Monday, July 4, 2016

Unsurprising review result of the year

Why you shouldn't let your country be run by merchant bankers (no that's not rhyming slang, although the meaning's effectively the same), number 3517859275 in a series.

So, back in 2014, international disquiet at NZ's foreign trust regime, specifically the lack of disclosure requirements that makes us barely distinguishable from offshore tax havens like the Cayman Islands, prompted the IRD to review the regulations relating to foreign trusts.

Those profiting from administering these foreign trusts include John Key's personal lawyer, Ken Whitney.  Key duly received representations from Whitney about IRD's plans to wreck the profitability of the foreign trust industry via unfair practices like imposing genuine disclosure requirements on it.

Key directed Whitney to the relevant Minister, one Todd McClay.  Apparently this was no more than the PM would do for any citizen, although it's unlikely McClay would respond to similar requests from citizens like you or me by coming cap-in-hand to our offices to hear what we and our colleagues had to tell him and make sure his department met our demands. Needless to say, the IRD didn't get to review the foreign trust rules.

Hooray, disastrous loss of profitability via the intrusion of good governance averted!  Until the Panama Papers turned up, that is, and journo scum got hold of the story.  Key had to get up in Parliament and spout laughable bullshit about our foreign trusts featuring "full disclosure," being "world class" and any Opposition members saying otherwise must be "barking mad."

I expect he wished he hadn't said those things when the polling showed most people are able to figure out when there's a bad smell under their nose.  Now he had to assign someone to review our foreign trust rules, and putting Ken Whitney in charge of it wouldn't really be an option.

Fortunately the fuss had died down by the time the review was finished and found that, hey, you know what?  Our foreign trust rules are anything but "world class," and that, far from offering "full disclosure," they conceal the identities of the foreigners involved, which means the industry Key's pal Whitney went to such trouble to defend is quite likely providing vehicles for criminal activity (not that we have any means of knowing for sure, thanks to Whitney and Key's sterling efforts to ensure nothing so inconvenient as good governance should afflict the country).

I like it when stuff like this comes out, because it highlights what a bunch of shitweasels the country's ruling class actually consists of, but at the same time, it's depressing to think about how much of it we never actually find out about.

14 comments:

pdm said...

You know Milt we thought exactly the same about Clark and Cullen - the very people who actually set things in place for these Foreign Trusts.

Anonymous said...

PDM....Initiation is one thing, collusion when in full knowledge of the facts is another.
Given the political and economic climate today, particularly with the largest divide in wealth NZ has ever seen this has ramifications beyond a left right spat.

Lord Egbut

pdm said...

LordE - doubt it, but dream on.

Psycho Milt said...

...the very people who actually set things in place for these Foreign Trusts.

Sometimes the rules turn out not to have been so well thought out and need amending. That's true for any government. Clark and Cullen weren't part of the government in 2012 when it was first made public that these rules needed amending. If I recall correctly, the Revenue Minister in 2012 called it "legitimate tax avoidance," for all the world as though he was one of the shysters in the industry, not the Minister in charge of revenue.

pdm said...

` the Revenue Minister in 2012 called it "legitimate tax avoidance,"'

Would that have been Dunne? Nough said if it was as his mind was probably on things Irish.

Nookin said...

If tax avoidance is so morally repugnant and is to be condemned universally, why are Bonus Bonds so popular and successful?

Psycho Milt said...

You figure Whitney et al are hoovering up $25 mil pa for administering foreigners' Bonus Bonds purchases?

Nookin said...

Everyone engages in tax avoidance in one way or another. You cant say that you are only a little bit pregnant. You are pregnant or you are not pregnant. If some tax avoidance is repugnant then all tax avoidance is repugnant. Bonus Bonds investment is tax avoidance. Investors are avoiding paying tax, not only by minimising income but also in the expectation of tax free returns. If, as Little says, tax avoidance is morally wrong then where do you draw the line? Is there a $ amount that turns tax avoidance into reprehensible conduct or do you go by occupation?

Anonymous said...

Nookin is right. It seems its avoidance when someone else does it but not when I do it. My view is that tax should be simple and consumption based - dipping into my pay packet at source is theft.

3:16

Psycho Milt said...

I guess Key could have taken the line from the start that there's nothing wrong with tax avoidance (and money-laundering?), so we don't need full disclosure in our foreign trust regulations and overseas jurisdictions can go fuck themselves. It certainly would have been more honest than what he did instead. Not really a practical approach for a NZ Prime Minister to take though, is it?

The Veteran said...

PM ... with respect you're missing the point. Key agreed to the inquiry (to be conducted by John Shewan who Little then proceeded to 'trash' as Mr Dodgy Trusts exemplar). Shewan found that the laws governing the operation of foreign owned Trusts needed updating (first introduced by Labour in 1988 - quelle suprise). There is every expectation that this will now happen.

I thought the article by Deboroh Russell (Labour Party Candidate for Rangitiki in 2014) who may be known to you gives a balanced view on the rational for allowing foreign owned Trusts to operate in NZL. Her solution on how to close the loopholes that do exist is pretty much that as advocated by Shewan. You can access her article at http://thespinoff.co.nz/politics-media/10-05-2016/foreign-trusts-101-a-plain-english-introduction-amid-the-panama-paper-haze/

She does not hold to the view that foreign owned trusts are evil. I suspect that some on the left side of the political discourse will disagree.

Psycho Milt said...

I also thought the article by Deborah Russell was excellent. She points out that NZ in effect is operating as a tax haven and the issues with lack of disclosure that were raised in 2012 and 2014 were important and should be fixed. Key agrees with her, now that the scam's been made public. Back before it was made public he had a completely different view of things. The events speak for themselves.

Adolf Fiinkensein said...

Milt

What particular issues of disclosure were they?

Psycho Milt said...

The ones that prompted Key to ask Shewan to conduct a review, and that Shewan duly explained in his report before recommending changes that would fix them.