the world can best ensure that their businesses and institutions function as efficiently as possible.


Solomon’s official faces corruption charges

Corruption Perceptions Index – media coverage in New Zealand

New Zealand reclaims top place in global transparency index New Zealand's government on Wednesday welcomed the country's return to the top of the global anti-corruption rankings.

New Zealand reclaims title as world's least corrupt country Issac Davison of the NZ Herald, Wednesday, 25 January 2017, 6:54PM

New Zealand rockets up the anti-Corruption ratings: a non-Spinoff investigation A look at the numbers behind New Zealand's score.

New Zealand and Denmark deemed the 'least corrupt' countries in the world New Zealand has regained its top spot in a global watchdog's rundown of the most corruption-free countries in the world.

Corruption Perceptions Index 2016: Vicious circle of corruption and inequality must be tackled Rise of populist politicians in many countries is a warning signal. Transparency International's media release.

New Zealand and Denmark deemed the 'least corrupt' countries in the world

NZ rated least corrupt country New Zealand has risen from being the fourth-least corrupt country in the world to be joint top with Denmark in Transparency International's Corruption Perceptions Index.

New Zealand and Denmark deemed the 'least corrupt' countries in the world New Zealand has regained its top spot in a global watchdog's rundown of the most corruption-free countries in the world.