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New Zealand, Fresh From Its Service to Mexican Drug Lords, Helps Out the Russian Mafia

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New Zealand’s in the doghouse again, about organized crime, and may not re-emerge for a while.

I wrote about the Mexican drug lords’ enormous New Zealand connection here. It’s a long post about a meaty $400Bn, yes that’s Billion, of moneylaundering, via  front companies set up from New Zealand.

Now there is a new reputational disaster. According to New Zealand’s internet newspaper, Stuff, the Russian mafia also had its way with New Zealand’s magnificently lax, yet painfully transparent, company incorporation regime:

Another New Zealand shell company has been linked to an alleged fraud worth more than US$150m – this time involving Ukrainian state-owned companies.

The company, Falcona Systems Ltd of Albany, Auckland, was struck off the New Zealand Company Register last October but only after it was used to gain $150m in kickbacks for Ukrainian and Latvian officials, according to East European media reports.

The latest allegations involving New Zealand shell companies comes five days after Fairfax Media was told by the Latvia Finance Ministry that New Zealand had been struck off a European Union banking and corporate ”white list” over our weak money laundering and terrorism financing controls.

Yes indeed, there goes New Zealand’s spotless reputation. Well we told ya that would happen, same NC post as above, final paras; we just picked out the wrong angry Eastern European minister.

One imagines that this hit to New Zealand’s reputation could at last spell the end for John Key’s pitifully idiotic plan to turn New Zealand into an offshore financial “hub”, too, but then, that inane pet project has survived all sorts of heavy contact with reality already.

Back to Stuff:

Latvian authorities said they moved after revelations Tormex Ltd, of Queen Street, Auckland, allegedly washed US$680m through a Riga bank account – no explanation of where the money came from or went. However, a multi-national investigation points to the Russian Mafia.

Two years ago another New Zealand shell company, SP Trading Ltd of the same Queen Street address, was found to have chartered a Georgian registered plane to fly embargo-busting arms from North Korea to an unknown Middle Eastern state. They were intercepted in Bangkok.

Falcona Systems has its registered office at 23/17 Georgia Terrace, Albany, Auckland. Fairfax investigations found an unoccupied townhouse.

Pleasingly, the mystery of 23/17 Georgia Terrace, Albany, which I can solve, offers an opportunity to trump Stuff’s investigation and suggest another line of enquiry.

In fact 23/17 Georgia Terrace is one of the old addresses of the dirt cheap company registration service Company Net Limited, which has the web site ExpressBiz. That explains why so many overseas companies have their registered offices in Georgia Terrace…and gives quite a hint about who is registering them. A dive into the splendidly-built but horribly contaminated NZ company register tells us that this unassuming location has been the registered address of 765 companies, of which 35, not all of them obviously dubious, survive. So there’s a spot of mole-whacking still to do there.  Company Net Limited has had a couple of other addresses, so they will be worth checking out too. More on that later in the post.

Back to the Stuff article and Falcona Systems:

Its solitary director is Inta Bilder of Latvia. A search of the Company Register shows 942 results for Bilder as director and shareholder.

OK that is a giant hit. Go Stuff!

Stuff digs onward and finds another interesting office address:

Falcona Systems main shareholder is Interhold Ltd, of Level 4, 44 Khyber Pass, Grafton, Auckland…

This location seems to have a profusion of alternative versions in the register; for instance:

Level 4 Outsource It Tower, Grafton, Auckland 1150, New Zealand
Level 4 Newcall Tower, 44 Khyber Pass, Grafton, Auckland , New Zealand
Level 4, 44 Khyber Pass, Grafton, Auckland

Simply searching the register for “44 Khyber Pass” gives 1036 active companies. Evidently this too is a popular address for company registrations, so perhaps that is an overcount. Narrowing the search to the known-to-be-dodgy “Level 4 Khyber Pass” still gives 594 results though. Yikes!

Back to Stuff, who were talking about Interhold Limited:

…It, in turn, is owned by Genhold Ltd, of the same address, with a Panama-resident director.

Oh, here we go, Panama again. Genhold Limited’s director is Fernando Enrique Montero de Gracia, Calle Primera, Panama Viejo, House 496, Panama City, Republic Of Panama. De Gracia is also a director of Pacific Metal Recycling and Trading Ltd, which is wholly owned by Maxhold Limited, whose director is Manti Effrosyni, of Cyprus. Now, if the Russian Mafia is behind this, it’s only right that there would be a Cyprus connection somewhere:

Typically, Russian investors create “brass-plate” companies to take advantage of Cyprus’s low 10% corporate tax rate. Many of these funds are reinvested back in Russia – ¤1.4bn [sic] in 2008 – avoiding Russian tax. The Cypriot authorities angrily deny that the island is a haven for money laundering. They also point out that Russians invest more cash in Austria and the UK.

