New Zealand Company Registry Whack-a-Mole!

Fired up by my recent posts about dodgy New Zealand companies, Nick Shaxson asks what the hell is going on at 369 Queen Street, Auckland?

It is a first-class question, and by way of compensating for the fact that Mr. Shaxson and I are nearly five years late to this story, I have a snazzy elaboration. To fend off accusations of recycling old news, I also have an update that shows that this story is still of some current interest, notably to the cretinously blithe deregulating New Zealand Prime Minister, John Key.

My update may also add further to the workload of an athletic-looking but possibly harassed New Zealand regulator; there is already a pile of Questions in Parliament to Answer, arising from previous forays into this terrain by Naked Capitalism and NZ’s National Business Review.

So, to start on this shaggy dog story, what connects:

President Barack Obama and Senator Carl Levin and Representative Rahm Emanuel,
an aspiring actress in the Seychelles,
a fake English lord,
an intercepted illegal arms shipment,
Wachovia’s $380- billion Mexican drug cartel moneylaundering scandal (yes, billion),
“Russia’s largest tax fraud, an alleged $US230 million heist that led to the untimely deaths of four people and threatens to damage the Russian government”, according to the Sydney Morning Herald,
…and 369 Queen Street, Auckland, NZ

?

Let us start with the future POTUS and his mates (third download link here), who, in their letter to governors of February 2007, are concerned about the level of background checking performed in the US when companies are formed:

The central problem is that the 50 states are currently forming nearly 2 million companies each year with little to no information about who is behind those companies. While the vast majority of those companies operate legitimately, a small minority do not, functioning instead as conduits for organized crime, money laundering, terrorist financing, tax evasion, and other misconduct.

So, the US is just like New Zealand, then, but with volumes two orders of magnitude larger, and with no US-wide standard of disclosure or data presentation, either, which multiplies the complexity of the problem by another chunky factor, I suppose. By way of collateral, the three Congressmen append a couple of press stories, one from USA Today, from which we snip these details:

Wyoming incorporation records show that at least 90 companies created since 2002 list Stella Port-Louis as the sole listed officer. Many of the firms, such as Export Deutschland AG and Motorcomsa S.A., have foreign corporate names…

JoLyn Jordan, an official of Registered Agency Services, a firm that files incorporations, said she believed Port-Louis was a nominee for owners outside the USA. “I don’t know who she is, or if she’s for real,” said Jordan. Asked how to determine if they were shell firms created for crime, Jordan said, “You don’t know.”

Jack Blum, an international tax expert and former special counsel to the Senate Foreign Relations Committee, said money laundering investigations have historically focused on the Seychelles. While saying he had no information about the Port-Louis firms, he said the filings seemed designed to frustrate.

“Whoever’s trying to research it will go batty,” said Blum.

Well, I know that feeling; in my last post on NZ companies, I ended up wondering whether Rod Alvar was a real person. But Stella Port-Louis is less of a will of the wisp: here she is, looking winsome, and lo, not only is she in control of 90 Wyoming companies, she also helmed, by January 2010 at any rate, 338 New Zealand ones. Stella turns out to be an aspiring actress; socially a narrow cut, maybe, above the auto mechanics and taxi drivers to be found running spurious banks in NZ, but just as much in need of some spare cash. Evidently, we have the same background-check-defeating business model identified in the last NC post; having started the companies, she innocently hands them on their real end-users: crooks.

The same article gives most of the promised connections in one hit:

Her companies, with names like Petro Tex Ltd, El Mondo Ltd, London Group and Nelson Trading Ltd, are based at Level 5, 369 Queen St, Auckland.

A co-director at the same address is Lu Zhang, gender uncertain, who is the director of dozens of companies. One of them, SP Trading Ltd, rented a plane that was used to fly arms from North Korea to Iran, but it was seized by Thai authorities in Bangkok.

….

Lu Zhang may be little more than a figment of the imagination of a “professional client” in London who needed to hide their activities from the US, which has sanctions on North Korea and Iran. Providing just such a service is GT Group, based in Vanuatu, a Melanesian country that receives $18 million a year in New Zealand aid.

Vanuatu, like the Seychelles, is a no-questions-asked tax haven, or, as it likes to put it, centre for international business corporations.

GT Group is owned by accountant Geoffrey Taylor, who claims to be an English lord, and his family. It set up and owns Vicam (Auckland) Ltd, which appears to do nothing but clone itself into more than 1000 other entities, such as SP Trading.

There is more about the buffoon Taylor and the arms trading deal here, if you like a spot of colour. Then we have a connection to the Wachovia moneylaundering scandal via the Sydney Morning Herald:

Last year police intelligence sources told Fairfax newspapers and the ABC’s 7.30 Report that about half the cocaine now entering Australia was being sent from Mexico, and that the Sinaloa cartel was behind many of the shipments.

