One of the features of the legal and financial elite in New Zealand is how they swap sides, from public to private sectors. Of course, in reality there aren’t sides at all, the elite is separated from the mass of the public they disdain, and play the game according to their own rules. Occasionally the rules are tested, and conflicts of interest are exposed, as in in the infamous ‘Winebox’ Inquiry. It was set up to fail, but for a long time it appeared as if the players in tax evasion would be exposed, only for ranks to be closed at the end.
Now that the detail of the Winebox is finally available in the archives, some of the bit players can now emerge, and their later careers assessed. Within the Winebox are deals involving redeemable preference shares, organised for Fay Richwhite and European Pacific, by the law firm Kensington Swan. Setting aside the detail, essentially Kensington had shelf companies with names like Eodem, that were taken over by Fay Richwhite, and then companies based in the Cook Islands. The Overseas Investment Commission approval was sought for companies in the Cooks with names like Calypso and Nassau, an obvious nod to the Caribbean tax havens. The Kensington Swan lawyers were Simon McArley and Graham Tubb.
So where are they now? Well, Simon McArley is the acting director of the Serious Fraud Office, and Graham Tubb is the senior counsel for the Inland Revenue Department. So basically they have gone from being parties to tax evasion, if not fraud, to be the gamekeepers in the SFO and IRD. And the most interesting thing is that nobody seems to have noticed, not even for the irony of it. The Winebox Inquiry was meant to be limited to the performance of the SFO and IRD, but covered the actions of the tax evaders. The SFO and IRD were made to look foolish and incompetent, even if the Inquiry exonerated the officials at the time. At least the poachers may not be as naive as their predecessors. But in a proper functioning democracy McArley and Tubb would never have been selected for senior positions in the public service.
The Winebox papers indicate how it was an in-joke, or just a game, for the shelf companies to be used in tax schemes, and easy money for the law firm, usually at the expense of the Wool Board. And we have all had the fleece over our eyes while the likes of McArley and Tubb carry on their glorious careers.
Postscript in September: After a year of being acting director of the SFO, Simon McArley missed out on being the permanent appointment. Instead, Julie Read, an Australian, was appointed. She was working for the Australian Securities and Investment Commission (ASIC). Will an outsider bring objectivity, less baggage, and a greater propensity to litigate against the corporate tax evaders? At the moment there is a scandal in Australia over its Reserve Bank subsidiaries, that manufacture bank notes, negotiating with Iraq and other dodgy regimes, with the use of frontmen and bribes etc. Did ASIC decide to investigate Reserve Bank directors for fraud: no it did not. Will Read be a fearless independent prosecutor after leaving ASIC: we shall see!