Kim Dotcom, William Yan and Prime Minister John are linked together by Zhao Wu Shen, a wealthy National Party donor
Kim Dotcom, William Yan and Prime Minister John are linked together by Zhao Wu Shen, a wealthy National Party donor
A wealthy National Party donor described one of China's most wanted fugitives as his "best friend" and deals where millions of dollars' worth of shares in Kim Dotcom's Mega changed hands are being investigated by police, court documents reveal.
The documents from the High Court case place the two millionaires at the centre of a large-scale police inquiry into money-laundering, where police have frozen more than $40 million of assets which allegedly belong to Mr Yan.
He is defending the civil case and denied any wrongdoing in any jurisdiction.
There is no suggestion of criminal activity by Zhao Wu Shen but his business and personal links to Mr Yan are awkward for the Government as it seeks to strengthen ties with China.
Mr Shen and his wife Suzhen Zhou donated than $370,000 to National in recent years and he was the biggest shareholder in Mega until selling his stake last year and resigning from the board of the online encryption service founded by Dotcom.
No charges have been laid against Mr Yan - also known as Bill Liu, Yang Liu and Yong Ming Yan - but Prime Minister John Key recently revealed the New Zealand citizen was ranked number five on China's Top 100 extradition list.
William Yan leaves the Auckland Central Police after his arrest in 2009
He allegedly stole $129 million in his homeland and concealed the fortune in New Zealand through complex money laundering transactions, according to police, while forging political links to support his controversial citizenship bid.
One transaction is alleged to have been a $2.3 million sum "filtered" through Auckland's SkyCity casino to buy an apartment in the Metropolis tower with cash, while large shareholdings in Kim Dotcom's Mega were held by trusts and companies in other people's names.
The police raided his penthouse Metropolis apartment in 2014 when police seized $40 million of dollars of assets including an 18.8 per cent stake in Mega.
Court records obtained by the Herald show three different transactions organised by Mr Yan where millions of dollars changed hands for shares in Mega.
Each time, according to a police affidavit, the shares were divided into parcels held by Mr Shen and entities allegedly controlled by Mr Yan.
In one case, $US10 million was paid for 15 per cent of the company and split equally into two parcels - but the company allegedly controlled by Mr Yan only paid $US100.
Kim Dotcom met with William Yan in his penthouse apartment in the Metropolis
Kim Dotcom and Tony Lentino, a tech millionaire who invested heavily in Mega and supported Dotcom after his arrest in 2012 but later fell out, both told police about their dealings with the Chinese businessmen.
Each said Mr Yan introduced Mr Shen as a potential investor in Mega and the subsequent share transactions were arranged by Mr Yan.
Mr Shen has previously been used as a nominee to hold property on behalf of Mr Yan, according to the police affidavit.
He is a New Zealand citizen who currently lives in Hong Kong with his wife Suzhen Zhou, whose name is also spelt Susan Chou.
The couple have kept a low profile in New Zealand, despite being among the most generous political donors.
Electoral records show Ms Chou donated $300,000 to the National Party in 2010 and 2011, while their company Contue Jinwan Enterprises gave $70,820 in 2011 and 2014.
The couple last year listed more than $26 million of property in Auckland for sale. Mr Shen was also apparently involved in Mr Yan's controversial bid to become a New Zealand citizen.
Property records show Ms Zhou held a mortgage over one of the restrained properties linked to Mr Yan, a $50 million Albany housing project, and loaned money to help purchase another land title.
A spokeswoman for Prime Minister John Key said there were no records of any correspondence or meetings with the wealthy National Party donors.
"However, as you can appreciate the Prime Minister meets a large number of groups and individuals during his normal course of business and it's entirely possible that he may have meet them at any number of functions or events, or that the Prime Minister has spoken to them at various events.
"The Prime Minister is unaware of any relationship between Mr Liu [Yan] and Mr Shen, and this wasn't discussed while the Prime Minister was in China. Donations are a matter for the National Party."
Mr Shen was also apparently involved in Mr Yan's controversial bid to become a New Zealand citizen.
When police raided Mr Yan's penthouse in August 2014, they found a letter addressed to Rick Barker, the Minister for Internal Affairs under the previous Labour government, in support of his citizenship application.
"In the letter, Mr Shen describes Mr Yan as his "best friend", details Mr Yan's success in both China and New Zealand and describes Mr Yan as a man of 'courage, honesty and integrity'," according to the affidavit of Detective Senior Sergeant Craig Hamilton.
The ministerial decision on Mr Yan's citizenship was deferred from Mr Barker to Shane Jones, who was the associate Immigration Minister, because of a "real or perceived conflict of interest".
