Prime Minister John Key's lawyer asked about foreign trusts
John Key's personal lawyer lobbied the Government over a potential crack down on foreign trusts, papers show.
The Greens say the papers, released to them under the Official Information Act, show Ken Whitney, Key's lawyer, wrote to the then Revenue Minister Todd McClay in 2014 over reports Inland Revenue were reviewing the rules.
"We are concerned that there appears to be a sudden change of view by the IRD in respect of their previous support for the industry. I have spoken to the Prime Minister about this and he advised that the Government has no plans to change the status of the foreign trust regime," the email reads.
"The PM asked me to contact you to arrange a meeting at your convenience with a small group of industry leaders who are keen to engage to explain how the regime works and the benefits to NZ of an industry which has been painstakingly built up over the last 25 years or so."
New Zealand's foreign trust regime has been embroiled in controversy following the release of 11 and a half million documents from Panamanian law firm Mossack Fonseca exposing the scale of the foreign trust industry.
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The Government subsequently decided against a clamp down on the foreign trust industry despite concerns raised by IRD about damage to New Zealand's international reputation.
The documents show a December 18, 2014 meeting to discuss a potential review of the foreign trust regime was held at the offices of Antipodes Trust, where Whitney works.
McClay was scheduled to attend that meeting and the proposed agenda included seeking a commitment from the Government "that it will not conduct a public review of the foreign trust tax laws but will instead direct officials to work with the group to improve the existing rules and regulatory regime and ensure that in areas such as information sharing New Zealand meet its international commitments".
Background papers supplied by the foreign trust industry stated that New Zealand foreign trusts had "a high profile" in an international niche market, was not driven by tax as many investors were from tax free countries and provided New Zealand with jobs, income and taxes.
The industry argued that there was no need for a general public review and such a step would "severely damage" the industry.
The meeting came a week after a December 12 briefing paper from IRD outlining the case for improving foreign trust rules.
The IRD briefing paper warned that New Zealand's foreign trust regime had attracted criticism internationally that New Zealand was operating as a tax haven.
While this was not the case "the perception that we might be a tax haven are damaging to New Zealand's 'clean' international reputation."
The paper outlined a timetable for review.
But in a May 2015 email the Government confirmed there would be no review of the foreign trust regime.
The Green Party said in a statement it showed how "powerful vested interests" can get the ear of the Government "who will then change its plans to suit them".
"I want the Prime Minister to tell New Zealand whether he gave Mr Whitney an assurance that the foreign trusts industry would not be reformed and if so, why he hasn't been upfront about the assurances he gave," Green Party co-leader James Shaw said.
In a statement, Key said he had been asked by his longtime lawyer Ken Whitney at an informal gathering in 2014 whether the Government was planning any changes around the foreign trust regime in New Zealand.
He had previously disclosed that discussion when asked earlier this month about the conversation with Whitney.
"The Prime Minister said he wasn't aware of any changes and directed the query to then Revenue Minister Todd McClay.
"People raise various issues with the Prime Minister all the time – at events such as school and business visits, and informal gatherings all around the country, as well as in written correspondence. It is common practice for him to refer them to the appropriate minister, where appropriate, or to answer if he is able to do so.
"These are just more desperate claims from the Greens.
"Regarding whether the IRD should have continued to look into the issue of foreign trusts in 2013, as the Prime Minister has said the minister's view at the time was that this would have required IRD to dedicate significant resources to an area which did not affect new Zealand's revenue base and other issues were deemed more important. Also, there is already an ongoing OECD work programme looking into ways to address the issue, which New Zealand is participating in."