From North Korean gun running to El Chapo's drugs cartel; New Zealand Police have received more than 350 criminal investigation enquiries about NZ companies the notorious Taylors established 

By Gareth Vaughan

You might have heard about the New Zealand company that leased a plane to fly North Korean weapons to Iran, and the four NZ companies linked to Mexican organised crime group the Sinaloa Cartel.

Embroiled in major international crimes, these companies were established by NZ's Taylor family on behalf of clients. But they're just the tip of a very big iceberg.

Interest.co.nz has learnt that NZ Police have received more than 350 criminal investigation enquiries from overseas relating to NZ companies established by the Taylors. The enquiries relate to allegations the companies were being used for money laundering, smuggling, fraud, tax evasion, corruption, and breaches of trust involving hundreds of millions of dollars. The main region of the world where these enquiries have come from is Eastern Europe.

With roots in Nelson, the Taylor shell company peddlers consist of father Geoffrey and sons Ian and Michael, plus various extended family members and associates, who have featured as nominee directors and shareholders of clients' companies including Geoffrey's wife Priscila Lustre Taylor and Ian's wife Taya Burnett. The Taylors' Vanuatu-registered GT Group Ltd, the primary vehicle behind their NZ company incorporation, was deregistered in 2014. However its effects are still being felt today with criminal investigation enquiries related to Taylor established companies still reaching NZ Police this year.

But despite the nefarious activities of their clients' companies, none of the Taylors has ever been charged by NZ authorities with breaking any laws in relation to their company registration activities. By establishing and selling companies, sometimes complete with nominee directors and shareholders, plus addresses, they've assisted criminals launder money, evade taxes and hide their identities through phantom companies, but have not broken any laws.

The Organised Crime and Corruption Reporting Project has described Ian Taylor as "a notorious company registration agent from New Zealand who has created companies for organized crime, rogue states and terrorism groups."

Lithuanian authorities seek assistance

One overseas enquiry that has exercised NZ authorities of late comes from Lithuania, and involves curious share and money movements and alleged fraud, interest.co.nz understands. NZ companies involved include Development Win Ltd, Bismarck Ltd, Ellora Group Ltd and Atherstone Ltd. The four were established between 2007 and 2011 by Michael and Ian Taylor, and struck off in 2011 and 2014. Registered shareholders included the Taylor vehicle Vicam (Auckland) Ltd. Nesita Manceau, Geoffrey's housekeeper in Vanuatu, features as a nominee director and shareholder. 

Born in 1943, Geoffrey Taylor emigrated to NZ from Britain in 1964. He claims to have lived and worked in nine countries including Vanuatu. He's now living in Queensland. Ian Taylor's LinkedIn profile says he was educated at the Nelson Marlborough Institute of Technology and Nelson's Nayland College. He follows both Jacinda Ardern and Helen Clark on LinkedIn. The Taylors still have relatives in Nelson, although Ian's also now living in Queensland. Michael appears to be living in the South Island.

Below Mike, or Michael Taylor (left), Geoffrey Taylor (centre), and Ian Taylor (right). Photos taken from social media sites.

Taylor incorporated company allegedly used to launder money from the crime that led to the Magnitsky Act

Extensive attempts to contact Ian, Michael and Geoffrey Taylor for this article have proven unsuccessful. However, in July this year Ian Taylor, albeit reluctantly, featured in an Australian channel 7 TV programme. Entitled Dirty Money, the programme was based around Bill Browder. Formerly the biggest foreign investor in Russia via Hermitage Capital Management, Browder is the driving force behind the Magnitsky Act.

Initially signed into law by US President Barack Obama in 2012, the Act aims to punish Russian officials responsible for the death of Browder's lawyer Sergei Magnitsky in a Russian prison nine years ago. The US has subsequently adopted a global version of the Act, allowing the US Government to sanction corrupt government officials implicated in abuses anywhere in the world. Other countries including the UK, Canada, Estonia, Lithuania and Latvia have adopted their own versions of the Act.

Browder told 7's Matt Doran about tracing money from an alleged US$230 million fraud committed against Hermitage and the Russian taxpayer to Australian bank accounts. Bristoll Export Ltd, a NZ company established by the Taylors was, according to Doran, "one of several shell companies used by the Russians to launder the stolen $230 million."

Doran tracked Ian Taylor down in Mooloolaba on Queensland's Sunshine Coast where he attempted to question him. Taylor said he had "no idea" who the people behind Bristoll Export were. The 7 programme said nearly $5 million of the $230 million fraud money found its way into 11 Australian bank accounts at ANZ, BNZ's parent National Australia Bank, ASB's parent Commonwealth Bank of Australia and HSBC. The banks said they take money laundering issues seriously and report any suspicious activity, but declined to comment on specific transactions.