Citizenship was granted against the advice of DIA officials, who said Mr Yan did not meet the good character test, following lobbying from Dover Samuels, a Labour MP at the time, who regards him as a close friend.
William Yan - also known as Yang Liu and Yong Ming Yang - and former Labour MP Dover Samuels outside the High Court in 2012.
Mr Yan stood trial in the High Court at Auckland in May 2012 after pleading not guilty to five charges relating to false declarations on immigration and citizenship papers. Justice Timothy Brewer found him not guilty despite saying the evidence put before him "proves a situation that is highly suspicious".
The Auditor-General later investigated how Mr Yan came to be granted citizenship, but found no evidence of any wrongdoing by Mr Jones. The politician believed Mr Yan would be executed if sent back to China.
He has said he made his fortune legitimately as a businessman and the two identities he came to New Zealand with, Yong Ming Yan and Yang Liu, are valid because he was fostered out by his birth parents in China.
Both sets of parents registered him as part of their household with different names and dates of birth, said Mr Yan, and the Chinese Government considers him an enemy because he is associated with Falun Gong and is pro-democracy.
Passport presented during the trial of Yong Ming Yang, also known as Bill Liu, and now William Yan.
Two years after his acquittal, Mr Yan again came to the attention of police when detectives found a note as part of an inquiry focused on a group of VIP high rollers at SkyCity.
Handwritten in Chinese, the note authorised the purchase of $1.85 million worth of shares in a company registered in the tax haven of the British Virgin Islands and was signed by Yang Liu.
That caught the attention of Operation Galaxy detectives, who also know him by other names - Bill Liu to his friends, Yong Ming Yan according to Chinese authorities and William Yan on his New Zealand passport.
But the resurfacing of his name in Operation Galaxy triggered a fresh look at the dormant allegations of fraud in China and his business dealings in New Zealand, culminating in another police raid on his penthouse in the Metropolis tower in August 2014.
No criminal charges have been laid but at least $40 million in assets have been seized under the Criminal Proceeds Recovery Act, which essentially forces someone to explain their wealth.
The investigation has also uncovered Mr Yan's astonishing SkyCity records where he gambled $293 million over a 12 year period - despite being banned twice for two years - and losing a total of $23 million.
A trial date is yet to be set.
National Party donations 2010 - Susan Chou $200,000 (known as Suzhen Zhou) 2011 - Susan Chou $100,000 and Contue Jinwan Enterprise $21,600 2014 - Contue Jinwan Enterprise $49,220 Total - $370,820 William Yan - the Man of many names
2001: Arrives in New Zealand with two identities, Yang Liu and Yong Ming Yan. 2002: Granted permanent residency as Yang Liu. 2005: Applied for citizenship. Makes donations to Labour and National. 2007: Immigration New Zealand's moves to revoke permanent residency vetoed by minister. 2008: Three MPs write in support of citizenship application. Citizenship approved by ministerial prerogative, against advice of officials. Ceremony held at Parliament. Changed his name to William Yan. 2009: Arrested at Auckland Airport and charged with making false declarations on his immigration and citizenship papers. 2012: Found not guilty in High Court at Auckland, despite Justice Timothy Brewer saying the evidence put before him "proves a situation that is highly suspicious". 2013: Auditor-General releases report which criticises former Cabinet minister Shane Jones for granting citizenship but said there was no evidence of wrongdoing. 2014: Police raid Mr Yan's penthouse and seize his assets.
The Mega Deals: Kim Dotcom, China's 5th most wanted man and the wealthy Nat donors
TRANSACTION 1 $US10 million was paid by William Yan through a trust account to VIG to buy a 15 per cent stake, or 17,778 shares, in Mega. The stake was split equally between Zhao Wu Shen and MGL Investments, which is linked to Mr Yan. According to a share deed obtained by Police, MGL paid a nominal price of just $US100 to acquire its half of this stake.
Mona Dotcom
TRANSACTION 2 MD Corporate Trustee, controlled by Mr Dotcom's ex-wife Mona, sold a total of 4608 shares for $US3.5m. Of this parcel, Mr Shen was allocated 1925 shares for $US3.5 million while Hobson Street Holdings received the remaining 2683 shares for $US1. The HSH shares were then transferred to TEY Trustee, an entity controlled by Mr Yan's wife.
TRANSACTION 3 Tony Lentino, a tech millionaire who paid Dotcom's rent after the Coatesville mansion was raided by police in 2012, sold 7182 Mega shares held by his company Instra Holdings for $4.2 million. Part of the payment to Instra included a $400,000 Rolls Royce. The shares were again split into two parcels with 1875 shares valued at $3 million going to Mr Shen, and the other of 5307 shares being transferred to TEY for $1. Source: Affidavit of Detective Senior Sergeant Craig Hamilton.
