Sensible and rational answers to stupid and irrational Media party campaigning

The first person the Media party have attempted to name and shame for daring to be a lawyer/accountant working with trusts, Roger Thompson, has responded to silly questions from Radio NZ.

His answers show just how out of depth the Media party are in reporting legal and complex issues such as trusts and financial matters.

You, Bentleys and Mossack Fonseca NZ are extensively named throughout the “Panama Papers”. How do you respond to that?

I have provided professional services to Mossack Fonseca NZ. This includes acting as a professional director of an associated trustee company.

Looking at the data it seems that a relatively small number of trusts or companies have been established in New Zealand that are related to Mossack Fonseca.

In fact New Zealand does not feature in the 10 top jurisdictions. See the chart labelled “The 10 most popular tax havens in the Panama Papers”.

I think the painting of New Zealand as a tax haven has been grossly exaggerated.

And irresponsible. The Media party are actually putting people at risk with their egregious breaches of privacy. Worse they are claiming some higher good, and moral equivalence for doing claiming “public interest”. Most of the public will have eyes glazed over with boredom as this shabby little hit takes place.  

Are you a “director for hire”?

Like many accountants and lawyers I will accept professional director appointments for well regarded clients after undertaking satisfactory due diligence.

See what the Media party does…they try and coin a phrase that sounds bad…like “gun for hire”, in this case it is “director for hire”. Are they seriously suggesting that people should do jobs for free otherwise there is some ulterior motive? Do they get paid for their writing and publishing? No…are they in effect “wordsmiths for hire”?

Do people use your services to limit their tax liabilities or to deliberately keep their identities secret? Are there other reasons for offshore individuals establishing commercial entities in New Zealand?

New Zealand citizens are possibly the most prolific users of trusts in the world. There are a number of reasons, the most common being the preservation of wealth.

Business people commonly use trusts to separate private assets from business assets that may be at risk to business creditors, other people use trusts to keep family assets protected from claims from spouses or de facto relationships, spendthrift children etc., and additional flexibility and protection in passing assets to future generations as opposed to keeping assets in their own name to devolve by will subject to challenge by family members.

Prior to the abolition of estate duty, trusts were commonly used to hold assets likely to increase in value so as to protect that increase in value from estate duty.

The use of trusts for the purposes mentioned above is common practice and well accepted as legitimate.

Wealthy people in other countries have these same reasons for using trusts. There may also be a prevalence of kidnapping and blackmail in their country of residence, forced heirship laws (lack of freedom to choose who inherits their wealth when they die) and possibility of arbitrary state seizure of assets. The family and their businesses may be spread geographically and be subject to multiple laws in multiple countries. These are all situations where a trust can offer protection and flexibility.

However many countries do not have laws which enable the creation of trusts. Trusts are typically only found in countries that have adopted the English common law type systems such as UK, commonwealth countries and the USA.

For people in countries that do not have trusts they will need to consider trusts established in other countries that do have laws under which trusts can be created.

There are a number of choices including New Zealand.

New Zealand is attractive because we have good trust laws, a good independent non-corrupt judicial system and are stable economically and politically.

Another key factor is that NZ does not impose an additional layer of tax on foreign income of trusts where the settler of the trust is non-resident. There is nothing sinister or improper in this.

In my experience the use of trusts for tax evasion is not common.

Often a trust will own shares in a company carrying on a business which is paying full tax in the country in which the business operates.

The beneficiaries declare and pay tax on any income that is allocated to them by the trust. There is no tax evasion occurring by using a New Zealand trust in such way, rather a New Zealand trust gives the client the legal benefits of a trust without imposing additional taxes on them.

This is a perfectly legitimate and proper use of New Zealand trusts.

We do not assist people to illegally hide assets.

Trust deeds are generally confidential documents which are not publicly available. However whenever requested, we will provide copies of trust deeds to the Inland Revenue Department.

The use of trusts and people’s rights to keep their business and personal affairs private and confidential is legitimate and normal.

Unfortunately this appears to have been overlooked by the journalists releasing personal and confidential information without any regard to personal rights.

That is a very logical and understandable assessment of what we are actually talking about here. Nothing sinister, not at all what the Media party are portraying.

Do you actively promote New Zealand trusts to customers around the world, particular clients in South and Latin America?

