United States authorities plan to indict a New Zealand company involved in selling North Korean arms to Iran, sources linked to the investigation say.
They are trying to track down shadowy figures using a labyrinth of thousands of Auckland companies registered to an office at 369 Queen St. International watchdogs fear New Zealand's casual company registration system makes it easy for money laundering and terrorist financing operations.
Most of the companies in question were set up by Vanuatu based GT Group Ltd, controlled by New Zealand accountant Geoffrey Taylor and sons Ian and Michael. None has an obvious purpose and none of the directors can be traced.
"Indictments are coming and they will be big," a source said.
The Serious Fraud Office, the police and the Reserve Bank are also investigating, but in a major embarrassment, the US Justice Department is preparing indictments a week ahead of US Secretary of State Hillary Clinton's visit here.
The issue has a personal connection for President Barack Obama who, as a senator in 2007, co-wrote a letter warning of the activities of would-be Seychelles actor Stella Port-Louis, who is a director of at least 338 New Zealand companies.
Mr Obama warned of "serious problems confronting law enforcement as a result of minimal company ownership information requirements" and cited Wyoming's registration of 100 companies in which Ms Port-Louis was a director.
In Wellington, company registrar Neville Harris said Ms Port-Louis had signed consent to be a director. "The Companies Office has not been provided with any information to suggest that Stella Port-Louis is not a real person."
He said the Companies Act did not restrict the appointment of overseas persons as company directors or the number of directorships a person could hold.
"The OECD, Financial Action Task Force, Offshore Group of Banking Supervisors and United States Treasury have all highlighted that criminal exploitation of the corporate structure is a global problem. New Zealand is no more nor less immune to this issue," Mr Harris said.
It surfaced when one of GT's creations, SP Trading Ltd of Queen St, chartered a Georgia-registered cargo plane that was seized by Thai police on December 12. It was carrying 35 tonnes of explosives and anti-aircraft missiles from North Korea to Iran.
International inquiries say SP was set up as a "one-time use" company solely to charter the plane.
Iran used SP to pay North Korea. SP's New Zealand address allowed it to use a prominent US bank, unaware of the true purpose, to make the payment to Pyongyang.
GT Group will say only that SP was set up "at the request of one of our professional clients based in the United Kingdom". Sources say the client is the target of US interest.
If the Taylors do not reveal who they sold SP's registration to, they are liable to indictment.
A US Justice Department spokesman in Manhattan yesterday would say only that it was aware of the issue and a statement would be made later. Indictments would come under the US International Emergency Economic Powers Act, which imposes sanctions on North Korea and Iran.
Last year Lloyds TSB agreed to forfeit US$350 million (US$472m) when it was indicted for moving revenue from Iranian transactions through US institutions.
Geoffrey Taylor has not replied to emails but it is believed he is in eastern Europe, promoting New Zealand company registrations.
A company of which his son is a director, Sumato Energy, also of Queen St, recently shipped US$75m of Azerbaijani crude oil to an unknown destination.
THE COLOURFUL CAREER OF AN 'INNOVATOR'
The man behind thousands of New Zealand companies, Geoffrey Taylor, is linked to a bogus Malaysian-based internet university and a self-proclaimed West Australia principality.
He is also a director of a company listed on the stock exchange's alternative listing board, SunSeeker Energy, now suspended for not filing an annual return.
A fellow director, Auckland lawyer Jock Irvine, said yesterday he had not seen him for years.
"He has certainly registered a lot of companies; that is his business," said Mr Irvine, who was founding chairman of now bankrupt Blue Chip Finance. He said he had also met Mr Taylor's two sons.
He said he believed SunSeeker was a genuine business, but he could never understand how it operated.
Mr Taylor, 66, was born in England, lived in New Zealand and is now believed to live in Vanuatu.
His website, geoffreytaylor.net, describes him as "an innovator and semi-retired fund manager". He says he is president of the Malaysian-based Southern Pacific University, which sells internet degrees. He says his Vanuatu operations are to help people pay less tax.
He also says he wrote company law for the "Principality of Hutt River", a 75-square-kilometre "state" north of Perth that claims to have seceded from Australia.
- The Dominion Post