SPCS

SOCIETY FOR PROMOTION OF COMMUNITY STANDARDS INC.

Shell company crackdown imminent

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A long-awaited crackdown on New Zealand shell companies is finally expected to come into force tonight when Parliament votes to ammend the Companies Act.

The Companies Amendment Bill (No 4) will require all New Zealand-registered companies to have a local director, and all directors to file identifying information to the registrar of companies, including the company’s ultimate owner, and their date and place of birth.

Parallel legislation requiring limited partnerships to have practically identical residency requirements, the Limited Partnerships Amendment Bill (No 2), will also receive its third reading tonight.

The new law’s genesis came from revelations in early 2010 that a New Zealand-registered company, SP Trading, had leased a plane loaded with 35 tonnes of guns and explosives that was later intercepted in Bangkok trying to smuggle the arms from North Korea to Iran.

Since the SP Trading story broke, generating considerable international media attention, media have discovered widespread use of New Zealand shell companies for illegal activities including the laundering of drug-sale proceeds, the looting of Eastern European state coffers, and international financial scams.

[Read more…]

Warning over New Zealand shell companies

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NEW ZEALAND has been urged to tighten its company registration process by one of the authors of a major international study into the use of anonymous shell companies by terrorist and corrupt government officials.

Global Shell Games: Experiments in Transitional Relations, Crime and Terrorism by Jasson Sharman, Michael Findley and Daniel Nelson, [to be] published later this month in the United States, launched a series of stings to determine whether international regulations were met ensuring beneficial owners of shell  companies were recorded.

The study made 7400 inquiries of 3700 incorporation agents in 181 countries – including New Zealand – to determine if Financial Action Task Force recommendations were followed.

The results found patchy adherence to regulations. The case of SP Trading, a New Zealand shell company that leased a plane used to run guns from North Korea to Iran via Bangkok in 2010, opens the book and receives considerable scrutiny.

SP Trading was formed by incorporation firm the GT Group, which had enlisted Burger King cook Lu Zhang as a nominee director. Zhang was paid $15 for each directorship, and knew nothing of who was using her company to breach United Nations arms sanctions.

Sharman, a professor at Griffith University in Australia, said the SP Trading case was “lurid” and the GT Group’s shell companies had been involved in other cases of  alleged government corruption.

Following international outcry and an ultimately futile investigation into the SP Trading case, the GT Group left New Zealand, rebranded and was last reported to be operating in Malaysia.

Sharman agreed New Zealand’s present regulations, allowing offshore directors of locally registered companies , effectively puts information about beneficial owners out of reach of domestic authorities. [Read more…]