By Mihai Munteanu
In mid-December of 2009, a Russian-built cargo jet landed at Don Muang airport in Bangkok for routine refuelling. It was not routine as later news accounts made clear. Thai Special Forces acting on a tip from a foreign intelligence agency swarmed the Ilyushin 76 and arrested the crew of four Kazakhs and a Belarusian. Inside they found not the oil drilling equipment listed on the plane’s manifest, but 35 tons of weapons including anti-aircraft missiles and computer-controlled rocket launchers.
The shipment from North Korea had been bound for Iran before the Bangkok interruption according to research by the International Peace Information Service, proof that a UN arms embargo imposed on those two nations was not exactly holding.
Fast forward to March 2010 and a Miami courtroom. The Department of Justice announces the harshest penalty ever imposed on a US bank for the largest money laundering scheme in the history of the Bank Secrecy Act. Wachovia Bank was fined $160 million for laundering as much as $424 billion through a series of currency exchanges over four years for Mexican drug cartels including the murderous Sinaloa cartel. Investigators determined that $13 million went to buy airplanes used for drug trafficking. Court File - Agreement - Wachovia / FINTRAC (http://www.justice.gov/usao/fls/PressReleases/100317-02.html)
The two seemingly unconnected events have one thing in common: 369 Queen Street in Auckland, New Zealand.
The offshore businesses they used were all registered here at the offices of Ian Taylor and GT Group. Taylor is a New Zealander who is the director of Lamark Group Ltd which owns the Romanian company operated by Laszlo Kiss, a Romanian registry agent recently arrested for embezzlement and money laundering through offshore companies. It is also the address used by Chinese immigrant Lu Zhang, a former fast food employee in Auckland who is listed as the representative of a Romanian company involved in embezzling from Petrom Service, a Romanian oil field services company. Zhang was also a proxy in the SP Trading company involved in the Bangkok arms affair.
Office of a Thousand Businesses
The address is on a tree-lined street that dates to colonial times but is now a main avenue through Auckland’s business district. The building just blocks from City Hall is of medium height and houses a number of organizations including GT Group on the 5th floor. Behind the door of this nondescript firm is the official home of more than 2,500 offshore companies.
Keronol Ltd, Melide Ltd, Tormex Ltd and Dorio Ltd, fronts for the Sinaloa drug cartel are among them. According to the Miami case, the four transferred about $40 million to an account in Wachovia Bank’s London office.
The company that operated the plane carrying smuggled weapons from North Korean can be also found here. So can the company that controls Laszlo Kiss’s business -- Lamark Tax Planning Consult.
All these offshore companies have one more element in common: the same sole shareholder. It's called VicAm Ltd and it is a company registered at 363 Queen Street next door in another GT Group office.
Although the official documents issued by the New Zealand Companies Office show that all of these companies are 100 percent owned by VicAm Ltd, that is not really true. L-Group Ltd, SP Trading Ltd, Keronol Ltd
VicAm is a "shareholder proxy" service. This classical offshore service provided by GT Group is designed to conceal the real owners of companies. The New Zealand Companies Act of 1993 allows this making the country ripe for offshore criminal activities.
While proxies are not uncommon, especially in the most abusive of offshore environments, New Zealand law actually, maybe unwittingly, encourage them with a requirement that the shareholder be a legal or natural resident of New Zealand. To get out of paying income taxes, an offshore formed by a non-resident must have a resident trustee.
It’s become a good business for GT Group to provide that trustee. VicAm is the sole nominal shareholder for 1,089 companies in New Zealand, according to Complinet, a compliance monitoring firm.
After the naming of a trustee, setting up an offshore in New Zealand is not unlike doing it elsewhere. A "declaration of trust" is signed between the real beneficiary of an offshore and the proxy representing him as the company shareholder. However, this document need not be filed with any authorities and can be kept by the owner himself. Local authorities do not require financial statements, audits or records either.
Therefore, the database of New Zealand Companies Office is is not useful in figuring who owns a company even though the country makes it readily available. A search of any of these thousand companies will end with VicAm Ltd which is hiding the thousands of real owners scattered around the world.
