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Panama Papers Reveal How the Super Rich Stashed Their Cash in New Zealand

We talked to investigative journalist Nicky Hager who dug through the Panama Papers to discover how Mossack Fonseca operated in NZ.
May 11, 2016, 12:00am

Mossack Fonseca headquarters in Panama. Photo via.

Last month, when an international group of investigative journalists got their hands on the Panama Papers—the biggest data leak in the history of journalism—the New Zealand media was left largely in the dark. Very little emerged about whether NZ was involved with Mossack Fonseca, the shady law firm standing accused of helping drug lords, sports stars, and high-ranking politicians evade taxes. Until this week.

Investigative journalist Nicky Hager, alongside reporters from TVNZ and RNZ, was given access to an encrypted overseas database, which revealed that Mossack Fonseca is deeply involved in NZ, using the country as a centre of their global money-go-round for clients. A search of the Panama Papers yielded 61,000 mentions of New Zealand.

Under pressure to close loopholes in NZ's law that enable tax avoidance, prime minister John Key is insistent New Zealand is not a tax haven. However, the documents reveal there's been an explosion in the number of foreign trusts based in the country over the last decade. In 2006 there were just 2000, this year there are more than 10,500.

VICE asked the man behind the revelations, Nicky Hager, about what is going on and what it means for New Zealand.

Nicky Hager, image supplied VICE: Nicky, what interest does the government have in maintaining foreign trusts? Where's the payoff?
Nicky Hager: Well, see that's the interesting question. I think what it boils down to is that the beneficiaries of a New Zealand tax haven are a very small number of law firms. What we put out this morning is that reporters had gone back and looked at who had lobbied the National government to keep this whole secret trust thing going. Surprise, surprise it was four of the five companies that were found in the papers. A few get rich off the complete undermining of our national credibility and none of the rest of us ever know. This is why these papers are so fantastic. Are there repercussions for New Zealand?
Now the light's been shone on this grubby section of our economy, it's really clear that we need to be the first tax haven of the post-Panama Paper era that closed it down. Do you this revelation has damaged our reputation internationally?
Absolutely, this is not a small issue. It's been taken terribly seriously around the world. I think the next time there's a transparency rating of the world's least corrupt countries, New Zealand will drop farther down the list. This is all for the sake of the tiny 100th of our economy. They're letting down the country's image. The papers have given us a chance to do something about it. But are we as bad as tax havens like Seychelles or the Cayman Islands?
No we're not, but it's definitely tripled in size since National came in. Was that evident from the leak?
That's indicated by statistics from the Inland Revenue Department actually, but most of the trusts leaked in the Papers were set up in 2014 or 2015. There were no relics, they were all so recent. Just what does the National government stand to gain, though? Is money changing hands? What is it?
I think pride in prior political commitments is driving this. John Key comes from finance, the money moving world. One of three ideas he had when he became Prime Minister was that he would turn New Zealand into a financial centre of the world and line the streets of gold. He was ambitious. He wanted to make us, as he described it, "the Switzerland of the South Pacific." My personal opinion is the reason why they haven't just said "fair enough, we'll close it" is that there's been a political commitment from the leader of our government. I think they hope it will blow over, but if people continue to be unhappy after that I don't think they have much choice but to close it. John Key called you a "left-wing conspiracy theorist". Talk to me about that.
Uh, it's…unimaginative? These are really big and important issues that other governments are not dodging their way around, they're actually admitting there's a problem. I find it pathetic that all we can get from our prime minister is name-calling. When people call you names it's about them and not about you. What's your personal prediction? Will the people keep pushing for reform?
I've honestly been surprised by the reaction to this. I mean all you have to say is tax policy and people's eyes glaze over. I've been very pleased about the way people care about this, it means we care about the lives and people in other countries who are not receiving the benefits they need because of unpaid taxes. So it's been amazing. I think there's a good chance that people will keep talking about this and we can make a chance. How much more do you think is likely to be revealed, Nicky?
As long as we keep working hard there's more and more of this. A diligent person could find stories for years in there. I just hope it will keep rolling over the coming weeks enough to firmly lodge it in the national mind. There's plenty data and plenty of stories to do that. Follow Beatrice on Twitter.