During the court proceedings it was alleged that four New Zealand firms registered by the GT Group – Keronol Ltd, Melide Ltd, Tormex Ltd, and Dorio (NZ) Ltd – helped launder about $40 million of the proceeds using Latvian bank accounts and Wachovia’s London branch.

The US investigation provided a suggestion that the Taylor name was linked to an infinitely wider and more complex global network.

Indeed it was; via those companies,

…the GT Group was linked to the biggest money-laundering operation in US history.

Wachovia Bank – now a subsidiary of the global financial giant Wells Fargo – was fined $US160 million for helping to disguise the illegal origins of up to $US378 billion for Mexican drug lords.

And there was more:

The business magazine Barron’s reported that late last month documents emerged out of London that linked a shell company called Bristoll Export, registered in New Zealand by GT Group, to a scandal that some commentators claim has the potential to be Russia’s Watergate.

It centres on Russia’s largest tax fraud, which occurred on Christmas Eve, 2007, when Moscow tax officials approved a same-day refund of $US230 million to a gang masquerading as representatives of Hermitage Capital, once the largest portfolio investor in Russia.

You may or may not be surprised to hear that:

The Taylors…said they were blameless. In a press release issued in New Zealand by Ian Taylor – another of Geoffrey’s sons – he explained GT Group’s role was simply to incorporate and to act as a registered agent for SP Trading ”at the request of one of our professional clients based in the United Kingdom”. It was not responsible for and had no knowledge of what the company got up to.

As no law was broken, the authorities had no choice but to agree.

Taylor’s friends at Sorenson Law, mentioned in the linked piece about Stella Port-Louis, don’t think they’ve done anything wrong either:

Mr Sorensen said GT Holdings were just “one of a number of people who are there”.

He would not guess at how many companies were registered to the floor.

“What’s their business is their businesses and I don’t entertain what other people’s businesses are about at all.”

Looking at the distinctive addresses of a Sorenson Law company and an Ian Taylor company, one suspects, on purely stylistic grounds, that the association of Taylor and Sorenson may in fact be a little closer than Mr Sorenson would have us believe:

LANGATE LIMITED (2097954) Registered NZ Limited Company

C/-Gt Group Limited, Level 5, 369 Queen Street, Auckland, New Zealand

and

LIFETIME CORPORATION LIMITED (1220738) Registered NZ Limited Company

C/- Sorensen Law, Level 5, 369 Queen St., Auckland, New Zealand

They do seem to have hit on precisely the same abbreviated style, precisely the same punctuation, and precisely the same way of referring to Level 5, 369 Queen St. As it happens, that’s a style that the many other non-Taylor, non-Sorenson-Law companies in that building never adopt. I’d be interested in the Sorenson Law companies, if I were a regulator.

Anyway…here we are, finally, at 369 Queen St., Auckland. An impressive 1,450 companies have been registered there, of which ~1250 have been struck off.

So “what the hell” is going on there now? Three salient things.

First, despite the complete innocence of Messrs Taylor and Sorenson, the authorities seem to have judged that the Geoffrey Taylor companies are better struck off the register, and someone is gamely ploughing through those, turfing them out again. Perhaps it is a taxi driver or an aspiring actress, working the other side of the street. I notice that one of the struck-off companies, Oilex Ltd, still seems to have a web site, of sorts. Is it still trading, or not? A grown-up should check.

Second, our striker-off-of-companies may get a good long gig, because other hands are at work too. Someone called Ian Taylor is still busy: a director of 179 companies. And though they may not all be the same Ian Taylor, the history of a few of these companies does suggest that the GT Group business model is still running smoothly. For a start, when we wade through a sampling of the above, we find an unrepentant Ian Taylor still registering companies in late 2010 and in 2011. Is this the same Ian Taylor as the GT Group one? I think it must be – compare addresses with this Vicam-linked, Vanuatu-linked and so, GT Group-linked company, still not struck off. And there is an Ian Taylor company, ECOPAR LIMITED, with a Panamanian connection (which are the subject of a recent round of Parliamentary questions). And in another hint of the now familiar methods, we have Taylor (founding director) handing over another NZ company, GT Gloria Trading, to an improbable Czech! There is a recent twist to the MO, too. Taylor appears to have found a stooge to help keep his name off the register: this company was registered on 28th June 2011; it isn’t directed by Taylor, but it is wholly-owned by the Taylor company RSHRS LTD.