The video link to a promotion for the channel 7 programme and comments below come from Ian Taylor's publicly accessible Facebook page. The "Geoffrey Makepeace Thackeray" who features is Geoffrey Taylor.

'It appears everything the GT Group did was perfectly legal'

Ian Taylor told Doran that over the course of some 15 years the Taylors had incorporated thousands of companies for clients. Meanwhile Doran pointed out; "We're not suggesting that Mr Taylor has committed any crime. In fact quite incredibly it appears everything the GT Group did was perfectly legal."

Nonetheless, companies established by the Taylors on behalf of clients have been implicated in serious crimes. 

The activities of SP Trading Limited nine years ago earned the Taylors notoriety. A NZ company established by the Taylors on behalf of clients, SP Trading leased a plane used to attempt to fly 35 tonnes of North Korean weapons to Iran in contravention of United Nations sanctions.

When questioned by NZ Police after SP Trading's activity came to light, Ian Taylor said nominee directors could end up being directors of hundreds or thousands of companies. A legal opinion obtained from law firm Simpson Grierson said as long as the nominee director can show they're only acting on instructions from someone else, they're not liable or doing anything wrong, Ian Taylor told police.

“The aircraft was forced down while travelling over Thai airspace. When investigated in Bangkok it was found to contain 35 tonnes of North Korean weaponry including rocket-propelled grenades, missile and rocket launchers, missile tubes, surface to air missile launchers, spare parts and other heavy weapons to an estimated value of US$18 million. In the extensive publicity of the incident that followed there was considerable focus on the fact that the lessee of the plane was a New Zealand registered shell company [SP Trading].”

The above extract is taken from a High Court judgment from Justice Raynor Asher. The judgment blocked an attempt by Lu Zhang, the sole director of SP Trading whose day job was flipping burgers at Burger King, to be discharged without conviction having pleaded guilty to making 74 false statements under the Companies Act. (She was convicted and discharged without further penalty). 

GT Group, whose origins came from Geoffrey Taylor's initials, registered SP Trading to a virtual office in a Salvation Army building on Auckland's Queen Street. On SP Trading Ian Taylor told media GT Group's role was simply to incorporate the company and act as its registered agent at the behest of a client based in the United Kingdom. It was not responsible for, and had no knowledge of, what the company got up to, Ian Taylor said.

A UN report on the Bangkok plane seizure reportedly named three individuals said to be involved. They were Yuri Lunov and Igor Karev-Popov, both Ukrainian citizens, and Aleksandr Viktorovich Zykov, a Kazakhstan citizen. Igor Karev-Popov was said to be the UK based person who controlled SP Trading, which was a customer of Denmark's Danske Bank, now embroiled in Europe's biggest money laundering scandal following more than €200 billion of suspicious transactions.

The Sinaloa cartel & El Chapo connection

GT Group incorporated NZ companies have also been linked to a major money-laundering operation in the United States. In 2010 Wachovia Bank agreed to pay US$160 million to settle US charges that it failed to stop up to US$378 million of Colombian and Mexican drug traffickers’ money being laundered through accounts at the bank. Much of the money originated from Mexico's Sinaloa cartel, whose leader Joaquin Archivaldo Guzmán Loera, or El Chapo, is now on trial in New York where he faces life imprisonment for his alleged role in a bloody drug trafficking empire.

In the Wachovia case it was alleged that four NZ firms registered by the Taylors'  - Keronol Ltd, Melide (NZ) Ltd, Tormex Ltd, and Dorio (NZ) Ltd - helped launder about US$40 million of the proceeds using Latvian bank accounts and Wachovia's London branch. These companies and GT Group feature in a case study compiled by one of NZ's anti-money laundering regulators, the Department of Internal Affairs (DIA). Below is detail from the DIA.

The actual business of Tormex was not apparent and was not indicated by the company name. Unusual names that do not indicate the activity of the company is a common indicator of shell companies used to facilitate criminal activity. The Organized Crime and Corruption Reporting Project, a network of East European journalists, reported that, once Tormex was registered on the New Zealand companies register, a power of attorney document was used to transfer the directorship to a Russian national. A bank account was then opened at the Baltic International Bank in Latvia. Journalist enquiries with the man revealed he was unaware of either Tormex or its bank account. His identity had been used without his knowledge as he had sold his passport details. 