But many analysts are sceptical: “We are talking about Russian money laundered through Cyprus. The Russian mafia uses Cyprus extensively,” said Hubert Faustmann, associate professor of European studies at Nicosia University. “This is why Russia has no interest in Cyprus going down economically.”

Tax havens and organized crime go together like dung and flies. Well, we knew that.

Anyway, via the Cyprus connection, another modest opportunity to trump Stuff’s piece turns up: Manti Effrosyni is in fact the director of 88 other New Zealand companies. Meanwhile another Cyprus resident, Petr Zika, directs Brithold, which is owned by the same Genhold Limited mentioned by Stuff. Zika directs another 124 New Zealand companies. The network is getting bigger!

Back to Stuff:

Genhold is in turn 100 per cent-owned by Trust (NZ) Holdings Ltd of the same address. Its sole director and shareholder refused to comment on the company’s ownership.

The name of the director is Liliya Soboleva. In fact our Liliya was a director of a total of 16 New Zealand companies at one time or another. Via another of her companies, Club Property Limited, we find the registered address of C/-y T Choi Lawyers, Level 8, Phillips Fox Tower, 205 Queen Street, Auckland, New Zealand. I suppose that, pending clarification, those lawyers have a little red flag waving over them too.

Looking at more companies of which Inta Bilder used to be a director finds us a further sprinkling of names and companies to be wary of:

Via Metalwest Limited , we find another Russian name, Borysova Tatyana (vice versa, I suspect: who registered that name? Not Borysova herself).

Via Equity Law Barristers, we find Evgeny Orlov, current director. He is a director of 7 New Zealand companies.

Via Third Capital Limited, we find John Benjamin Foster Aosta of Panama, current director. He is a director of 4 New Zealand companies

Via NZ Evolution Trade Limited, Olga Belchikova, a current director of just that one New Zealand company.

Via GBFX Limited, we find Riccardo Luigi Alberico GAGLIARDI, 5827 Prairie Cr, On L5n 6b4, Mississauga , Canada, current director.

Via One World FX Limited, Eng Neng Chaw, 13a-06 Taragon Puteri Bintang No 136, Changkat Thambi Dollah, Kuala Lumpur, 55100 , Malaysia, current director.

A mixed bag. Goodness knows why Mississauga, Canada, is such a magnet for expats running dodgy New Zealand companies. is that another Russian mafia connection? There was something like that in Ontario, way back, ten years ago, but I though it was all cleaned up. Perhaps our Canadian readers can help.

More Stuff, now looking into other names connected with Bilder:

Dzerkalo Tyzhnia newspaper names an Erick Vanagels as being involved with both Highway and Falcona.

A search for Vanagel’s name in the Company Register produces 318 results with both Panama and Latvia addresses.

We can find still more related addresses and names via Macronet Impex Limited, of which Inta Bilder also used to be a director. It has company address 69 Ridge Road, Albany, Auckland , which delivers an impressively enormous 1766 results when you look for it in the register. This is another historic address of the company registration service Company Net Limited. Every single one of those 1766 companies is now struck off. One knows that startups fail, but that is still a remarkable rate of attrition. Some have been struck off by the NZ authorities, others, having served their purpose, whatever that was, by the company officers. A really good guess at how many of them were just fronts for crime requires a volume of investigation that is well beyond the scope of this post, sadly. A quick sampling turned up some regular-looking companies, along with plenty of Russian names and Cyprus residents, and plenty of appearances of Erick Vanagels, so one can’t simply pronounce the whole lot to be shady.

Note well: being struck off doesn’t necessarily mean it’s all over with those companies. When you strike off a company in the UK, its local bank account is frozen, after an interval for closedown activities be to completed. I imagine it is the same in New Zealand, though Companies House isn’t explicit on this point: perhaps a local can confirm that in the comments. What happens in NZ when the directors are overseas, and the bank account is overseas too, isn’t clear at all. It may be that New Zealand’s latest gift to the world is a huge number of (very) superficially legitimate-looking company bank accounts, in all sort of domiciles, attached to defunct NZ companies of dubious origin. A money launderer’s paradise; I hope it is not so.

Let’s recap the main points. Assume we agree with the premise of the Stuff story (Russian mafia). Assume also, reasonably, that if one connected company is dodgy, it means all of them are at least worth a quick look. On that basis, we have a whole bunch of active companies worth a quick look, as follows:

35 active New Zealand companies, some with possible Russian Mafia links, at 17 Georgia Terrace, Albany.

