Lax company laws expose New Zealand to money laundering and terrorist financing and may need to be tightened, says Parliament’s commerce select committee chairwoman, Lianne Dalziel.
Her comments follow revelations that Auckland-registered SP Trading Ltd, of 369 Queen St, was used in an attempt to ship arms from North Korea to Iran.
An international enforcement source warned yesterday the reputation of “New Zealand Inc” was now at risk.
SP director Lu Zhang cannot be found but inquiries now reveal that a woman called Lulu Zhang lived at an Auckland address linked to SP. SP is owned, through several layers of companies, by accountant Geoffrey Taylor’s GT Holdings of Vanuatu.
New Zealand’s company registration system was exposed when Thai authorities seized a plane from North Korea last month carrying 35 tonnes of explosives and anti-aircraft missiles bound for Iran. The Georgia-registered plane was hired by SP.
New Zealand agencies, the US Justice Department and US Treasury Department are investigating. The controversy comes at an embarrassing time, with US Secretary of State Hillary Clinton due to visit on Friday.
Ms Dalziel said the select committee examined company registration and directorships in the wake of recent finance company collapses. The SP case raised questions about how to verify directors’ names and company registration without imposing compliance costs on normal businesses.
“The question is have we got the balance right, does it expose New Zealand to a greater degree of risk than we ought to be?”
She said New Zealand was proud to be at the top of World Bank “ease of doing business” tables, and would not want to be disadvantaged if it adopted extra verification measures to address money-laundering fears.
Singapore and Hong Kong also rate highly. but they both require photo identification for company registration. New Zealand requires only a signature.
I would be very reluctant to add complexity to our company registration system. Our system does rank amongst the best in the world for ease of settign up a business as a company. You can basically do it all online – with the exception of the signatures which you can fax in (but are automatically scanned and added to your electronic file).
People do good things and bad things with companies. Making it more difficult to set up a company will probably not change that. Takin the specific issue of requiring a photo ID, I don’t think that would have changed anything about this set of companies – they were not using false identities as far as I know.