Panama Papers NZ: Roger Thompson's full response

Roger Thompson said that “due to contractual, legal and ethical obligations I cannot provide specific comment about specific clients. My comments are therefore of a general nature.”

Roger Thompson
Roger Thompson Source: 1 NEWS

You, Bentleys and Mossack Fonesca 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 NZ that are related to Mossack Fonseca. In fact NZ 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 NZ as a tax haven has been grossly exaggerated.

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.

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?

NZ 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 settlor 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 NZ trust in such way, rather a NZ 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 NZ 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.

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

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

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 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.

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 NZ laws including anti-money laundering laws.

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.

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 NZ tax is properly paid and to also obtain information about NZ 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.

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.

Is New Zealand a tax haven?

No, in my experience I don’t see NZ 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 NZ foreign trusts are being used for illegitimate purposes is unfounded and based largely on ignorance. Due to the information gathering powers of the NZ 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.

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.

The investigation into the Panama Papers New Zealand is a journalistic collaboration by reporters from ONE News, RNZ News and investigative journalist Nicky Hager.



First images of wreck believed to be Captain Cook's Endeavour revealed

Researchers exploring whether a shipwreck off the coast of Rhode Island could be the vessel that 18th-century explorer Captain James Cook used to sail around the world have released images of the vessel.

The Rhode Island Marine Archaeology Project, which is leading the search effort, and the Australian National Maritime Museum identified the vessel.

It's one of 13 shipwrecks that have been known for years to be in the harbor near Newport, Rhode Island.

Archaeologists were meeting today in Newport to talk about their recent fieldwork.

The Rhode Island Marine Archaeology Project also described the site as promising but said it'll still take a lot more work and money to identify it.

Nearly 250 years ago, Cook ran aground on Australia's Great Barrier Reef during a voyage to the South Pacific.

His ship was the Endeavour, an awkward little vessel that improbably helped him become the first European to chart Australia's east coast.

It was the ship in which the explorer charted New Zealand and Australia between 1769 and 1771.

The Endeavour was also part of the fleet of 13 ships the British scuttled during the Revolutionary War in 1778 to blockade Newport Harbor from the French.

It was listed in the records under a different name, the Lord Sandwich.

The nonprofit Rhode Island Marine Archaeology Project located documents in London identifying the groups of ships in that fleet and where each was scuttled


Archaeologists are almost certain they've located the scuttled ship. Source: 1 NEWS


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TODAY'S
TOP STORIES

Members of the public rush to save stranded whale at Auckland beach that turned out to be a fake

Members of the public flocked to Browns Bay in Auckland after spotting what looked like a stranded whale close to the shoreline, many people ran down to the waters edge to see if they could help.

However, it wasn't a real whale, but rather a life-like replica used by rescue charity Project Jonah.

"We thought we saw a whale in the water, so we stopped, got out and had a wee look," one onlooker said.

This weekend Project Jonah is holding two training sessions for volunteers.

"We're teaching people the basic skills needed to help keep stranded whales and dolphins alive," Project Jonah general manager Daren Grover said.

The trainers explained how to handle the mammals when they are in distress.

Two mammal replicas were used; a training dolphin, which when filled with water weighs 150 kilograms and a training whale which takes 2000 litres of water and can weigh up to two tonnes.

New Zealand has one of the highest stranding rates in the world, with more than 300 dolphins and whales coming ashore each year.

However, sometimes appearances can be deceiving. Source: 1 NEWS

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FEATURED STORIES

Community demands answers over what caused kids to become seriously ill at a Carterton school

The Wairarapa community are demanding answers to what caused children at Carterton South End's school to become sick, after a strange smell wafted over the school yesterday afternoon.

Police ruled out initial reports that a plane flying overhead may have dropped a toxic substance on the school.

Parents at the school are angered and want answers as to what caused the illnesses.

Cody Pratt's daughter was one of the students who vomited after smelling a sulphur like substance.

"It was scary having my daughter in the school premises and being told I couldn't go in to get her was pretty daunting," said Mr Pratt.

"I definitely want to know what has gone on.

"Children came in after lunch and reported feeling unwell after the substance, or smelling a smell," he said.

Ten students were taken to hospital but returned to their homes last night.

The school was cleared to be re-opened for classes on Monday.

Police say they have conducted a thorough examination of the school and still haven't found a point of cause.

Police inquiries will now focus on the surrounding neighbourhood.

Police now believe they can rule out initial reports that a plane flying overhead may have dropped a toxic substance on the school. Source: 1 NEWS


Council trees in central Otago being chopped down by people helping themselves to the timber

The Central Otago council has called on police help to crack down on people illegally cutting down council trees.

Central Otago Mayor Tim Cadogan argues that the stumps in central Otago are evidence of illegal felling of trees by members of the public.

"Randomly coming up and knocking trees down without taking any safety measures in a place that the public walk their dogs, ride their bikes and so forth is actually really dangerous, as well as theft," said Mr Cadogan.

Culprits have been forced to hand the wood over to local charities when they have been caught.

But the council now says they will be handing the thieves over to police.

"We can't just keep taking that attitude so from now on it's going to be prosecutions, no questions asked, no warnings."

Families in need of timber in Alexandra are urged to use other sources, like the Salvation Army who hand out free and low cost wood, with the Rotary Club helping to split donated costs.

Alexandra Rotary president Charles French says this option is much safer.

"It is available here and there isn't really any need for people to go their own way with this," said Mr French.

The council says their concern is the safety of the public and the thieves.

It's becoming such a problem across the region the council's now cracking down and involving police. Source: 1 NEWS