Curran Clare: Companies and Limited Partnerships Amendment Bill — First Reading 
Text is incorporated into the Bound Volume 
Curran Clare: Companies and Limited Partnerships Amendment Bill — First Reading 
[Sitting date: 24 July 2012. Volume:682;Page:3864. Text is incorporated into the Bound Volume.] 
CLARE CURRAN (Labour—Dunedin South) 
: 
Tena koe Mr Assistant Speaker. I would like to speak tonight in support of the first reading of the Companies and Limited Partnerships Amendment Bill. As you have heard Labour is supporting this bill. We are supporting this bill because we understand that New Zealand has an international reputation as a trusted place to do business. 
New Zealand has also got an international reputation as being one of the least corrupt countries in the world and we take that very seriously. Therefore we do not agree with the Prime Minister John Key who yesterday told the media that trade-offs had been made by allowing New Zealand to be the easiest place in the world to set up a company. He said that the changes being made were to preserve the country’s reputation but in talking about trade-offs—and I will be talking about that in a minute—there are some serious questions I think that have to be asked. 
Questions have to be asked about just what the Government’s intent is around this legislation and when it gets to the select committee whether or not there will be any attempt to reduce its impact and water it down in any way. I have got a few questions for the Minister of Commerce about that particularly given what he has said today on this bill. But the first point to make is really a big ups to Simon Power the previous Minister of Commerce who had the wherewithal to get this legislation drafted to deal with what is a pretty serious issue. 
I just want to point out that in a legal opinion that was given by Bell Gully around this issue this bill was seen very much as being an important piece of legislation that was developed after so many of these issues came to light and that the legislation was brought in—I think it was described as being in the dying days of the previous administration—as we came towards the election. 
The Ministry of Economic Development at the time said that it was thought that this legislation was going to be coming before the House as a matter of urgency. We are now 7 or 8 months down the track and it is only now appearing before the House. I think you have got to ask yourself why that is. A new Minister was in place and I would have thought he would put it pretty high on the list of priorities. Either he did not understand its importance or he was just not that bothered about protecting New Zealand’s reputation in the world. 
As a result now we are off the white list. As you have heard tonight New Zealand has actually been taken off that important white list. It has been described as the prestigious European Union banking and corporate white list. Earlier this year New Zealand was removed—along with Russia—over our weak money-laundering and terrorism financing controls. Being struck off that white list as we have heard tonight—although I note that the Minister did not actually mention this in his opening remarks to us tonight—means that banks and institutions in the European Union “will not be entitled any more to make simplified research for banks and financial institutions registered in New Zealand” and that European institutions can no longer accept and acknowledge customer identification and analysis performed in New Zealand. 
I do acknowledge that one of my colleagues on the Commerce Committee who spoke tonight has mentioned a couple of these instances but I thought I would mention a couple more because there have been quite a few of them as we have heard. Despite the fact that there are some measures in place to ensure that there is more monitoring of this they have not necessarily gone away. 
At the root of this issue which is what I hope will be discussed in full when the bill comes before the Commerce Committee is the fact that this is about our reputation. You cannot buy a reputation. You cannot manufacture a reputation. You earn it and once it is gone it is a bit hard to win back. So this is important this legislation. It is important that we are sending a strong signal out there in the international community that we do take this stuff seriously that we guard jealously our reputation as not only a good place to do business and to set up businesses but a place that you cannot take advantage of and a place where you cannot set up companies that are essentially rorts and are into money-laundering. 
Here we have just a few of them that I thought it might be worth mentioning. The London-based NGO Global Witness uncovered the movement of billions of dollars in suspicious transactions through AsiaUniversalBank in Kyrgyzstan by New Zealand British and Bulgarian companies. This was reported in April 2010. Hostas I think it is called was named in a 2010 report prepared for the Ukrainian Ministry of Finance where a Ukrainian company entered into government contracts with the Ukrainian Ministry of Healthcare. It was a company that was registered in Auckland. There was nobody in New Zealand who actually was attached to that company. 
Falcona Systems Ltd was allegedly used to gain $150 million in kickbacks for Ukrainian and Latvian officials. Investigators found that it was registered to another address in Albany Auckland and it was struck off the companies register in October 2011. Tormex Ltd allegedly washed $680 million through bank account in Riga Latvia. A multi-national investigation pointed to Russian mafia connections. A company registered in Queen Street—which I think might have been the company that Jonathan Young referred to—SP Trading Ltd was found to have chartered a Georgian-registered plane to fly embargoed arms. That is the instance that was mentioned earlier. 
These are just a few quite serious incidences of this issue which the Government has been aware of for some time. This bill is part of addressing this issue but it has taken as has been pointed out on numerous occasions tonight 2 years to actually get to this point where it is going through its first reading and going to the select committee. I suppose the point that I am making tonight is that when it gets to the select committee let us hope that it is actually treated with some importance and actually goes through that process and comes back to the House as soon as possible. 
Today I have just read a piece that has come out in the media reporting remarks from the Minister of Commerce around this where he said that there might be some changes at the select committee. Well that is fair enough. Any bill needs a good bit of scrutiny and a look at how to improve it and make sure that it is actually going to be a good piece of law because that is what we do on the Commerce Committee. But he said: “There’s a fair bit of opinion around some of the broader details of the Bill … There has been discussion around criteria for directors. That’s the big one.” 
This gives me a warning bell because this may be—and this is what I would like some clarification on—around the introduction of criminal offences for directors who commit a serious breach of their duties. This is where these offences become criminal activities where they are liable for imprisonment for up to 5 years or fines of up to $200000. If we are going to take this issue seriously if we jealously guard our reputation internationally as a good place to do business and as a place that is not corrupt then we do need to ensure that internationally people looking at this country will know that there will be serious sanctions if they do engage in criminal activity and if they think that they can try to use our country for their illegal activities. 
Labour supports this bill. I am looking forward to the discussion in the select committee. Thank you.