Wednesday, 13 April 2016

Other People's Secrets: How Important Are The Panama Papers To New Zealand?

Sunny Hideaways For Shady People: Tax Havens are a very big news right now, but how big a deal are they for New Zealand? Much has been made of the 60,000 references to this country in the Panama Papers. That sounds like a lot. But in a dump of 11.5 million documents, 60,000 references is actually a very small number indeed. Assuming there is only one reference to New Zealand per document (which hardly seems likely) our country’s name is to be found in just 0.005 percent of the documents leaked.
THE PANAMA PAPERS are a big deal. No sensible person would attempt to argue otherwise. Thanks to the leaking of upwards of 11.5 million electronic documents the world is now in possession of incontrovertible proof of the global elite’s perfidious allergy to paying tax. What had been the stuff of thrillers by John Le Carré and John Grisham, has become the substance of nightly news bulletins.
But how big a deal are the Panama Papers in New Zealand? Much has been made of the 60,000 references to this country in the leaked documents. That sounds like a lot. But in a dump of 11.5 million documents, 60,000 references is actually a very small number indeed. Assuming there is only one reference to New Zealand per document (which hardly seems likely) our country’s name is to be found in just 0.5 percent of the documents leaked.
I would hazard a fair amount on there being a considerably larger number of references to the Cayman Islands, the Virgin Islands, the Turks and Caicos Islands and the Cook Islands in the Panama Papers than there are to the islands of New Zealand.
It is also important to note that the warnings that have been issued to the New Zealand Government by an assortment of both public and private bodies have tended heavily towards the contingent. If the powers-that-be do not act quickly, there is a risk that New Zealand’s reputation as one of the world’s least corrupt and most transparent countries might be damaged. Which suggests we’ve still got quite a way to go before we get to count ourselves among the Caymans, the Virgins and the Turks and Caicosses.
Which is not to say that the 12,000 overseas trusts currently availing themselves of this country’s less-than-robust disclosure regime are all squeaky clean. On the contrary, there’s a better than even chance that a newsworthy number of shady characters have been using these instruments to hide a whole lot of even shadier goings-on.
As the International Consortium of Investigate Journalists and their colleagues in the global news media pore over the Panama Papers, we are bound to discover a disappointing number of New Zealand individuals, businesses and organisations in the frame.
Will our own Prime Minister be among them? Is John Key about to suffer the same fate as the erstwhile Prime Minister of Iceland, Sigmunder Gunnlaugsson, or the present, increasingly beleaguered, Prime Minister of the United Kingdom, David Cameron?
Well, John Key is a very wealthy man, and if the Panama Papers have shown us anything it is the extraordinary lengths to which very rich people will go to protect their financial affairs from the scrutiny and criticism of those who are not very rich. For years, rumours have circulated that Key is worth considerably more than the $NZ55 million he publicly acknowledges. If the rumours are true, then the rest of his fortune may well have been salted away where the sun shines and the trade-winds blow. But by whom? Mossack Fonseca isn’t the only law firm that specialises in keeping prying eyes away from very rich people’s financial information. And you can bet that the others are working day-and-night to beef-up their security.
Personally-speaking, I’d be surprised if our Prime Minister goes the way of Gunnlaugsson or Cameron. Key has spent his whole life working towards the position he now holds, and all along the way he has been extraordinarily careful to avoid doing anything that might come back to bite him when he was Prime Minister. While the other London currency traders were winging their way across the Atlantic for a weekend of drug-fuelled debauchery in Las Vegas, John Key was heading home for a quiet weekend with Bronagh and the kids. Would he put everything he’s worked for so carefully at risk by squirrelling away millions in some Caribbean tax haven? I can’t see it, myself.
Then again, who among the very rich could have foreseen the acute danger into which this age of digitalised information storage, retrieval and communication was leading them? John Key? Many New Zealanders have wondered at their Prime Minister’s interest (some would say obsession) with cyber-security, and noted his extreme hostility towards individuals and groups accused of abusing and/or violating the supposedly secure zones of cyber-space. Exactly what was driving Key’s inflated disquiet about the security of secret information has never been very clear.
As the tens-of-thousands of secrets contained in the Panama Papers are revealed to the world, however, there will be more than a few Kiwis who will insist on ending the above paragraph with the words – until now.
This essay was originally posted on The Daily Blog of Tuesday, 12 April 2016.


Brick said...

