New Zealand companies and NZ trust & company service provider embroiled in high level Slovakian financial scandal

By Denise McNabb*

Slovakia’s Public Procurement Office (PPO) has pulled up 11 New Zealand companies for their roles in a bogus ownership structure at one of the country’s largest construction companies that earns the bulk of its income from government contracts.

And while the PPO has gone after the owners of the Slovakian company, Váhostav-SK, local police and other bodies have now expanded their investigations over suspicions the New Zealand companies and mysterious “mailbox companies” - one with another New Zealand connection - could be a front for a multi-million dollar money-laundering scam.

The 11 companies listed as shareholders of construction giant Váhostav-SV were registered in New Zealand by Auckland law firm, Cone Marshall, owned by prolific foreign trust creators, Geoffrey Cone and Karen Marshall.

They are Musgrave Ltd, Pakema Holdings Ltd, Havelock Ltd, Thomond Ltd, Navan Ltd, Beacon Holdings Ltd, Ennerdale Holdings Ltd, Draeger Holdings Ltd, Torrelaguna Ltd, New Zealand Escrow and Trust Co Ltd and New Zealand Trustees Ltd.

Cone Marshall also arranged a coterie of directors and shareholders for the companies. Cone and his trust companies (New Zealand Escrow and Trust Co Ltd and New Zealand Trustees Ltd) feature as shareholders on wire diagrams produced in a 30-page report by the PPO.

When asked about these companies, Cone (pictured below left) said he had neither met nor acted for the wealthy oligarch Jiraj Široký, vice chairman of Váhostav-SV who transpired to be the company’s real owner.

“We provided companies and local directors to an intermediary and ended our services in April last year. Another NZ law firm now acts,” Cone said, without explanation as to why those services ended then.

Slovakian companies procuring government contracts must comply with a law called prostischránkových requiring transparency around company shareholdings. Slovakian Prime Minister Robert Fico introduced the law in April 2015 with the intention of ending the very thing Váhostav was eventually found to be doing, - hiding behind shell companies with untraceable owners.

After months of denying he was the beneficial owner Široký, whose estimated worth is  €250 million ($NZ408m), came clean in January after Váhostav’s bank gave ownership details to the PPO under its obligations to the Combating Money Laundering Act.

Široký was fined €20,000 for filing false information on the companies register. However according to Slovakian media reports, he could face a fine of up to €27m and the company could be banned from procuring government contracts for at least three years if suspected money-laundering is confirmed.

Široký has given no clues as to why he went to such great lengths to keep his name off the companies register, raising yet more questions about what was really going on.

By early 2015 Váhostav was teetering near bankruptcy with debts of €136 million even though government contracts alone between 2005 and 2014 for building roads and highways, commercial buildings and renovating Bratislava Castle in the country’s capital, totaled €1.02 billion ($NZ1.68b)

When Váhostav was unable to pay 1500 contractors the government had little choice but to bail the company out otherwise its projects would have not been completed. It paid the 1500 contractors half the money they were owed from its Slovak Guarantee and Development Bank, also a lender to Váhostav. This effectively gave the bank a stake in the company until a five-year restructuring plan would hopefully see the loans repaid.

At the ensuing creditors’ meeting another link to New Zealand emerged centred on two mysterious Cyprus-registered shell companies (called mailboxes by the Slovakians), Lomark and Tatuga, with a British parent that had taken on €1.5 million of bank loans borrowed by Váhostav. They and other shells, it transpired had taken over a collective €26m of bank loans owed by Váhostav.

The British parent, Oldsbury Consultants Ltd, had as its director Filipino Nesita Manceau, a prolific stooge director for shell companies established by Geoffrey Taylor in New Zealand and elsewhere. In 2009 Manceau and Taylor made global headlines when the Taylor creation SP Trading Ltd was used to charter a plane to carry weapons for an unnamed client to Iran from North Korea in breach of United Nations sanctions. Manceau was the director of SP Trading's parent company, Vicam (Auckland) Ltd.

In the dark

Eight of the 11 New Zealand companies at the centre of Váhostav’s structure have been removed from the New Zealand Companies Office register in recent months mainly because they failed to file annual returns. Those that remain registered are Musgrave Ltd, New Zealand Escrow and Trust Co Ltd, and New Zealand Trustees Ltd. 

For undisclosed reasons the PPO chose not to make its investigation into Váhostav public. But a whistle-blower leaked the 32-page report to Slovakian press in January.

The PPO singled out Cone and the New Zealand companies in the first few pages of its report, highlighting on more than one occasion that Cone would have been aware of the “know your client” obligations for company agents.

Yet Cone said he did not know what the companies' purpose was and was also unaware of the PPO report in which he features.

 Široký who?

Even though Cone said another law firm took over the servicing of the Váhostav companies in April last year it was not until three months after then that his firm passed the baton to Stace Hammond, a law firm with offices in Auckland and Hamilton.  

Businessman Michael Hart, who has an office on the same floor as Stace Hammond’s Auckland branch, became a director of each of these three companies around the same time.

