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?