A True Offshore Paradise
It is hard to get to Port Vila in the Republic of Vanuatu located amid a string of islands 2,200 kilometers north northwest of Auckland. The capital city boasts a population of 40,000 and is the seat of the country’s parliament consisting of six members.Port Vila, the small capital of Vanuatu
Among palm trees and three-floor buildings near the center of the town, Rue Bougainville is a short road that dead ends at the coastal road near the yacht harbor. Here, in the heart of the South Pacific, GT Group has its world headquarters in a 2nd floor office in Bougainville House. (www.gtgroup.com.vu / www.gtgroupoffshore.com)
“With direct representation in New Zealand, Vanuatu, Cook Islands, Samoa and Australia, GT Group Offshore is dedicated to providing an extensive range of “Offshore Services for Privacy, Tax Structures, Asset Protection … Trust Services, Nominee Services, Bank Accounts, Virtual Office and more,” according to a GT Group brochure, signed by Ian Taylor, director of marketing.
GT Group was founded in 1995 by Taylor's father, Geoffrey. Born in England, the head of the Taylor family immigrated to New Zealand in 1964 according to his website. There, the young accountant specialized in commercial law creating an empire based on offshore consulting in Oceania. By the 1990s, Taylor had expanded worldwide with a network active from the United States to the Caribbean to Hong Kong via the UK and Seychelles.
GT Group was even allowed to establish companies in the micro-nation of the Principality of Hutt River, a 75-mile square kilometer tract north of Perth run by the self-styled Prince Leonard I of Hutt. The Australian government erred when the area attempted secession, thus giving it legal status bu no international body recognizes the principality.
The Taylor family coordinates its global interests from Vanuatu where an offshore can be bought for $150 down and an annual fee of $300. What public records are available contain at most a name and a Certificate of Good Standing.
Taylor handed over his business to sons, Ian and Michael Taylor. Now retired, the GT Group founder sports a title of nobility from the Hutt Principality and says on his website that he is president of a non-accredited university called Southern Pacific University which offers online courses. The University, naturally, was established as a private commercial company in the offshore havens of St. Kitts & Nevis Islands, Delaware in the US, and Belize in Central America.
On his own website, Taylor says: "Geoff Taylor is well respected as an innovator and top ranking, retired fund manager in the offshore field in the Asia / Pacific region.” (http://www.geofftaylor.info) His philosophy is stated in a “beliefs” section of the website where he refers to a UK politician who said, “Everyone has the right to arrange their affairs in whatever way they want, in order to pay the least amount of tax legally due. Geoff may be able to help you to do this. Please do not misunderstand; tax avoidance is paying less tax by legal means; tax evasion is paying less tax by methods that are not legal. Geoff will not help with evasion.”
The elder Taylor built another integrated cross-border consulting system, called Global Fin Net, which offers help on company formations and financial services. (Http://www.globalfinnet.com) and has offices in the UK, Australia, New York, China and Hong Kong.
In the usual Taylor pattern it is registered in Auckland at the same address as VicAm. It is not clear what Kiss and Taylors relationship is exactly because ownership of Lamark is not clear. Kiss may be an employee, business partner or just another businessman using GT Groups services.
According to official documents, Geoffrey Taylor registered VicAm Ltd in February 2002 and was its first shareholder. It later passed into the control of his wife Priscilla and then his son Ian. At some point a Philippine offshore expert Nesita Mance took over from the family. Geoffrey Taylor disappeared from all documents connected to the firm in Sept. 2009, about two months after formation of SP Trading Company Ltd, the company that owned the plane filled with North Korean weapons.
Shortly after the arms scandal broke, GT Group and VicAm separated and VicAm was taken over in documents by Mance. The VicAm website also went down.
The international investigation and publicity generated by the arms seizure in Thailand led to the family issuing a press release where Ian Taylor said: "GT Group Limited is not responsible for the operation or activities of companies that it has incorporated. GT Group Limited may at times also supply a Nominee Director or Shareholder and in the case of SP Trading Limited, we can confirm that GT Group Limited has supplied such.”
Blame the Proxy
It is rare for proxies and registration agents to get into any trouble no matter what the offshores they’ve created have gotten involved in. One exception was Lu Zhang, a 28-year-old Chinese immigrant to Auckland who was working in a Burger King fastfood restaurant before she was hired as an assistant for GT Group. She was the managing director of SP Trading Company when Thai police boarded the firm’s Ilyushin-76 plane.
