Monday, April 04, 2016

We should not be part of the problem

There's been two enormous corruption / money laundering / tax-cheating exposes in the last week. Firstly, on Thursday, the exposure of Unaoil by Fairfax, a company which exists primarily to funnel bribes around the oil industry and enable corrupt officials to loot their country's wealth. Then today we have the massive Panama Papers, the biggest leak in history, exposing the inner workings of the tax-cheating network run by Panamanian lawyers Mossack Fonseca. And this isn't just a foreign problem: New Zealand trusts and shell companies feature in both scandals, with Unaoil held through an NZ trust, while NZ trusts appear to have been used to hide the corrupt wealth of Maltese politicians.

This isn't surprising. We've known for a long time that New Zealand is effectively a tax haven, with secret, tax-free foreign trusts and lax company regulation allowing us to be used not just to cheat taxes, but also launder money and facilitate illegal arms deals. All for a fee, of course. This is what John Key means when he talks about New Zealand becoming a "financial hub" and a Pacific "Switzerland": a small clique of bankers like himself profiting by laundering money for tax cheats and global criminals. Naturally, this means facilitating not just tax fraud and enforced austerity, but also corruption, war and poverty. But the bankers don't care, because they get rich off these things.

The media includes a disclaimer about how there are "legitimate uses" for offshore companies in every one of these stories, but at the end of the day they're about fraud (whether in a divorce or of tax agencies) or illegally hiding wealth (from bankruptcy or corruption investigations). And even those uses which appear harmless - avoiding kidnapping, lying to your customers - are massively, massively outweighed by the tax cheating, corruption and crime they enable.

We should not be part of this problem. We should not. Instead of being a tax haven, we should regulate our companies, bust the trusts, seize their assets, and put these crooks in jail. And if bankers want to get rich by providing financial services to criminals, we should tell them clearly "not in New Zealand" as we extradite them to face trial for their crimes.