Shadowy oil trader's Tauranga bank shell
An Elvis-impersonating bankrupt is using his Tauranga home as the headquarters for a strange foreign 'bank' owned by a shadowy Russian businessman who paid bribes to circumvent United Nations oil sanctions against Saddam Hussein's Iraq.
Last week the Sunday Star- Times outlined the financial shell kingdom of Tauranga 'energy healer' and former taxi driver Darryl Jensen who has incorporated, and uses his Parkvale home as the physical address for at least 37 foreign- based financial companies.
One of the companies, Lakia Financial trading as Lakia Bank is, according to the Companies Office, majority-owned by Swiss- based Russian Gazi Luguev.
Luguev admitted paying US$60,000 to secure sanction- busting oil contracts with Iraq following a 3am meeting with Saddam Hussein's infamous son, Uday, in a Baghdad palace in early 2001.
Newsweek reported Luguev was shown Uday's collection of expensive cars, rare cognac and Cuban cigars, but the Russian later went public with complaints when the oil deal fell through and his bribe - paid to a numbered account in Jordan - was not refunded.
'They think they are like God,' Luguez told Newsweek of the Husseins. 'They can do what they like.'
Newsweek said Luguez was known in Moscow for running a factory that made Russian Roulette vodka and he 'was known as a tough guy who was not to be fooled with'.
Russian news articles, translated for the Sunday Star- Times, report Luguev was suspected by police authorities to head a Dagestani gang before he departed Moscow permanently for Geneva in 1995.
The activities of the Russian's Tauranga-headquartered bank are a mystery, but have now sparked interest from authorities.
Lakia Bank director Sam Zormati told Sunday Star-Times from Paris the allegations against his business partner Luguez were smears spread by a business opponent from Russia.
Zormati said he was unaware of Jensen's bankruptcy and said the Tauranga formation agent had recently been demanding payments to 'renew the company'. He said Lakia would be distancing itself from Jensen immediately.
Zormati said Lakia was not yet operational and took anti-money- laundering compliance seriously. 'We are not a bank, we are a financial company - acting like a bank but we're not,' he said.
Zormati said the Reserve Bank had written to him this week - after Sunday Star-Times began making inquiries - requesting the removal of the word 'bank' from Lakia's advertising.
'I will do it immediately, and we will change,' he said.
Contacted last week Jensen was unwilling to answer questions about Lakia or his knowledge of Luguez. He said in blanket response to all questions: 'I haven't got any comment to make on anything.'
Jensen was bankrupted in May 2010 and Lakia was incorporated by him in September last year.
The company initially had fellow Tauranga energy healer Edward Harris as sole director and shareholder. Harris, said by neighbours to be travelling in South Africa, did not reply to messages left by the Sunday Star- Times.
According to the Companies Office, Harris's residential address is also used as the physical address for numerous offshore- controlled financial firms.
Jensen has filed all paperwork for Lakia, including change of ownership forms to give Luguev a majority stake and has continued to make administrative filings as late as March.
A spokesman for the Official Assignee said Jensen, and Lakia, were now in their sights.
The spokesman said Jensen was formally warned in November last year over his obligations not to manage a company or be self- employed without Official Assignee consent.
Lakia Financial, and other companies maintained by Jensen would be probed further, the spokesman said.
'Those companies will be deregistered if evidence of genuine business activity in New Zealand is not provided.'
Further action against Lakia and Jensen is unlikely as a raft of regulations and rule changes tightening up company registrations and money- laundering reporting requirements will not come into force until next year.
Commerce Minister Craig Foss has belatedly introduced the Companies and Limited Partnerships Bill into Parliament for its first reading.
The bill will require all New Zealand-registered companies to have a New Zealand resident director or agent.
Presently Lakia has as its sole director the France-based Zormati, and its website praises New Zealand's lax regulation of offshore financial entities.
'New Zealand is unique in the sense that an international banking business can be established without excessive supervisory requirements,' Lakia said.
Phased regulation of the offshore financial sector, through the Anti-Money Laundering and Counter Financing of Terrorism Act, start to kick in from July next year when company formation agents such as Jensen, and New Zealand-registered entities such a Lakia, will face stronger regulation.
PricewaterhouseCoopers director Stephen Drain, an expert on fraud, said the widespread scope of the new regulations was the reason for the long lead-in.
'We are behind Australia by about three years, and of course the United States has had anti- money laundering legislation since the 1970s,' he said.
Drain pointed to the evolving scandal over HSBC - the bank is expecting to be fined US$700 million after it laundered money for Mexican drug cartels - as a reason why authorities need to be vigilant.
'HSBC is an example of what can happen when things go wrong. In the past people said 'It's not my concern.' At the very least it's a concern for our reputation.
"New Zealand has a reputation as a good, honest place for doing business - and we should all be concerned about our reputation,' he said.
- © Fairfax NZ News