Panama Papers: The story so far

5:59 am on 9 May 2016

Panama Papers NZ - To what extent has New Zealand been caught up in the leaks, after the first documents were made public early last month?

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Photo: RNZ / Toby Morris

Panama Papers NZ - read our Full Coverage

New Zealand-based foreign trusts, including the Rotorua Trust and the Haast Trust, were caught up in the data leak after 11 million confidential documents were first revealed.

Following the leak, Prime Minister John Key mounted a defence of New Zealand's tax system, rejecting any suggestion it acts as an international tax haven.

Revenue Minister Michael Woodhouse said that any questions about overseas trusts should be directed to the lawyers and companies that set them up.

New Zealand's reputation 'damaged'

But Greens co-leader James Shaw said it was clear people were using New Zealand's foreign trusts to evade tax and the assessment by ICIJ director Gerard Ryle that New Zealand was a tax haven, and a front for people who wanted to hide their money, was damaging for the country's reputation.

Others accused New Zealand of dragging its heels in response to the Panama Papers with a number of countries starting to crack down on tax dodgers and money launderers.

Review of New Zealand's foreign trusts

On 11 April, Mr Key said that the government was likely to appoint an independent expert to review New Zealand's foreign trust laws.

Andrew LIttle, left, and John Shewan

Andrew LIttle, left, and John Shewan Photo: RNZ / Supplied

On 12 April, tax specialist John Shewan was appointed to conduct the review.

But Labour leader Andrew Little accused Mr Shewan of giving the Bahamas advice to preserve its status as a tax haven. Mr Shewan rejected the allegations as 'a storm in a teacup'.

The government was also warned that quick fixes to the foreign trust regime would not be enough to restore the country's reputation.

John Key's involvement

Andrew Little called on the Prime Minister to release his personal tax records, while it was revealed that Mr Key had a short-term deposit with a firm specialising in foreign trusts. Mr Key said that was not in the least embarrassing.

In late April, an email was released which showed that Mr Key's personal lawyer lobbied the government about proposed changes to the foreign trust regime.

Mr Key said his lawyer had misrepresented him when lobbying the Revenue Minister not to change the rules governing foreign-owned trusts. Mr Key was adamant he told one of his ministers that a man he was referring on to him with queries about trust rules was his own personal lawyer.

Prime Minister John Key speaks to media about the Panama Papers whistleblower on 7 May 2016.

Prime Minister John Key speaks to media about the Panama Papers whistleblower on 7 May 2016. Photo: RNZ / Claire Eastham-Farrelly

PM targetted

This past weekend the anonymous leaker of the Panama Papers - John Doe - targetted the Prime Minister in a statement about the motives behind the leaks.

But Mr Key responded saying the anonymous leaker was confused about the New Zealand Prime Minister's responsibilities.

OIO review

The Minister for Land Information has asked the Overseas Investment Office (OIO) to review a decision to allow a land purchase by a person connected to Mossack Fonseca, the law firm at the centre of the Panama Papers. Louise Upston asked the office to review the application to ensure it was appropriately assessed and that any concerns were properly investigated.

At the end of April the OIO said it was satisfied due process had been followed.

However, the OIO later said it was investigating revelations the two Argentine brothers it allowed to buy the large Taranaki farm had pollution convictions.

Last week the OIO apologised to the government for failing to conduct a robust inquiry when it approved the sale of the Taranaki farm to a foreign company.

A timeframe of foreign trust usage

1988: The David Lange-Roger Douglas Labour government passes a new tax law allowing foreign people to have New Zealand trusts with zero tax and no reporting required.

2005: John Key as National Party finance spokesman talks about New Zealand becoming the "Jersey of the South Pacific" and his wish to develop the offshore banking industry.

2013: Tax Justice Network declares New Zealand to be a "secrecy jurisdiction". Its Financial Secrecy Index ranks New Zealand 48th most secret country out of 82 (with Switzerland number 1).

2013: An IRD report stated that "our foreign trust rules continue to attract criticism, including claims that New Zealand is now a tax haven in respect of trusts. This is largely because the mismatch between our rules and those of other countries may result in income not being taxed either in New Zealand or offshore".

2013: Anti-Money Laundering/Counter Financing of Terrorism Act passes, requiring financial services providers to retain more detailed records on their clients and their sources of money - but it did not change the foreign trust regime.

2015: Panama Papers leaked to German Newspaper, Sueddeutsche Zeitung. The 11.5 million documents contained 40 years worth of information from secretive law firm Mossack Fonseca. It pairs up with the International Consortium of Investigative Journalists to spend a year delving into them.

2015: Tax Justice Network estimates between $31 trillion and $41 trillion of private money is sitting untaxed or lightly taxed in countries which offer high levels of secrecy.

2016: John Key says New Zealand should position itself as an Asia-Pacific "Switzerland" and attract mega-rich customers.

2016 (April 3): Panama Papers - first stories released, involving 400 journalists across 75 countries.

2016 (April 4): Iceland's Prime Minister Sigmundur David Gunnlaugsson becomes the first major casualty of the leak amid public outrage that his family had sheltered money offshore. British Prime Minister David Cameron comes under scrutiny after revelations his father ran an offshore fund.

2016 (around 7 April): John Key when asked about his 2005 "Jersey of the South Pacific" comments saying "I think there's a role for NZ to play in providing financial services. We …. have very strict obligations around disclosure and we meet those obligations."

2016 (April - in Parliament): John Key - "There are a variety of reasons why people use foreign trusts, including ones that may be registered in New Zealand. I am sure many of them are legitimate.... I do think there is a role for NZ in the provision of financial services as part of a diversified economy. I think we can do that quite successfully."

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*The investigation into New Zealand links in the Panama Papers is a journalistic collaboration by reporters from RNZ News, One News and investigative journalist Nicky Hager, and with the assistance of the International Consortium of Investigative Journalists and the German newspaper Süddeutsche Zeitung.

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