594 active New Zealand companies, many with possible Russian Mafia links (run inter alia, by Vanagels, Bilder and miscellaneous residents of Cyprus), at Level 4, 44 Khyber Pass Road.

…and…

another 730 defunct New Zealand companies at 17 Georgia Terrace, Albany, many with possible Russian Mafia links, that may still, in the worst case, have active overseas bank accounts.

1766 defunct New Zealand companies at 69, Ridge Road, Albany, many with possible Russian Mafia links, that may still, in the worst case, have active overseas bank accounts.

That’s 3,000 companies that are worth some level of closer scrutiny: or at least, the (large) subset of that 3,000 that has overseas directors.

These counts and assumptions may exaggerate the scale of the problem, but not necessarily by much. And if I’ve missed any other big clusters, which is perfectly possible, the problem is bigger. For instance a thorough trawl of New Zealand company directors with addresses in Cyprus, Latvia, Panama, the US and Canada might throw up some interesting patterns. One can’t do that kind of investigation via the register’s public interface, but a sleuth with SQL-level query access and a bit of gumption could serve up some pretty neat (and alarming) reports, I should think.

By way of taster, among the companies at those three hot spot addresses in Albany we can quickly identify (in addition to Stuff’s red flags):

People running 28 active or defunct New Zealand companies (Liliya Soboleva, Evgeny OrlovJohn Acosta, Olga Belchikova) who are indirectly connected with alleged moneylaunderers.

88 active New Zealand companies with possible Russian Mafia links, all run by one guy in Cyprus.

124 active New Zealand companies with possible Russian Mafia links, all run by another guy in Cyprus.

One is not necessarily impressed by the vigilance of the New Zealand authorities. Once alerted to the Stuff article (many thanks to ChrisPacific and John G.), it took me half a bureaucrat’s working day to put this list together. It’s not that hard to get a first-cut idea of the size of the problem. One can look for patterns in the register (by way of starting point, looking for very large counts of companies registered at the same address, or very prolific company officers). With more comprehensive access to their database than I have, the NZ authorities can do this even more easily than I can. It might be time for them to make a start on that.

We are still supposed to entertain hopes that the NZ authorities will say, or do, something that will put a stop to this endless whack-a-mole. Obviously one solution, in the new Companies and Limited Partnerships Amendment Bill, which will require companies to have a resident agent, won’t achieve anything at all, if the directorships held by Greg Roderick Stewart, New Zealand resident, are any guide. But extra (I hope, draconian) powers to investigate, warn about and deregister dubious overseas companies (another proposal that is in the Bill), will help a lot, if only to make sure that the moles actually do get whacked.

And perhaps there ought to be something in the bill that would impose more than a duty of care on people who register companies for a living. That would enable someone in authority in New Zealand to have a much more persuasive official word with the likes of the terrifyingly industrious Glenn Smith (no relation, as far as I know). He is the owner of bucket shop registration outfit Company Net Limited, formerly of 17 Georgia Terrace, Albany, later of 69, Ridge Road, Albany, and, for the last two or three weeks, of Unit O, 241 Rosedale Road, Albany (evidently he’s making enough out of it now to abandon working from home). As we have seen lot of the companies he has been registering at those addresses for overseas customers, at NZD320 a pop, via Company Net Limited, are dead dodgy. I wonder if he might remember registering a whole load more companies that had offices at 44 Khyber Pass Road, too.

This type of hectic registration activity will be familiar to folk familiar with the GT Group/drug lord story that I linked to at the top of the piece.

So is Glenn Smith another Geoffrey Taylor, unscrupulous mass registerer of dodgy companies? Or just another cowboy with an internet connection? I warned about a slghtly different type of hired hand, running offshore banks in New Zealand, here:

But the worst of this nonchalance about New Zealand’s registers and financial regulation is the potential it offers for New Zealand to be transformed into a full-on tax-dodging and money-laundering centre.  Then it won’t be Elvis impersonators or invisible Panamanians that one worries about, it will be the Mob.

What, exactly, is John Key’s aspiration for New Zealand, again? Does he want it to be a Financial Hub, or Panama, or is it to be Sicily?

With the Russian mafia having had such a field day in New Zealand, that’s an even better question than it looked at the time.

Further reading:
You can read much, much more about Tormex, just one of the (so far) ~3000 related NZ companies that someone in authority might want to take a little look at, if they can be bothered, and get a budget, here.
Some words from the New Zealand Justice Ministry here.
Here’s the new Companies and Limited Partnerships Amendment Bill again.

