Cosgrove Clayton: Companies and Limited Partnerships Amendment Bill — First Reading 
Text is incorporated into the Bound Volume 
Cosgrove Clayton: Companies and Limited Partnerships Amendment Bill — First Reading 
[Sitting date: 24 July 2012. Volume:682;Page:3854. Text is incorporated into the Bound Volume.] 
Hon CLAYTON COSGROVE (Labour) 
: 
 I can say from the outset that the Labour Party will support this Companies and Limited Partnerships Amendment Bill at the very least at the first reading. Obviously we will want to see the details as to how this bill progresses. We all agree that New Zealand has an international reputation as a trusted place to do business and we all agree that that reputation should be protected and enhanced at all costs. I note that the World Bank and the International Finance Corporation have ranked New Zealand the easiest of 183 countries in which to start a business and Transparency International ranks New Zealand the least corrupt country of the 183 surveyed. That is a tribute to our business people and our regulatory agencies in policing the laws and regulations of our land. 
However it has to be said that lately attention has been drawn both domestically and internationally in respect of the media to overseas interests exploiting New Zealand’s incorporation processes by using New Zealand - registered shell companies to undertake illegal activities. In fact I am advised that a New Zealand - registered company was used to run a $25 million Ponzi scheme. I know that the National Party is very fond of that term in recent days given that it has some relevance to other matters before the House. But that Ponzi scheme was run by an American chief executive and owner who is now facing up to 15½ years in a United States jail after pleading guilty. 
So the question arises: this is sound in principle and this is a sound piece of legislation yet the Government has taken some time to process and have this bill introduced in Parliament. My recollection is that this was unfinished business by the previous Minister of Commerce the Hon Simon Power. Yet despite the threats to New Zealand’s reputation the reputational risks that we face as a result of some of this nefarious activity in terms of exploiting New Zealand’s incorporation law this bill has sort of languished. One wonders—and we will be asking him in the Committee stage—what priority the Minister of Commerce has given or is giving to the reputational risk management process for New Zealand given that this bill has languished for months after being introduced. 
I would have thought and I do echo and agree with the Minister’s words that New Zealand’s business and commercial reputation is paramount. The question then arises as “The Maestro” sort of grins across the Chamber at us— 
Hon Dr Jonathan Coleman 
: 17 grand. He would have rushed it into the member’s ballot. 
Hon CLAYTON COSGROVE 
: Well who is it going to be? Which declaration would we like to start with first on that one team? Would we like to start with Mr Foss or “The Maestro” or Mr Young or any of them? I am very happy to have this debate—very happy to have this debate—anywhere anytime inside or outside this Chamber. And then we will see—then we will see. So which hen over there which rooster over there is going to have their head cut off because if that— 
Hon Member 
: Mr Brownlee. 
Hon CLAYTON COSGROVE 
: Well Mr Brownlee—because if that member wants to start it I will finish it. But getting back to more serious matters—and the Minister might look at the conduct of some of his own colleagues. But if you want to start it I will finish it. 
I say that this bill has languished— 
Hon Dr Jonathan Coleman 
: Come on. If you’re going to tell us to step outside the House next. 
Hon CLAYTON COSGROVE 
: I will not need to. I will just ante up with some paperwork on you—not you Mr Deputy Speaker that one over there. 
Hon Dr Jonathan Coleman 
: You’re all talk. 
Hon CLAYTON COSGROVE 
: Oh yes talk and actions mate. Roll the dice. So I say that the question before this House is why this legislation has languished for so long. Obviously the smoke signals that “The Maestro” is putting up—because we all know he likes a cigar occasionally—show that he wants to divert some attention away from a serious piece of legislation. 
In fact what I found astounding doing the research on this bill was that—given the lack of priority that was given to this—earlier this year which the Minister did not mention New Zealand along with Russia was struck off the prestigious European Union banking and corporate white list over this country’s weak money-laundering and terrorism financial controls. I was the Associate Minister of Justice when Labour introduced and put through the anti - money-laundering legislation as required through our international obligations. Because this Government has been introverted and self-obsessed with its own crises and its own mess-ups—whether they be asset sales or a whole raft of other things ACC the list goes on—New Zealand’s reputation has been damaged. 
