New Zealand shell companies may have played a part in the biggest money-laundering operation in Eastern Europe.
A recent investigation by the Organised Crime and Corruption Reporting Project (OCCRP) exposed an enormous US$20 billion ($24.4 billion) transfer of dirty Russian funds, dubbed ”the Laundromat”.
The complex movement of cash, between 2010 and early this year, was allegedly facilitated by judges, well-connected officials, banks and offshore companies – including at least one New Zealand firm.
OCCRP journalists supplied the Naked Capitalism blog with PDF documents which appear to suggest a company named Chester (NZ) Limited laundered almost 25 billion roubles.
Chester (NZ)’s sole director is Leah Toureleo, who worked for the infamous Vanuatu-based GT Group.
Among other things, GT’s pre-packaged companies and nominee directors have been used by clients to ship arms to North Korea and launder drug money.
The Laundromat’s typical spin-cycle would begin with two companies signing a fake lending contract, for huge sums in the region of US$100 million to US$800m.
Debts were guaranteed by Russian companies run by Moldovan citizens, giving them access to the Moldovan justice system.
When the fake debts were not repaid, the company would take the ”debtor” to court, where judges would order the Russian guarantor to pay.
The Russian company then transferred dirty money to an intermediary bank before wiring it to the lending company’s account, which was always based in Latvia.
Once in Latvia – which is part of the European Union – it was officially clean, and backed by a court order.
Chester (NZ) was recently struck off the Companies Office website, but at least a dozen companies related to GT’s former nominees remain active.
GT itself closed up shop after extensive media coverage of its activities.
The company was owned by the Taylor family, New Zealanders who have since been linked to a similar outfit operating out of Malaysia, called Ready Made Shelf Company.
An MBIE spokesman said Chester (NZ) was removed from the register because the registrar was satisfied it was not carrying on business in New Zealand.
He said the the Companies Office was responsible for monitoring compliance with the Companies Act and related legislation, but did not have any wider responsibility for monitoring or overseeing the activities of registered companies.
New Zealand is a popular target for money launderers because of its lax registration rules and perceived trustworthiness.
Law reforms expected to take effect early next year will stamp out the Chester (NZ) problem, by requiring firms to have a New Zealand resident listed as an agent.
However, other shell companies have successfully used New Zealand-based stooges in the past.
Story by Richard Meadows. Stuff 11/09/2014