We do not promote New Zealand trusts directly to customers around the world.

Media party shown up for their lack of research. They should have already known the answer to that question.

How thorough is your due diligence on new or prospective clients? These checks appear to be left to your own staff – is that adequate?

Our due diligence process is of a high standard and includes verification of identity and residence from independent sources.

We also typically obtain a report from a third party such as Thomson Reuters World-Check. If anything unusual is identified, additional information will be requested.

How thorough is the Media party’s own due diligence. They are smearing and abusing people while breaching their privacy, yet they are the first to whinge when there are other privacy breaches. The Media party are showing us yet again how poorly researched and thoroughly nasty they are.

How often do you reject clients?

We have rejected a small number in the past where we could not be satisfied as to the integrity of the client or the legitimacy of source of funds.

This is generally due to not being able to obtain sufficient information rather than anything untoward.

Fair enough.

What requirements are there to demonstrate – to your staff and authorities – what the trusts are being used for?

I’m not sure I understand this question. We comply with all New Zealand laws including anti-money laundering laws.

What a stupid question. They comply with the laws, where is the problem? The Media party and the left-wing are attempting to make this an issues of morals, but whose morals are we supposed to live by? Theirs?

The customer is not required to sign any documents stating they won’t use the trusts for unlawful purposes – is that sufficient?

Incorrect. We typically require confirmation as to the purpose the trust is being used for and the legality of any funds being transferred to the trust.

Wrong again. The Media party really are just hurling out emotive and wrong accusations in the hope of the dirt sticking.

On how many occasions since 2014 have IRD had cause to raise concern about your clients?

I believe Inland Revenue’s role is to ensure that New Zealand tax is properly paid and to also obtain information about New Zealand trusts when requested to do so by foreign tax authorities where there is an exchange of information obligation.

We have received a small number of such requests in the past and have always complied.

As you would. Again another attempt at a smear that has fallen flat.

Can you confirm that you worked for IRD? What was your role?

I worked for Inland Revenue for a relatively short period after graduating from university over 30 years ago. I fail to see the relevance of your question.

There is no relevance. There must be literally thousands of former employees of IRD, in fact my own accountant is a former employee of IRD. So what?

Is New Zealand a tax haven?

No, in my experience I don’t see New Zealand is a tax haven I would describe it as a high quality jurisdiction for trusts with a benign tax system in certain circumstances.

I think the assumption that all New Zealand foreign trusts are being used for illegitimate purposes is unfounded and based largely on ignorance.

Due to the information gathering powers of the New Zealand Inland Revenue Department I would expect that those looking to use trusts for tax evasion or other illegitimate purposes would choose alternative jurisdictions with secrecy laws.

Jurisdictions like those in the top ten countries for money laundering, which New Zealand isn’t remotely near joining.

Have you ever met John Key, Michael Woodhouse or Todd McClay? What was the nature or purpose of the meeting? Have you ever lobbied the government on tax legislation, regulation or compliance issues?

I met John Key once for a few seconds before he spoke at a national accounting conference.

This was before he became Prime Minister and we merely exchanged general pleasantries, there was no discussion regarding trusts or any specific tax issues.

I have never met Michael Woodhouse or Todd McClay and have never lobbied the government on tax legislation, regulation or compliance issues in any way relating to trusts and the taxation thereof.

I have made several submissions to the Finance and Expenditure Select Committee and appeared before the Committee twice on non-related tax issues, for example, the taxation of property developed for investment purposes and the portfolio investment entity (PIE) rules when those rules were initially proposed.

There is the sting, the attempt to put a hit on the government. That is what this is all about. Nothing else.

 

– Radio NZ


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As much at home writing editorials as being the subject of them, Cam has won awards, including the Canon Media Award for his work on the Len Brown/Bevan Chuang story. When he’s not creating the news, he tends to be in it, with protagonists using the courts, media and social media to deliver financial as well as death threats.

They say that news is something that someone, somewhere, wants kept quiet. Cam Slater doesn’t do quiet and, as a result, he is a polarising, controversial but highly effective journalist who takes no prisoners.

He is fearless in his pursuit of a story.

Love him or loathe him, you can’t ignore him.

To read Cam’s previous articles click on his name in blue.

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