Demand for NZ foreign trusts 'massively increased' last year

Labour and Greens say a review of New Zealand's foreign trust regime needs to start again following new claims about wealthy foreigners hiding their money in New Zealand trusts.

An article published in the Australian Financial Review today shed new light on the number of foreign investors who had moved their cash and assets into tax-free New Zealand-based trusts, and the way these investors were able to minimise their tax.

It said demand for New Zealand's foreign trusts massively increased last year and the law firm at the heart of the Panama Papers, Mossack Fonseca, had urged its New Zealand office to "chase the money".

Among the foreign investors was Mexican businessman Hinojosa Cantu, who is being investigated in his home country in relation to housing deals for government figures.

Following the release of the Panama Papers last month, the Government launched a review of the disclosure rules for New Zealand's foreign trusts.

Opposition parties criticised the review's narrow focus, and Labour and New Zealand First questioned the choice of former PWC chairman John Shewan because they felt he was too close to the industry.

Labour's finance spokesman Grant Robertson said this evening that the latest claims about the foreign trusts regime showed that the Government's review did no go far enough.

It now needed to accept that the secretive trusts regime was damaging New Zealand's reputation, he said.

Green Party finance spokeswoman Julie Anne Genter said the Government needed to "go back to the drawing board" and begin a more comprehensive inquiry.

"Kicking the tyres and taking a quick look under the bonnet, as John Shewan has been told to do, simply isn't enough to get to the bottom of this issue which is sullying New Zealand's good reputation as a transparent country."

The Australian Financial Review article also claimed that Auckland-based lawyer Ken Whitney, whose clients include Prime Minister John Key, had written a reference for Auckland law firm Cone Marshall to get accreditation with Mossack Fonseca in 2009.

After the release of the Panama Papers, Mr Key said he had received an assurance from Mr Whitney that he had not had any dealings with Mossack Fonseca.

Companies Office records show that Mr Whitney was a director of the New Zealand office of the Swiss company Rothschild Trust until August last year. Cone Marshall are the Rothschild Trust's law firm in New Zealand and several of its lawyers are also directors at the Rothschild Trust.

The Prime Minister was not available to comment this evening.

Offshore companies and trusts are routinely used for entirely legal purposes, and Mossack Fonseca maintains that it has always complied with international protocols.

A reference to a person or entity in connection with the Panama Papers is not therefore in any way indicative of any wrongdoing or impropriety.