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26 comments

  1. Gerard Pierce

    This article sounds sort of like a replay of “Music Man”. Actually, “Trouble in River City” was at least specific.

    The part that seems to be missing here is any indication that any of these companies were actually involved in tax-dodging or drugs or any other illegal activity.

    Some of them probably were engaged in some kind of nefarious activity. Isn’t it nice that they provided an open list for the authorities to follow up on.

    Sounds like the new regulations will guarantee job security for some government agents, create difficulties and expenses for some honest companies and otherwise accomplish very little.

  2. Flying Kiwi

    John Key’s only experience of life before becoming Prime Minister of New Zealand was the opportunity to earn millions shuffling paper as an “investment banker” with Merrill Lynch, and he heads a right-wing Government that knows the price of everything and the value of nothing.

    This is a Govt. which in its budget last week decided to tax the income of children mowing lawns and delivering papers, so getting a rake-off from Mexican Drug Lords and the Russian Mafia is just another entry on the credit side of the ledger to help off-set the tax-cuts on the wealthy from its first budget in power.

    1. Up the Ante

      “This is a Govt. which in its budget last week decided to tax the income of children mowing lawns and delivering papers, ”

      too good, too good

  3. rotter

    Im sure NZ is only doing whats its been asked to do. A huge chunk of Mexican Drug Lord money belongs to american finance capitalists and CIA operations. Im sure the same is true of the Russian mob

  4. Goin' South

    A world in thrall to profiteers. A society without some kind of moral guidelines is a lovely place to live, no?

    1. Goin' South

      Please pardon my failure to be explicit. One American Democrat after another went on TV today and spouted exculpatory statements re: Romney’s behavior at Bain: Nothing wrong with it morally, it’s just a poor qualification to be POTUS.

      Typical of the Washington General Dems who have assiduously assisted the Republicans’ propaganda to blind American workers as to the causes of their denigration these last 30 years.

      The rich remain our gods according to both parties. Worship them or risk serious consequences.

      1. psychohistorian

        Thanks for pointing to the global inherited rich that are the ones at the top of this fetid heap. The other observation that I would point out from this posting is how well it supports the thought that maybe there are bad meaning folk out there conspiring on an ongoing basis to control and fleece the public. Maybe this control and fleecing has been consciously going on for decades and maybe even centuries

        1. backwardsevolution

          I think it HAS been going on for decades and centuries; we just didn’t know about it before. It is partially out in the open at the present time, so it is easy to think it’s a new phenomenon, but when you really stop to think about it, when you think back over history, you can see it was always there.

          The difference is that nowadays we are not so conformist, we don’t listen and swallow-up wholeheartedly all of the propaganda we hear. We have started to question. They will view this as a threat.

    2. F. Beard

      A society without some kind of moral guidelines is a lovely place to live, no? Goin’ South

      That battle was lost centuries ago when usury for counterf**t money was legalized.

  5. Grassland

    What’s the cost of living like in New Zealand? I heard it’s expensive as all get out, ergo an unlikely destination for bankrupt ‘Murican chattel. Clearly NZ followed the “legitimate” American style housing-price-ponzi-criminality which predictably gives rise to right wing cancers, that goose step into accusing the poor, immigrants and pot smokers for societal destruction (to enable organized crime to thrive). Similar programs are alive and well here in ‘Murica.

    1. Flying Kiwi

      New Zealand is a looooong way from anywhere and a very small market, which makes most of anything manufactured expensive. There is high demand internationally for most of what it produces – foodstuffs mainly – and the high prices that can fetch overseas means it’s expensive on New Zealand shelves. Add to that a 15% Goods (including food) and Services (except banking services) Tax (also levied on local government taxes, hence a tax on a tax) and yes, the cost of living here is high. House prices have increased obscenely, but have been driven by immigrants with lots of dough from selling their own over-priced properties back home plus mega-rich refugees like Kim Dotcom.

      But no, the social divide while widening is still little of the ‘right-wing’ cancer you describe. With the social safety-nets still available and widely supported no-one is – or need be – ‘poor’, we are all immigrants and pot-smoking is more to be noted in the breach than the observance. In fact over and above food on table and roof over head there’s not much you can do with money in New Zealand.

      (Apropos all getting out – yes there’s migration to Australia where prices are lower and wages higher, but as the dyed-in-the-wool Tory PM Robert Muldoon observed, that merely raises the IQ of both countries.)

      Currently we are buffered by a over-valued NZ$. If that fell seriously the price of fuel – which would already make a ‘Murican squeal – would go through the roof and that would make the pips squeak. It’s such an obvious Achilles’ Heel that you’d have to be a politician not to see it.

