Money laundering conviction for Natural Dairy duo involving HK$230m

Two principals of a Hong Kong-based company that came close to buying New Zealand’s 22 Crafar farms have been convicted of laundering HK$230 million (NZ$36m).

The South China Morning Post said that a solicitor and the wife of a former director of listed company Natural Dairy (NZ) Holdings were convicted of the laundering.

Wu Wing-Kit, 57, was found guilty in the District Court of laundering HK$68.95m, while Ye Fang, 43, was convicted of dealing with the proceeds of indictable offences totalling HK$230m.

Natural Dairy (NZ) Holdings, known in New Zealand for its frontwoman, May Wang, had agreed to buy the Crafar family farms for NZ$375m.

Wu is Wang’s solicitor and Ye is the wife of Jack Chen, Wang’s business partner.

Prime Minister John Key at the time raised “concerns” about the sale of land to overseas interests.

In December 2010, acting on the recommendation of the Overseas Investment Office, the Government decided not to approve the application.

The rejection was based on the Government’s view that Natural Dairy were not fit persons.

The farms were later sold to another Chinese company, Shanghai Pengxin.

Full story: http://www.stuff.co.nz/business/10425426/Money-laundering-conviction-for-Natural-Dairy-duo

[Read more...]

Milk New Zealand Investment Ltd – British Virgin Islands/China link confirmed

Following formal complaints by the Society …….. the Companies Office Registry Integrity Team has today ensured that a correction has been made online to the “registered office/principal place of business address” of the true shareholder of the NZ incorporated company, Milk New Zealand Holding Ltd [see email below - Appendix].  The latter’s sole shareholder is now recorded on the Companies Office website as

MILK NEW ZEALAND INVESTMENT LIMITED – Offshore Incorporations Centre, Road Town, Tortola , British Virgin Is. Country of Origin: China.

See: http://www.business.govt.nz/companies/app/ui/pages/companies/3883536/shareholdings

The previous incorrect registered office address – one based in Auckland – has been replaced by the correct one, an overseas address in the BVI. [Read more...]

Why do so many Chinese companies use the British Virgin Islands (BVI)?

Extracts from: Why do so many Chinese companies use the British Virgin Islands (BVI)?

By Nicholas Shaxson  - author of Treasure Islands, a book about tax havens. He writes for the Tax Justice Network [TJN].

Article source: http://treasureislands.org/why-chinese-companies-flock-to-the-bvi/

Naomi Rovnick of the South China Morning Post published an excellent article in 2011 looking at the use by Chinese companies of British Virgin Islands (BVI) vehicles

She reported that ten percent of all “foreign” investment into China comes from the BVI, in fact – and growing explosively. Why so? Well, the reporter met quite a lot of obfuscation. The lawyers didn’t want to tell her; one Scottish corporate lawyer merely said ‘ask the Chinese clients’. But she extracted this telling quote from U.S. lawyer Steve Dickinson, which says it all!

The reason for this strong link between China and the BVI is a very simple form of tax avoidance. If you take the money straight back into China you pay capital gains [or income] tax. If you leave it in the BVI, wait a while then send it back, it can be made to look to the authorities like it is a foreign investment, and you don’t pay tax on that.”

Mr Dickenson failed unfortunately to distinguish between “tax avoidance – which by definition involves getting around the law without actually breaking it, and tax evasion, which is a criminal activity. What he was is in fact talking about is Chinese interests pretending to be foreign – essentially escaping tax, illegally, through offshore deception. This is illegal. It is tax evasion.

Chinese interests pretending to be foreign – essentially escaping tax, illegally, through offshore deception. This is illegal. It is tax evasion. [Read more...]