We have been removed from that white list. I know that Mr McClay who I believe worked for the European Union or some of its agencies in a previous lifetime will know very well the value of that institution and the value of being on the white list. We were struck off and what that means is that banks and institutions in the EU “will not be entitled any more to make simplified research for banks and financial institutions registered in New Zealand”. And it also means as I am sure Mr McClay is aware—and he might want to proffer some advice to his Minister—that European institutions can no longer accept and acknowledge customer identification and analysis performed in New Zealand. 
I recall the anti - money-laundering legislation very well. We got all the banks in and the financial institutions because we were at pains to come up with a scheme of arrangement—given that we were obliged to put this legislation and these rules in place—that was appropriate and at an appropriate level. It was not Rolls-Royce it was not gilt-edged but it allowed the financial processes to go through and it also preserved and enhanced our reputation as a country engaging in international commerce. Because this bill has languished and nothing has been done about it we are off the white list. We are off the white list because this Minister and his Government do not see this as a priority. 
However I had a phone call last week from a venerable journalist of the  
National Business Review 
 who was at pains to ask me and other colleagues about where this issue was at when this anti - shell company legislation was going to come back into Parliament and noted that it had languished for so long. Then hey presto an article appears in the  
National Business Review 
 and my word here we are today on Tuesday night at 5 to 8 in Parliament the Minister’s feet have been put to the fire by the media and we are processing the bill. Well I want to thank that journalist. I want to thank him from the bottom of my heart as do the business people and commercial entrepreneurs around this country for attempting to call this Minister and his Government to account and to ask the question as to when this legislation would ever see the light of day. 
This is important. Any legislation regulation or scheme of arrangement that preserves our transparency preserves our reputation as incorruptible and keeps us right at the top of the rankings of transparency internationally and those other international watchdogs is vital in terms of easing business and allowing our companies overseas to do deals and allowing overseas companies in New Zealand to have confidence that they can come here and trust in our institutions. So I have a question for the Government and the Government members when they stand up to take a call—and I am sure Mr Coleman being the vocal sort of fellow he is will be rushing to jump up on the shoe leather and advance arguments in respect of this. What I would like him and his colleagues to tell us is why it has taken so long. 
I recall Simon Power—and I have got to say he was a pretty diligent Minister of Commerce; fair go. We disagreed on a few things around the edges in the justice portfolio but a— 
Hon Member 
: He had a brain. 
Hon CLAYTON COSGROVE 
: My colleague said he had a few brains—absolutely more than a few. He now resides I think in the biggest or second-biggest financial institution in New Zealand. He put this up. He started you know kicking the ball. The ball started rolling and then there was an election and he shuffled off to a different life and this Minister was put in charge of this. So I want an answer from the Minister and his colleagues as to why this has taken so long to get on the Order Paper and get before Parliament. 
The bill as we know requires each company to register in New Zealand and to have a registered agent if there is no director living in New Zealand or in an approved jurisdiction. This is important because it provides a modicum of accountability within this country. We know that registered agents will be responsible for ensuring that companies provide accurate information to the Registrar of Companies and will be liable if companies breach their record-keeping and filing requirements under the Companies Act. This bill gives new powers to the Registrar of Companies to investigate and deal with non-compliance with the Companies Act and this includes of course the power to flag companies on the register that are under investigation. 
These are actually critical provisions because again it is a form of accountability. I mean no slur to New Zealand companies but we do know that New Zealand has been preyed upon given the Ponzi scheme out of the United States and given other alleged nefarious activity by those who simply want to use our good name use the good name and reputation of our country and commercial enterprises to engage in those nefarious and criminal activities. It is incumbent upon this House to ensure that this legislation—which I am pretty sure will have basic bipartisan support although we will be seeking detail obviously because we agree in principle with it. But it is incumbent upon this Parliament to take whatever measure is necessary to ensure that our reputation as a country is managed well and protected. 
I say again to the Minister that we will be very interested in getting reports. I invite him in the advice that he and his officials provide to the Commerce Committee to tell us up front why it took so long. That is important. If this is a precedent and if it has taken so long and we are off the white list in the European Union then that is a problem and that is a black mark against our name. Thank you.