Third, there seems to be some kind of emerging Irish connection. Are the Irish horning in on this NZ company formation lark? It would make sense. They have a lot of debt payments to make. Note the company address history of Peter Keogh and Sons (NZ). And then see the company address, and directors’ addresses, of

CARRAIG DONN NEW ZEALAND

EAST COAST CATERING (NZ)

GRANDFORD

MARCON NZ

Now you may well think, reviewing all this, that the NZ authorities haven’t really done a bang-up job of sorting out their company register. In fact, they don’t even seem to be able to stabilise the companies registered in one floor of one single building, even when they already have a massive red flag planted firmly over this one address. Though I have to admit, the NZ company registry is very nicely designed. It is just the contents that are garbage.

I suppose that’s it’s not a great job the NZ authorities are doing, really, but as long as they’ve got political constraints, and budgetary ones, and mutts like Niko Kloeten of the NZ National Business Review, and me, to ferret through their register for them, buckshee, they have the best outsourcing deal of all.

Until they get the authentication of their registrants sorted, and better legal protections for the register, it’s just a game of whack-a-mole, after all, though with several hundred billion dollars worth of international relations at stake.

You see, I wouldn’t like to be in Prime Minister John Key’s shoes when he explains, to US President Barack Obama, how the NZ government’s inept custody of New Zealand’s Company Register continues to facilitate money laundering, just after the biggest moneylaundering ring in world history was shown to depend on shoddy New Zealand registration, and four and a half years after Obama’s first warning.

Nor, come to that, would I particularly relish the prospect of explaining to Prime Minister Medvedev Putin whoever of Russia how a key component of the biggest tax fraud in Russian history was facilitated by other shoddily registered New Zealand companies.

Oh Mr Key, if you don’t want New Zealand to be either an international pariah, or a laughing stock, I’d take a look at the New Zealand Company Registry and its protections right now. Perhaps there will be another 200+ parliamentary questions, about this new batch of companies, in another couple of weeks. Would that get your attention?

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18 comments

  1. readerOfTeaLeaves

    ‘ Cretinous’ seems to apply to more than simply the feckless regulator.
    It applies to the entire system.

    With posts like this one, I fear that my appetite for fiction diminishes.
    For truly, now that the emerging truth is far more bizarre, dangerous, cretinous, and feckless than a fictitious account could invent.
    Alas.

    For all the hubbub about the markets failing, it takes only a cursory reading about tax havens to recognize that with such vast, institutionally sanctioned externalities it is not possible that global economies can continue to function in any stable way.

    Richard Smith, I tip my cap to you.

    1. readerOfTeaLeaves

      Edit: For truly, now that the emerging truth is far more bizarre, dangerous, cretinous, and feckless than a fictitious account could invent.

      1. Anonymous Jones

        Definitely true.

        Almost all successful fiction depends on identifiable constructs and relatively narrow ranges of identifiable behaviors. Truth is far more variable.

        Fiction is finite. Truth is infinite.

  2. Foppe

    Your presentation is a bit difficult to follow at times, but do keep up the good work.
    Anyway, to supply a probably largely unrelated (to your investigation) tidbit that I recently ran across.
    First, please read an article that the article I shall link to next introduces this way: “please join me now in laughing at the latest hyperbolic effort of possibly the most predictably stupid nutjob in America.
    The reason you should probably read it first is to see what is being argued, so as soon as you think you’ve gotten the gist of it, head over to this splendid article, which neatly explains the links between Hermitage, Magnitsky, and Renaissance Capital. (Apropos of nothing — The CEO of Renaissance is a Kiwi.)

    1. Richard Smith Post author

      Another gorgeous mess, and yes, it is sort of connected, via a (fake?) Hermitage that was one of the props in the Russian tax scam.

      One of the problems with presenting this stuff is that pretty much everything’s connected! There is all sorts of linkage that I am just chopping off, to keep the story half way sane.

      1. Foppe

        I wouldn’t think Hermitage was fake, even if it may have been a scam in that it acted as a locust plague
        Re Hermitage:

        The whole Sergei-Magnitsky-as-inspirational-figure thing gets easier to understand, though, the more reports you read on the “Magnitsky List”, because a couple of names pop up in every one of them – multimillionaire William “Bill” Browder, and Hermitage Capital, the firm of which he is CEO, which was implicated in a tax-fraud scheme and fled Russia just ahead of being kicked out. In fact, in documents ranging from minor legal declarations to scandal-rag whisperings t0 plants in business circulars, Browder and Hermitage Capital keep surfacing, along with another name – Renaissance Capital. Renaissance Capital is the biggest investment bank in Russia, run by New-Zealander CEO Stephen Jennings, and is still doing business and making big money in Russia. So I guess it’s only to be expected that Renaissance Capital is also accused of helping the Russian government swindle Hermitage out of a fortune.

        It might have something to do with the fact that when the article was written, Hermitage Capital – which specialized in wrecking undervalued Russian companies in which it owned a significant interest, then stuffing its pockets with money when the state came in to clean them up – was the biggest foreign investment fund in Russia. Now it’s….you guessed it – Renaissance Capital, Browder’s arch-rival.

