While the Prime Minister is trying to downplay New Zealand's role as a tax haven today, another news story gives us a stark illustration of the problems of the global money laundering industry. The money launderers love these things called "bearer shares": basicly, certificates saying you own part of a company (look, there's a bunch of people who hold them, supposedly right here in Palmerston North!) They love them because they make it virtually impossible to prove who owns a company, allowing taxes and stamp duty to be evaded. The effect of this? Our government has literally no idea who now really owns a $6 million farm they allowed to be sold offshore:
The Overseas Investment Office has admitted it may have lost track of who ultimately owns the Onetai Station farm in Taranaki.
The 1317 hectare farm was sold in 2014, on the advice of the Overseas Investment Office (OIO), to Ceol & Muir, a company established with the help of Panamanian law firm Mossack Fonseca.
The OIO advised ministers in 2013 that Ceol & Muir was "ultimately owned" by Argentinian businessmen brothers Rafael and Federico Grozovsky.
But OIO group manager Annelies McClure said ownership of Ceol & Muir was determined by who held 13 separate "bearer certificates", three of which it has been unable to trace.
Which in turn means that they have no idea whether those owners are complying with New Zealand law around foreign ownership.
Mossack Fonseca and its money laundering friends regard that as a feature. To law abiding citizens who want a law abiding country, its a bug. Fortunately, there's a simple solution: outlaw the use of such financial instruments, and forbid any company owned using them from investing in New Zealand. If the investors can't be continuously identified, a company shouldn't be allowed to invest or do business here. Anything less is providing safe haven to tax cheats and other criminals.