The evidence appearing from reputable and knowledgeable investigators seems to show that NZ is not even on the page. But then, the envy of the socialist of even the moderately successful passes all belief even though it is the income from the successful that funds their often lunatic scheme.

Anonymous said...

Unless there is actual proof against what John Key is telling us then most Kiwi's will support him.
They will also pour scorn on those who attempt to malign him.
John Key is adroit in his personage and politics.
I would be aghast if that adroitness did not concur in his personal finances.
John Key's estimated wealth of $55M is peanuts to the estimated wealth of Kim Dot Com who attempted a coup on John Key by a rort in the MMP voting procedures.
In my opinion the Panama papers will bring to light more people of KDC's ilk than they will of John Keys ilk.
Chris, this well written piece is your second blog on this matter in the last week or so, unless proof against John Key is produced then I am afraid it is a non story.

Guerilla Surgeon said...

Couple of things. It's really interesting to know that this whole thing could have only blown up to the extent that it did due to computerised banking. Otherwise, the wine box simply wouldn't have been a big enough.
I'm also not sure that Key wouldn't have done something like this. He might be very cautious in politics, but you know – it's not illegal – is it? That's what various conservatives I know keep saying.
But then I think conservatives don't really care about the things that are paid for by taxes, often the things that help them make their money in the first place. They're quite happy for those to be paid for by 'the little people'.
I once posted a question on Salon – rhetorical question – but I said "How much money do these people need?"
Someone replied "All of it." And I think there was much truth in that.

David Stone said...

Hi Chris
I don't think the Icelandic Prime minister resigned so much because of having acted illegally ; but being caught in a lie .
The scandal highlighted by these papers is the reciprocal laws established by governments, in cooperation with other governments ,to provide a mechanism enabling the wealthy internationally to legally avoid paying any tax. Tax is something for the ignorant masses to pay not the elite. All the high ranking participants will be well within the law. They made the laws for the specific purpose to which they are putting them.
Cheers David J S
P S thanks for minimising my recent blunder Chris

Anonymous said...

We all know the saying "where's there's smoke there's fire" which often has a lot of truism to the situation.
In this case I do not see any smoke though I do see a lot of hot air.
Andrew Little is loquacious on the matter though looks forlorn, bereft and lost.

peteswriteplace said...

Criticism of John key must come from the political Right before the public will believe Key is crooked.

Anonymous said...

It's unlikely that evidence will emerge of John Key being a 'Wolf of Wall Street' type of character ie hiring jets to Las Vegas and snorting cocaine off the breasts of high price hookers etc but you never know

When I lived and worked in London, I worked with an amiable & harmless fellow who, it turned out, did just that on weekends.

That said, I'm sure, as a result of his global banking connections, Key pays for the best tax and legal advice in the world and this advice will take him to the edge of the law anywhere in the world.

And the fees Key pays will include the strictest of confidentiality.

Anonymous said...

Tolstoy asked the question: how much land does a man need?

Nick J said...

Looking at our political leaders with regard to tax avoidance is to rather miss the point. Tax can only be avoided on income / assets if individuals who might avoid their taxes actually have this income / asset stream. Key earned megabucks and has probably paid megabucks in tax. He would not be alone amongst the wealthy in resenting the amounts paid as a proportion BUT I wonder how often does he, or others of the super rich stop to ask the alternate question which is "How did I manage to capture such disproportionate earnings compared to the 99%?"

The point we are missing focusing in on tax avoidance is that we as a society don't have enough wealth to spread the tax take across the whole without an over reliance upon excessively taxing the wealthy (which may be right or wrong depending on your viewpoint). When a tiny minority have captured a disproportionate amount of the total wealth it means that the rest of us don't have enough income to pay the tax required. My contention is that income distribution is the core issue we are faced with, tax avoidance is merely an indicator of this problem.

Guerilla Surgeon said...

Nick. Kindly define "excessive". Some of the rich seem to feel that any tax is excessive.

Nick J said...

They do indeed, I think that comes with the wealth. Excessive is interesting. ...take too much and you kill, take too little and they get gorilla sized bank accounts. My take is simpler, if we ensure that those doing the work are paid fairly the rich won't have so much to tax. Of course then there are the subjects of rentier investment and capital gains....don't get me started.

Chalet E said...

It's always informative how some on the left are so certain the rich always try to cheat or avoid paying tax.
It tells me that clearly that is what they would do given the chance.
I expect the parallel is some rich always thinking the beneficiaries waste all their money on booze and fags.