    2. sidelarge

      I sometimes feel genuinely sorry for the actual anti-authoritarian forces in Russia, since every single attack on Putin from America seems to boil down to some petty vengeance based on the most pathetic kind of greed.

      It should be extremely hard for a Russian not to see the “West” (a term that needs some rigorous re-defining) as purely destructive force, when the Americans and alike, whether in finance or journalism or politics, look so eager to play the old Soviet stereotype of the “capitalists” remarkably perfectly. I don’t know if they have ever paused for a second to think how they look and sound to the average Russian, regardless of whatever the Russian media say.

      Maybe their mission is actually to burn the bridge down in the spirit of the good old clash of civilization meme.

  3. XRayD

    What’s the problem with NZ Companies?

    “Corporations are people, my friend.” – Mitt Romney

  4. Rick

    Level 5, 369 Queen St, Auckland 101 is http://www.danite.co.nz/ a virtual office centre, many startup use this as its first business, then many of them go out of business as you can see by the companies beings struct off.

    1. Richard Smith Post author

      Well, a virtual office is certainly what what it’s meant to look like, oh semi-literate “Rick” with the NZ IP address and the untraceable domain name.
      But it has hosted some record breaking crookery, and startup failure isn’t why all the Taylor companies are being struck off.

      The company name is Danite HFEM, limited.

      Registered Office
      369 Queen Street, Level 5, Auckland , New Zealand

      Address for service is just like a Taylor company
      C/- Sorensen Law, Level 5, 369 Queen Street, Auckland , New Zealand

      And you are an obvious sockpuppet.

  5. Flying Kiwi

    Don’t worry. Whatever it is you can be assured John Key will be ‘relaxed’ about it. Relaxing is his one and only approach to life since his luck at being at the right place at them right time enabled him to suck a couple of $million out of the money market.

  6. Tim

    I don’t really think that many people in New Zealand are all that concerned with the context of this blog post. At the end of the day New Zealand has a long tradition of being an international pariah whether being the whole Rainbow Warrior incident or pulling out of ANZUS. Almost everything described here has being going on long before John Key came onto the scene. In fact Key will in all likelihood win reelection handily largely because the current leader of the opposition is considered a complete stooge of Key’s predicessor Helen Clarke who is still fairly unpopular.

    1. Andrew not the Saint

      In NZ, National is very much your typical neo-liberal, USGovt sucking-up party, whereas Labour is a bit more cautious in terms of both foreign diplomacy (e.g. gave the US the middle finger for Iraq) and economics (recently it has recently started to object to sell-off of public assets). Still, both of them are more or less blowing the same globalised trumpet and both believe in theoclassical economics.

      Luckily, there isn’t that much money involved in NZ parliamentary elections and with MMP system there are minor parties involved in the politics such as the Greens that can be a pain in the butt to the status quo.

      The main problem is that most of the people, like most people everywhere, are blissfully unaware of the class wars and the dangers of the FIRE industry. These kinds of scam company-stories probably won’t cause much stir in NZ. I think the wake-up call will have to be something like a real estate crash for the Kiwis to stop thinking just about beer, rugby, cars and the outdoors.

  7. psychohistorian

    Thanks for the posting and your efforts to lay all this out.

    Its all broke mate. Time to hit the big reset button and start a new social arrangement.

  8. Tom Parsons

    Hearty thanks for the info. It may be of direct use to some and certainly entertains many of us others. More importantly, it might also matter in the upcoming election if the Greens and Labour play well with the cards you have dealt them.

    It is too easy for us down here in this relaxed country to look approvingly at the personable Mr Key and forget how easy it would be to stay calm and affable when one already has a lifetime’s worth of comfort in the bank plus a lot of the world’s wealthiest on one’s team and waiting for one to deliver the privatization goodies.

  9. pj

    As I’ve mentioned before, Yves, this sort of activity is prevalent everywhere.

    Let’s face it, we are going through a period of lawlessness. Criminals prosper and everyone else loses.

    If you want to know how the story ends, just pick up a history book.

  10. Blissex

    «Let’s face it, we are going through a period of lawlessness.»

    Well, a major investor once in an interview said that the USA in the 19th century had no rule of law.

    Which is not quite right — the USA have always had a very selective application of the rule of law, where the selection gets narrower or wider depending on who has more leverage, especially as to political patronage.

    One of the more ironic consequences of this are the many calls for a reinvention of wildcat banking (via schemes to abolish a national currency) when this has already happened, and wildcat banks have huge headquarters in the wilds on Manhattan nowadays.

    «Criminals prosper and everyone else loses.»

    That’s not how Real Americans see it, the way they express the same concept is that winners do whatever it takes and losers deserve what’s coming to them.

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