Hart said he had never heard of Váhostav, Široký, Cone Marshall or Geoffrey Cone. He said he took on the directorships based on due diligence by a law firm he would not identify, but said it was reputable. Stace Hammond had willingly given out his phone number when told by interest.co.nz it wanted to talk to him about the directorships.

“The companies are private and there is nothing more I can add,” he said in a text after he took ill and lost his voice.

Wily wiring

PPO wire diagrams detailing the phoney labyrinthine structure of Váhostav show the peripatetic Cone, residing these days in Uruguay, at one point owned 24.55% of the company.

It had followed linkages in the shareholdings of each of the New Zealand companies until it arrived at the two long-established Cone Marshall trustee management companies, New Zealand Trustees Ltd and its subsidiary, New Zealand Escrow and Trust Ltd, where Cone was the ultimate owner.

Slovakian police contacted New Zealand police on behalf of the PPO who pointed them to the New Zealand Companies Office for background on the Cone companies.

Not only did the PPO include the New Zealand companies information in its report, but also articles quoting Cone or about him in the New Zealand Herald, in the online legal publication, Lawfuel plus links to submissions he made about foreign trusts to the New Zealand government.  

Cone said he has not heard from police in either country, though it appears Slovakian police were at that stage only on a fact finding mission.

Bailout buddies?

Even though the Slovakian government had little choice but to bail out Váhostav, it had been long rumoured the 63-year-old Široký had poured considerable money over the years into the coffers of the ruling SMER-SD (Social Democracy) party and that he was close to the Prime Minister, Fico.  Both have denied such a relationship. Fico suggested recently there could be elements of fraud inside Váhostav though he alluded to it emanating from previous management.

Mailbox mystery

It was at a creditors meeting, as part of the restructuring, that the seven mailbox companies with registrations in Cyprus, Belize and the United Kingdom turned up claiming a collective €26 million obtained through the acquisition of rights from banks owed money by Váhostav.

Váhostav’s director general Marián Moravčík told other creditors he didn’t know the background of the mailboxes even though Slovakia’s political watchdog, Fair Play Alliance, had turned up a document from one of the shells, Lomark, in 2010 stating it had given him its indefinite power of attorney.

Fair Play Alliance suspected the real reason Váhostav was deep into debt was because the money was going to related third parties through a laundering operation, possibly involving the shell companies.  Široký’s lawyer, Daniel Futej, also had the same address as some of the mailbox companies.

Futej appears a likely person to be the intermediary Cone dealt with in the company creations for Váhostav because they have had dealings previously (see below).

Lomark and mailbox, Tortuga with outstanding loans of €1.5m between them, were registered in Cyprus by its UK parent, Oldbury Consultants Ltd. Nesita Manceau was Oldbury’s director from 2006 until she resigned in April 2015, coincidentally when Slovakian media, when reporting the emergence of these mailboxes, also reported her link to the Russian plane and arms smuggling.

The NAKA

In March 2016, after the Slovakian National Crimes Agency (NAKA) raided Váhostav’s offices it laid criminal charges against three unnamed company executives on suspicions they gave preference to an unnamed creditor, causing damage to the company of around €7m. By June of that year, however, charges remained against only one executive and these have still not been heard.

But Slovakian police are pursuing other avenues since the raid and have interrogated individuals, including Široký and his son, Juraj Jnr, who is Váhostav’s chairman.

Transparency

In June 2016 Transparency International Slovakia (TIS) picked out Váhostav’s to test the new beneficial ownership rule. The watchdog was the first to question the New Zealand companies with Cyprus and Costa Rican connections alongside Slovakian companies.  

Its report on the secretive ownership structure was the catalyst for the PPO to look into Váhostav.

It found the New Zealand companies were fronting for almost half of Váhostav’s shareholding with 24.55% owned by Beacon Holdings Ltd. Beacon later transferred its stake to a Czech-created company, Helston Investments, the company that bank records showed was a front for Široký.          

Wired for secrecy

The following wire diagrams show how beneficial ownership of almost half of Váhostav was concealed using the 11 New Zealand companies at various times.

Diagram One

This diagram from Transparency International shows 24.55% of shares owned by New Zealand companies, Pakema Holdings Ltd, in turn owned 100% by Havelock Ltd, in turn owned 100% by Torrelaguna Ltd. The latter had five Costa Rican shareholders, Dan Hildalgo, Jurgen Nanne, Ignacio Dobles, Carlos, Ayon and Randall Jiminez, all with Costa Rican addresses, and each owning 20% of the company. Torrelaguna Sociedad Anonima was registered in Costa Rica, before being incorporated in New Zealand. The directors are or have been lawyers, staff or associates at Costa Rica-headquartered Pacheco Coto, one of South America’s oldest law firms.

 Readers may recall Michael Hart, who was later installed as a director some of these companies was also a director at Vivier & Co from June 2002 to October 2015, alongside Luigi Wewege, written about here.  

