Panama Papers NZ - What are the Panama Papers and what do the latest revelations mean? Catch up on the latest developments in the saga with a special Q & A.
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What are the so-called Panama Papers?
The Panama Papers are an unprecedented leak of 11.5 million files from the database of the world's fourth biggest offshore law firm, Mossack Fonseca.
The records were obtained from an anonymous source by the German newspaper Süddeutsche Zeitung, which shared them with the International Consortium of Investigative Journalists (ICIJ).
The ICIJ then shared them with a number of partners worldwide, including RNZ News, One News and investigative journalist Nicky Hager.
What do they reveal?
The documents show how the world's rich exploited secretive offshore tax regimes, including New Zealand's.
This country is referenced more than 61,000 times in the papers, and shows Mossack Fonseca actively promoted New Zealand to its clients, particularly those from Latin America, as a place to park their money.
It highlighted New Zealand's tax-free status to foreigners setting up offshore trusts or companies and limited disclosure rules, backed by New Zealand's stable political system, and independent and established legal and financial systems.
A number of New Zealand key foreign trust players also show up time and time again, including Bentleys New Zealand and its co-founder Roger Thompson, which acted as Mossack Fonseca's agent here.
So New Zealand's a tax haven?
The OECD says tax havens have the following features; zero or low tax, a lack of effective exchange of information, lack of transparency and no substantial activities
The Panama Papers highlight the complexity and opaqueness of many trusts, and the lengths some people went to hide their connection to them.
Indeed, a Mossack Fonseca official, reported in the Guardian newspaper, said "95 percent of our work coincidentally consists on selling vehicles to avoid taxes."
How is it done?
The Panama Papers show it's relatively easy to do for those with the means to do so.
Potential customers, or their lawyer or accountant, would contact Mossack Fonseca. Typical clients include Ecudorian bankers, Colombian car dealers, wealthy Mexican celebrities and Brazilian lawyers.
Mossack Fonseca passed on their clients information to Auckland law firm Bentleys and its co-founder, Roger Thompson, who would organise the paperwork to set up the trust here.
Mr Thompson's tasks would also often include being the sole New Zealand director of the trusts, alongside two Panamanian directors.
A further Bentleys company, Orion Trust, is also used over and over as a nominee office holder in foreign trusts and companies.
Both hid the real owners from view.
Nevertheless, Bentley's Roger Thompson says confidentiality is allowed, and the system guarantees it.
Who keeps an eye on the trusts in New Zealand?
Inland Revenue (IRD) has oversight of the trusts, which are required to be registered. The trusts are not required to file an annual return, but if asked by IRD they must give details on their make up and transactions.
The papers indicate that IRD rarely queried or checked any trusts, its owners or its beneficiaries.
Bentley's Roger Thompson says his firm has received a small number of requests from IRD in the past and have always complied.
In the light of the Panama papers, is the government doing anything?
Prime Minister John Key initially insisted there was nothing wrong with the foreign trust regime when the papers first came out in early April.
But within a week, Mr Key executed a u-turn, appointing former PWC chair and tax expert John Shewan to carry out a review of the disclosure rules.
He is due to report back at the end of June.
Mr Key also said Inland Revenue will follow up any revelations from the Panama Papers involving New Zealand, but has rejected calls for the industry to be shut down.
He said New Zealand was working with other OECD countries to shut down tax loopholes.
The next step in that co-operation comes this week when British Prime Minister David Cameron hosts the London Anti-Corruption Summit, which Police Minister Judith Collins will attend.
*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.
