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International fraud highlights urgent need for law reform

6 September 2011

International fraud highlights urgent need for company law reform

The ease at which companies can be registered in New Zealand for the purposes of committing fraud needs to be urgently addressed, the Green Party said today.

“The Government has been slow to tighten up company law putting New Zealand’s reputation as a good place to do business at risk,” Green Party Co-leader Russel Norman said today.

Minister of Commerce Simon Power revealed in parliamentary questions lodged by the Green Party that New Zealand registered companies were being used to commit money laundering, tax evasion, and fraud overseas. The Registrar of Companies recently deregistered 1,800 New Zealand companies following an inspection of their sole office which disclosed no evidence of any business activity. Mr Power also admitted that such activities were harming New Zealand’s reputation as a good place to do business.

“Our lax standards and enforcement around company registration and resident directors are being exploited to facilitate crime, such as money laundering, tax evasion, and fraud,” said Dr Norman.

“The Minister also admitted that a lack of enforcement of current company law has meant our company enforcement agencies have been unable to help international agencies in trying to combat international fraud.

“It doesn’t take a detective to search the companies register on-line to find a large number of suspicious companies registered in New Zealand who share a common business address in a residential part Auckland. The companies have links to a Panamanian financier alleged to be involved in crime in other jurisdictions.



Dr Norman first read about the alleged criminal activity with Panamanian links in a Naked Capitalism blog.

“The Government seems to be aware of the problem but have been slow to investigate and stop New Zealand-registered companies becoming a front for committing sophisticated international fraud,” Dr Norman said.

“The Minister of Commerce announced in September 2010 an intention to introduce a new law in 2011 to tighten up requirements around company registration. We’re still waiting for this new law. This should have been a higher priority for the National Government along with increased resources for policing current company law.

“Protecting the integrity of our business sector is vital for the health and prosperity of our wider economy. This Government has tacitly allowed white collar crime to go on unchecked for too long.”


For a full transcript of the Minister of Commerce’s answers to Dr Norman’s questions:
http://www.greens.org.nz/misc-documents/transcript-parliamentary-questions-corporate-fraud

Link to Naked Capitalism blog post highlighting the possible fraud:
http://www.nakedcapitalism.com/2011/07/clueless-new-zealand-ministry-of-economic-development-provides-regulatory-cover-to-bogus-financial-companies.html

ENDS

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