Lochinver and Crafar farms buyer – Milk NZ (Hong Kong) – to be sold off

The controversial sale of the 16 Crafar Farms to Pengxin NZ Farm Group Ltd, a subsidiary of Shanghai Pengxin Group Co Ltd (“Shanghai Pengxin”) directed by billionaire Zhaobai Jang, was approved by two NZ government ministers on 26 January 2012 following a recommendation by the Overseas Investment Office (“OIO”). In considering whether or not to grant consent to the Hong Kong registered applicant, Milk New Zealand Holding Limited (“Milk NZ”), the OIO decision dated 19 January 2012 identified “the relevant overseas persons” to be  Milk NZ, Shanghai Pengxin, Nangtong Yingxin Investment Co., Ltd (“Nantong”) and Mr Jiang Zhaobai. Nantong, owned by Zhaobai Jang (99%) and his brother Lei Jiang (1%), owns Shanghai Pengxin.

See Company “Ownership diagram”, Overseas Investment Decision 22/01/14, Page 71 (Appendix 6)

http://linz.govt.nz/sites/default/files/docs/overseas-investment/decisions/oio-recommendation.pdf

Shanghai Pengxin owns 55% of Hunan Da Kang Pasture Farming C0. Ltd (“Da Kang”), which according the Da Kang June 2014 Report, is currently raising money from investors with the intention of purchasing Milk New Zealand Holding Ltd from Shanghai Pengxin

See: www.cninfo.com.cn/finalpage/2014-06-18/64148310.PDF

Once the purchase is completed, Shanghai Peng, as 55% owner of Da Kang, will retain only 55% ownership of Milk NZ. Consequently Nantong and its subsidiary Shanghai Pengxin will only retain 55% ownership of the NZ Crafer farms and the Lochinver Station (if its purchase by Pure 100 Land Ltd, a subsidiary of Milk NZ is approved). The remaining 45% ownership of the NZ farms and other assets held by Milk NZ [Hong Kong] and its subsidiaries, will be owned by Da Kang’s remaining shareholders.

The control of the 16 Crafer Farms and Lochinver Station will be in the control of Nantong as its subsidiary, Shanghai Pengxin will retain the majority (55%) shareholding in Da Kang, and thereby 55% of its subsidiaries and assets.

Chinese investors in Da Kang who contribute to its 45% holding in Milk NZ will effectively ‘own’ a slice of New Zealand. [Read more...]

Lochinver and Crafar farm sales – link to British Virgin Islands registered company

Milk New Zealand Investments Ltd, a company registered in the tax-haven – British Virgin Islands – is inextricably connected to Chinese billionaire Zhaobai Jiang’s  Hong Kong registered company Milk New Zealand Holding Ltd (“Milk NZ”), which has purchased the $200 m Crafer farms and $70.6 m Lochinver Station through its NZ incorporated subsidiaries. Milk New Zealand Investments Ltd (BVI), with Jiang as sole director, is owned by Milk NZ which in turn is owned by Shanghai Pengxin Group Co. Ltd (“Shanghai Pengxin”). The latter is owned by Nantong Investment Company Ltd, of which Jhaobai Jiang owns 99% of its shares.

1. See: www.cninfo.com.cn/finalpage/2014-06-18/64148310.PDF

2. See Company “Ownership diagram”, Overseas Investment Decision 22/01/14, Page 71 (Appendix 6)

http://linz.govt.nz/sites/default/files/docs/overseas-investment/decisions/oio-recommendation.pdf

Milk NZ [Hong Kong] entered into a sale and purchase agreement with the vendor of the Crafar farms on 19 November 2011. Milk NZ then applied to the NZ Overseas Investment Office (OIO), as it was required to do under the Overseas Investment Act 2005,  seeking approval of the purchase on 12 April 2011. The OIO issued its decision dated 19 January 2012 recommending that the sale be approved by the government. On 26 January 2012 the deal was approved by two Ministers of the Crown. Following subsequent protracted litigation including a High Court challenge initiated by another bidder, the Crafar farms Pengxin NZ Farm Company Ltd, a subsidiary of Milk NZ, became the owner of the 16 Crafer farms.

Few New Zealanders would have suspected that Shanghai Pengxin, through its Honk Kong registered subsidiary, Milk NZ, for the purpose of purchasing Crafar farms, set up a NZ registered subsidiary – Milk NZ – which would be owned by the British Virgin Islands (“BIV”) registered company Milk New Zealand Investments Ltd (a subsidiary of Milk NZ [Hong Kong]) [Read more...]