      1. Joe S

        NZ was a poster boy for deregulation for years, exalted in the Murdoch press as an example for Australia to follow. Now levels of immigration to Australia by kiwis seeking a better standard of living are breaking all records and people confuse me for a kiwi because I work with so many of them. They all say same thing too, wages in New Zealand are only enough to survive on-barely.

  6. Ed

    I’m starting to wonder just how much legitimate economic activity is left in the world economy. It looks like organized crime is starting to crowd out everything.

    You liberalize regulations to make your small country more business friendly, organized crime is then what you get.

  7. korual

    NZ’s good reputation comes from a couple of INDICATORS – the first being top of the global table in (LACK OF) CORRUPTION and top of the global table in EASINESS TO DO BUSINESS. You can see the logical connection: there’s no corruption here because it isn’t illegal. People from Europe and the USA would be amazed at the totally legal conflicts of interest in politics in NZ. I even came across a political pamphlet by a local council candidate explaining that her expertise in running the local conference centre was precisely why she should be elected to council to promote the conference centre locally. Seriously.

    1. Flying Kiwi

      I would suggest that rather than any conscious ‘conspiracy’ to attract the devious if not downright illegal, New Zealand has for most of its existence been ignored, overlooked and sheltered by its lack of importance, distance from anywhere else, lack of ambition and general sense of self-satisfaction.

      Now, unfortunately, she has been noticed and, like a naive country girl finding herself swept onto the streets of New York, is open to being taken advantage of by all and sundry.

      Pity.

  8. Aquifer

    Again, for a better perspective, not clothed in the “language” of western econometrics, read Arundhati Roy …

  9. Doug G.

    As an out of work Kiwi (with ties to Mississauga Ontario) I invite all and sundry to contact me should they require representation in New Zealand. Salary expectations negotiable.

  10. Kunst

    With 200 countries in the world, there will always be some that facilitate criminal activities. Corporate and criminal syndicates can search around for weak laws and corrupt regimes to bypass the more ethical majority. We see analogous phenomena in the US, where 50 states compete to give corporations more incentive to locate ever-cheaper economic activities in their state instead of others.

  11. Michael Wind

    russian mafia is now operating from fisher island florida under full protection from local police and corrupt local government,federal agents are looking where to buy donuts.

  12. Penny Bright

    Any New Zealanders concerned about corruption and want to help do something about it – please contact Penny Bright waterpressure@gmail.com

    For an ACTION PLAN to help stop ‘white collar’ crime, corruption and ‘corporate welfare’ – check out

    http://www.dodgyjohnhasgone.com

    For further background info in the the fight against privatisation (arguably the root cause of corruption – how is it decided who gets the contracts?) check out

    http://www.pennybright4epsom.org.nz
    http://www.pennybright4mayor.org.nz

    (I use the electoral process to help make a FUSS about the issues! :)

    http://www.stopthesupercity.org.nz

    Cheers!

    Penny Bright
    ‘Anti-corruption campaigner’

  13. grace haden

    lillia is eugine orlovs wife. orlovs real name is eugine narodetsky. julia and tattiana are also related.

    another office at 44 khyber which had companies registered to it was the empty office in the 3rd floor rented by clive ashey Johnson liquidator

    NZ is indeed a country of great oportunity you can even write legislation for your own business plan and advise on it as it goes through the process of becoming law.

    one thin not to do in new zealand is to expose corruption.. if you do they take you out financially see anticorruption.co.nz

  14. Robert

    I can answer the question about what happens to bank accounts of struck off companies in New Zealand from personal experience. I am the liquidator of a company known as Dweller Limited. This company is what I have termed the ‘fag end’ of a notorious property development group. I tried to track moneys paid from Dweller, including a sum of $34,000 paid to a bank account in the name of a company known as Taipa Bay Investments Limited (TBI). It turns out that TBI had been struck off prior to the payment of the moneys.

    When I approached the relevant bank it became very concerned that TBI basically did not exist, tending to suggest the bank did not run a cross-check of its bank accounts against a list of live companies. I set about taking legal action to hold the shareholders accountable for the money on the theory that for those shareholders to maintain the protection of limited liability the relevant company had to exist. To have existence a company must be on the register.

    This matter is still wending its way through the Courts. However, the defence that three (of four) shareholders have given is that they used the TBI account as a convenience for passage of moneys to a company that was still ‘live’, being Taipa Way Limited (TWL). I have been given no explanation as to the ultimate purpose of the moneys. However, it seems that TWL may have needed the capital presumably to meet indebtedness of some kind, though that does not explain why it did not have its own bank account.

    Make of that what you will.

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