Director of SP Trading was not her only job. Although she had never set foot in Romania, she managed the Bucharest based offshore consultancy firm Laveco Tax Consult SRL. Documents submitted to the Bucharest Trade Register and recorded by the Official Monitor confirm that she held the management position. Laveco later became Lamark Planning Tax Consult, the firm Kiss operated before his arrest. At the same time, she was the director in dozens of companies in Auckland and globally.
As a proxy, she is just a name on paper hiding the real decision-makers. However, in Romania, administrators bear the legal responsibility for the company.
She was one of the first people questioned in the weapons case. When authorities realized she knew nothing, they checked the other companies she directed. In the end, they found she had provided the Queens Street address as her home address on paperwork and charged her with the technicality of 75 counts of making false statements.
Zhang told journalists from a New Zealand website that she received about $20 for each company she directed. “It wasn't very much money and it was just a part of my job. (...) It was a very basic administrative job. I just file all the documents, check the emails, and look after the daily maintenance of the office."
After the scandal broke, Lu Zhang resigned, together with her husband who worked as an accountant for Taylor. Her name was removed from all the companies under the GT Group. At Laveco Tax Consult SRL Romania, she was replaced with Ian Taylor. And at SP Trading she was replaced by another in-name-only director: Doro Leo Basil, a resident of Vanuatu.
Once queen of a mighy paper empire, Lu Zhang ended up with nothing. As she told the New Zealand website, "I will plead guilty because we have to pay the mortgage, pay the lawyer's fee and we don't want to cause our family more stress."
GT Woman in Seychelles
Stella Port-Louis is another prolific proxy the GT Group uses. Even if she lives in Victoria, the capital of Seychelles, the 30-year-old woman appears as the director of 338 New Zealand companies, all registered at 369 Queen Street, Auckland. In 2007, four of them, Keronol Ltd, Melide Ltd, Tormex Ltd and Dorio Ltd, were accused of laundering $40 million for the Sinaloa drug cartel.Photo by Googlemap
A US Drug Enforcement Agency investigation revealed that drug traffickers laundered $424 billion from 2004 to 2007 taking advantage of the weak account monitoring system of Wachovia bank.
According to FINTRAC, the architects of the biggest money laundering operation in modern U.S. history used three main techniques: “multiple rounded sum wire transfers to a single account on the same day, bulk cash transactions up to 50 percent more than what a customer had led Wachovia to expect and the deposit of traveller’s cheques with sequential numbers that had unusual markings.”
The four companies in Auckland which all opened offshore accounts in Latvia, were used as a financial "filter". “All transferred approximately $40 million from their raccounts to Wachovia in London. In addition, the Sinaloa cartel funnelled money to the Latvian bank accounts through Wachovia, via the Mexican exchange houses”, FINTRAC concludes.
Port-Louis is an offshore expert working for Lotus Holding Company Ltd – a registry agent in the Seychelles. New Zealand is not the only tax haven she operates in. She was the nominal director of more than 90 offshores in the US state of Wyoming.
New Zealand is Warned
The inter-governmental body Financial Action Task Force (FATF) has warned New Zealand about a "potentially dangerous gap" in its company registration system. FATF found there is no legal requirement for financial institutions to identify the actual owner of offshore companies, a situation that allows for money laundering and terrorist financing.
Martin Wood, a former police officer who specialised in the investigation of money laundering and major international fraud, analyzed the New Zealand "Proxy" system for Anti-Money Laundering Magazine. His study reflects the consequences of the system.
Wood is also a former Wachovia Bank anti-money laundering officer who told the Serious Organized Crime Agency about the bank’s suspicious transactions related to the Mexican Sinaloa cartel (http://online.barrons.com/article/SB123639102998259161.html). He became a key witness in the investigation.
Wood's analysis ends with an inexorable conclusion: “Addressing the way companies are incorporated is another key area for reform. It is time to tighten up incorporation systems making nominee directors and shareholders illegal and subjecting government agencies that incorporate companies to the full force of FATF recommendations, including identification and verification of identity requirements for shareholders and directors as well as monitoring and reporting suspicious matters.”
This story has been modified from its original published story. OCCRP has added attribution and a link to the International Peace Information Service.
The following journalists contributed to this project.