NIUE, LATEST TAX HAVEN, BARELY A COUNTRY

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By Michael Field

AUCKLAND, New Zealand (March 10, 2000 – Agence France-Presse)---A rugged nearly empty island in the middle of the South Pacific has become one of the world’s newest tax havens, attracting allegations Russian Mafia and South American drug money is being laundered there and that its sovereignty is controlled by a Panamanian law firm.

Niue, a 258 square kilometer (103 square miles) raised coral outcrop home to just 2,103 people, is what Premier Sani Lakatani calls the world’s smallest self-governing state.

Its fractured government cannot pass a budget, most of its people live in New Zealand, it’s under heavy pressure from the Organization for Economic Cooperation and Development (OECD) and there is high-level debate whether it’s a viable state at all.

The Panama City law firm of Mossack Fonseca and Co., which has the exclusive right to operating Niue’s tax haven, has a solitary Niuean employee who occupies one of only a handful of offices in downtown Alofi, opposite the Parliament and near the solitary Westpac Bank. She tends the 6,000 registration files of mainly Asian companies, which have set up as "international business companies" (IBC).

In a money laundering report the U.S. State Department questions the "awkward sharing arrangements" with the law firm and warns that Niue’s operation was ideal for money laundering. The OECD has threatened sanctions against Niue for its non-cooperative stance.

German born lawyer Jurgen Mossack arrived in New Zealand this week and tried to see Foreign Minister Phil Goff who last month warned that small Pacific nations were "particularly vulnerable to the predations of criminal elements." Goff would not see him.

Mossack told AFP that Niue was no different from the other jurisdictions, particularly the British Virgin Islands (BVI).

Niue was attractive because it was easier to find a company name, unlike BVI which has 360,000 companies registered.

And Niue allows for companies and articles of association in Chinese and Cyrillic characters.

Mossack admitted he had never heard of Niue until his company picked up a 20-year deal with previous Premier Frank Lui.

His company had wanted a new location outside the Caribbean and in an Asia-Pacific time zone. They wanted it to be part of the Commonwealth with no scandal attached. They looked at the Cook Islands and Vanuatu but competitors were already there.

"We figured that if we had the exclusivity we would avoid the price wars because in off-shore jurisdictions there is a lot of competition going on," Mossack said.

"If we had a jurisdiction that was small and we had it from the beginning, we could offer people a stable environment, a stable price."

Niue makes around 1 million NZ dollars (US$ 500,000) a year from registrations which all end up in the Commercial Building in Alofi, the registered office of all the IBCs.

With only one Royal Tongan Airlines flight a week getting the paper work in is tricky, but also an advantage to those wanting to protect their secrecy.

"We have to accept that there is no money laundering going on in Niue, or even through Niue. Any IBCs registered in Niue are used in the Far East, in Hong Kong or Singapore, to open bank accounts. Are they are a threat to New Zealand or the New Zealand dollar? I cannot see it, I don’t see a connection."

Niue was not at risk.

"No money passes through Niue; there are no facilities there."

Niue was not involved in money laundering "and I can say that absolutely and categorically."

He said he suspected the Niuean operation was being picked on because of their Panamanian connection.

"There is where a certain discrimination factor comes into it. Why is somebody who is based in Panama any different, any worse, than somebody based in the United States or Europe? Panama is a country like any other. It is an on-shore country. It is not an island in the middle of nowhere."

Michael Field New Zealand/South Pacific Correspondent Agence France-Presse E-mail: afp.nz@clear.net.nz  Phone: (64 21) 688438 Fax: (64 21) 694035 Website: http://www.afp.com/english/ 

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