Shadowy shell companies still being registered

New shell companies operated by shadowy figures overseas are being created in New Zealand despite assurances by the Government it was toughening up the process.

Shell companies, including thousands on the New Zealand Companies registry, have been exposed in the past as operations used in international money laundering, terrorist finance and fraud.

One of them was formed on November 16 calling itself New Zealand International Finance Ltd (NZIF) and providing a Johnsonville, Wellington, address for service.

Its initial shareholder and director, who gave a Mauritius address, features in a major project into shell company operations launched this week by the Guardian, the BBC and the International Consortium of Investigative Journalists.

They say they will expose a global network of sham company directors behind more than 21,500 companies.

One central Auckland company, SP Trading Ltd, was used to ship arms from North Korea to an unknown destination two years ago. The arms were seized in Thailand.

New Zealand's international reputation has been hurt by shell company activities. Earlier this year, the European Union removed New Zealand from a favoured banking list because of the money laundering activities of the Russian Mafia using New Zealand shell companies operating in Latvia.

Gareth Foster, who provides a mail forwarding operation for companies like NZIF, told Fairfax Media he carried out comprehensive anti-money laundering and counter terrorist financing checks.

"Everybody who uses us as a registered office has to go through an identity process... We make sure they are who they say they are."

He said they used "horrendously expensive" databases to check people.

"I think we take all the steps we can."

Foster said his kind of operation had become popular with European companies, which wanted a New Zealand address so that they could exploit New Zealand's free trade agreement with China.

NZIF had not yet submitted the identity paperwork. If they did not, they would not be allowed to operate.

The director and initial shareholder of the company is listed as Hon Andrew Stuart, with a Mauritius address.

The Guardian said Andrew Moray Stuart, of the same address, was a nominee director of 241 British Virgin Island companies, as well as 36 British and 43 Irish companies.

The newspaper published a list of 28 nominee directors, including 15 who were on a combined 113 New Zealand companies.

"The nominees play a key role in keeping secret hundreds of thousands of commercial transactions," the newspaper reported.

"They do so by selling their names for use on official company documents, using addresses in obscure locations all over the world."

While NZIF has no obvious business here, it is an active company seemingly restructuring itself online.

Just after midnight last Thursday a man in Spain, Shaun Tausch, went online and changed the company's shareholder from Stuart to another company formed a year ago, New Zealand Finance Ltd, also of the Johnsonville address.

That company's director is Joaquim Almeida of Portugal, while its solitary shareholder is Andrew Stuart.

The Guardian said it discovered a list of names of people while investigating British Virgin Islands companies which are used to buy up expensive London real estate but hid the real owners.

Many of the nominee names listed by the study as being in New Zealand companies have been struck off, particularly last year when Fairfax Media revealed the international criminal connections some of the companies had.

While struck off here, many of the companies can still operate aboard using the original registration to create bank accounts.

Most of the nominee directors are on companies created by Auckland shell creators, notably Geoffrey Taylor and sons Ian and Michael, who turned a Queen Street address into a virtual office for thousands of companies.

Other directors are also linked to an Auckland law firm and to a Te Atatu, Auckland, address where a new Chinese shell company creator is operating.

Commerce Minister Craig Foss has still not managed to get legislation that would tighten up the rules passed through Parliament. It is due to be reported back from select committee in the new year.