By Dan Parker
Commerce Minister Simon Power says legislation is on the way to prevent foreign fraudsters from setting up what look to be legitimate businesses here in New Zealand.
Upstairs in the Johnsonville Medical Centre is the registered office of 829 separate companies. They all share one room, while the company directors live in exotic locations like Nicaragua, China, Spain and Indonesia.
But the Government is set to change the law, making such setups illegal.
“We have to be vigilant that we know about who is forming these companies,” says Mr Power.
“That’s why we are changing the law to say a director or their agent has to be a resident in New Zealand before that company can be registered here.”
Mr Power says it has been too easy to set up a company here and the relaxed approach is being exploited by fraudsters.
An investigation by the Ministry of Economic Development has so far seen 800 companies struck off for not being able to provide any evidence of being anything other than a front.
“The pattern seems to be that there are a number of people who are setting up basically bogus companies in New Zealand then using those companies to conduct fraud of tax evasion overseas,” says Green Party co-leader Russell Norman.
The change will spell the end for companies like New Zealand International Savings and Loans Ltd.
Its director Rodrigo Alvarado lives in Panama while soliciting funds as a New Zealand based company. It is registered in a block of Herne Bay Apartments along with four others, but the man who occupies the address says he hasn’t heard of either of the two companies.
Mr Power says the country’s reputation has been harmed by this practise and company record keeping has until now been so poor, enforcement agencies haven’t been able to help with overseas investigations.
He says legislation to tighten it all up will be considered by Parliament before the election.
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