Cone had formed a partnership with Pacheco Coto after meeting its founder, Humberto Pacheco in Davos in 2006. He registered Pacheco Coto Cone & Co as the New Zealand branch but its website is now gone.

Another shareholding structure in this diagram showed Váhostav 24.35% owned by New Zealand-registered Draeger Holdings with Cone and Marshall as directors and the shareholders, Cyprus-based companies, Prontoservus Ltd and Maninteser Co Ltd (50% each).

Diagram Two

This diagram in the PPO report (reproduced by Transparency International) shows the 24.55% owned by Pakema, Havelock and Torrelaguna had been replaced by more Cone-Marshall created companies - Beacon Holdings Ltd, 100% owned by Ennerdale Holdings Ltd, in turn owned by New Zealand Escrow and Trust Co Ltd, in turn owned by New Zealand Trustees Ltd, with Geoffrey Cone named as the ultimate shareholder of this stake.

In the same diagram, Musgrave Ltd had now replaced Draeger Holdings’ 24.35% stake. Thomond Ltd, owned by Navan Ltd, owned Musgrave. Navan had five Costa Rican shareholders who were different to those in the first diagram - Andrea Barboza, Carillo O’Campo, Allan Vargas, and Marco Rojas and Juan Castro – Cone and Marshall were directors of all three companies in 2015.

 Navan and Thomond both had their registered address for service in Auckland's Parnell suburb at the address of Cone’s ex-wife, Deborah Hill Cone.  

When asked about why he used her address Cone said he had spoken to his ex-wife but neither wanted their private life aired in this article.

Cone and Marshall were directors of Navan and Thomond just before it became public knowledge that Váhostav had financial problems, that TIS were checking the ownership structure, and that police, investigating possible irregularities, had questioned Široký and Váhostav management.

Diagram Three

This diagram (another from the PPO report) still has Musgrave as 24.35% owner, but the other 24.55% stake, “owned” by  Beacon Holdings Ltd had by then been transferred to  European companies and interests, including the Czech Republic registered Helston Investments, in turn owned by Slovakian company, Second Strategic, in turn owned by Finasist, in turn owned by Váhostav. The lawyer Futej also makes an appearance in this ownership structure.

Spy in a hard hat

 When The Slovak Spectator searched files at the Prague-based Centre for the Study of Totalitarian Regimes last year looking for people who worked for the communist-era intelligence service at home and abroad, it found records of Captain Juraj Široky, one of two second secretaries at the Czechoslovak embassy in Washington in 1988. He was described in the files as an intelligence officer.

But when Slovakia’s The Spectator asked Široký (pictured) about this work for the ŠtB (communist state security apparatus) he said he had neither been an employee or had collaborated with the ŠtB.

“I worked in the state administration, in the foreign service as an employee of the foreign ministry. That's all I can tell you,“ he told the paper.

After returning from Washington he and colleagues in the communist intelligence service created the now infamous asset-stripping operation, Harvard Group.

Co-founder, Viktor Kožený, is presently on trial in the Czech Republic, charged with looting billions of Czech crowns from Harvard Group in the mid-nineties and channelling them into tax havens, but he is in the Bahamas, beyond the reach of Czech courts. Široký has been scrutinised by media for building two luxury villas in the Bahamas near his fugitive buddy at a time when Váhostav has been struggling to survive.

Ambulance chasing

 Váhostav is not the first company Široký and Cone appears to have links in common to.

Danish-based Falck, a global healthcare company owned Falck Slovakia and its network of ambulances. But in 2009 Prime Minister Fico, in his first term in office, put the licences of the Slovakian arm out for tender and renamed the company Falck Emergency.

It was not until an extraordinary general meeting in February 2012 that the co-owner of Falck Emergency was revealed as a Cone Marshall created New Zealand registered company, Carterton Springs Healthcare Ltd. The structure was uncannily similar to Váhostav with Carterton owning just under half of the company for a purported payment of €2.7m. Its Slovak headquarters was the law firm, Futej & Partner. Daniel Futej, Široký’s lawyer also appeared, as mentioned above, in the Váhostav ownership structure through Helston (see wire diagram three). Futej told Slovak media that Carterton owned a large New Zealand fund manager, which was not true.

Slovak politician Richard Sulík, founder and chairman of the right-winged Freedom and Solidarity liberal party, dug deep into the origins of Carterton Springs and possible connections to Široký, publishing an article describing the ownership as “Cosa Nostra” practices.

According to reports Futej owns Cypriot-registered company, Prefto Holding Limited, owner of half of the largest private insurance trust in Slovakia. The other half is owned by Penta, which sold the Falck stake that Carterton turned up with. Again Široký is considered the real owner of Falck.  

So until the real structure of Váhostav with its mysterious loans and huge losses is unravelled, the Slovakian government and its people go without taxes from this once profitable business, and fraud allegations hang over the company and its owner like a dark cloud.

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*Denise McNabb is a New Zealand freelance journalist. You can reach her here - dmcnabb98@gmail.com.

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