When the journalists examined bank statements for the Latvian account held by Tormex obtained by lawyers in a Moldova court case, they discovered that during 2007 and 2008 US$680 million was transacted through the account. Analysis indicated the transactions were money laundering transactions carried out under the guise of trading contracts between Tormex Limited and several companies. Trade transactions were conducted with several Ukrainian companies including a state-owned weapons trader. The contracts were then cancelled after the funds had been transferred and refunds were made to different third-party offshore companies. The Organized Crime and Corruption Reporting Project journalists report that using transactions related to cancelled trade orders with legitimate companies is a common money laundering method amongst Russian organised crime.

Transactions were also made with three other New Zealand shell companies – Keronol Limited, Melide Limited, and Dorio Limited – which had also been registered by GT Group using the same nominee director, nominee shareholder and virtual office address as Tormex. The UK’s Guardian newspaper reported that Tormex Limited, Keronol Limited, Melide Limited and Dorio Limited had been involved in laundering US$40 million for the Sinaloa Drug Cartel based in Mexico. Part of the money laundering process involved the New Zealand shell companies transferring funds to an account held at Wachovia Bank in London linked to the Sinaloa Cartel.

NZ was dumped from the European Union's so-called White List, which provides guidance for EU banks and financial institutions about countries with EU equivalent money laundering and anti-terrorist financing laws, in 2011 after Tormex's money laundering via a Latvian bank account came to light. Meanwhile yet another NZ company established by the Taylors, Chester (NZ) Ltd, was embroiled in a major Russian money laundering scandal, to the tune of NZ$612 million, as reported by Naked Capitalism's Richard Smith. 

Recent activity

Whilst Geoffrey and Michael Taylor no longer appear to be involved in the company incorporation business, it appears that Ian Taylor still is. His LinkedIn profile describes him as a private consultant, with skills including company incorporation, business structures and international company services. He used to have a website called readymadeshelfcompany.com.

On another website Ian Taylor boasted of "being directly credited with driving the New Zealand government to strengthen its previously weak and negligent company registration processes by exposing multiple holes in a naively drafted Companies Act."

Meanwhile, Interest.co.nz reported last year that Ian Taylor's fingerprints appeared to be on a series of NZ registered companies and financial service providers which all had Burnett as a director. Following our article ECS Ltd, a company service provider whose director and shareholder was Taylor associate Denis Petrov, was issued a formal warning under the Anti-Money Laundering and Countering Financing of Terrorism Act by the DIA. And Registrar of Companies Ross van der Schyff removed ECS Ltd and some Taylor-linked client companies from the Companies Register.

NZ the easiest country in the world in which to set up a company

For the past decade the World Bank has ranked NZ the number one country in the world for the ease of starting a business. It costs $10, plus GST, to reserve a company name and $105, plus GST, to apply to incorporate a company.

"For starting a business, for example, New Zealand has the smallest number of procedures required (1) and the shortest time to fulfill them (0.5 days)," the World Bank says.

All NZ companies must have at least one director who lives in NZ or Australia. An Australian-based director must also be a director of a company incorporated in Australia. To become a director under the Companies Act, people must complete a director consent form. This requires the proposed director to confirm they aren't disqualified from being appointed or holding office as a director of a company. Applications to appoint a director are checked against the Companies Office list of disqualified directors, and the insolvency register.

Anyone can apply to register a company, so long as the requirements of the relevant legislation are satisfied and the relevant fees paid, the Ministry of Business, Innovation & Employment (MBIE), which oversees the Companies Office, says. Van der Schyff may require information to be provided by registration agents, or any other applicant, in support of a registration application. But provided the relevant requirements are met there is no power to refuse to accept applications from particular agents to register a company, MBIE has told interest.co.nz. 

'Nothing inherently unlawful about the incorporation of shell companies'

A spokeswoman for MBIE told interest.co.nz there's nothing inherently unlawful about the incorporation of shell companies.

"Shell companies are simply companies that have no business operations or assets. Although shell-companies can be an indicator of a heightened risk of unlawful activity, they may be used for a variety of legitimate reasons including, for example, as a business start-up. It is not always possible for the Registrar of Companies to identify that a company is a shell company because information about business activity is not required to be provided to the Registrar," the MBIE spokeswoman said.

"If a company is indeed a shell company, the requirements of the Companies Act apply in the same way as for any other company, and there has been considerable work done over the past four years to help address misuse of New Zealand’s company registration regime." 

In 2014 changes to the Companies Act were made that aimed to help address the misuse of NZ’s company registration regime. These included that all new companies incorporated from May 1, 2015 must provide date and place of birth of all directors, with these details not publically released, must have at least one director who lives in NZ, or lives in Australia and is also a director of an Australian incorporated company, and provide details of any ultimate holding company if there is one.

"In addition, the powers of the Registrar of Companies under section 365 of the Act were enhanced, for example by allowing the Registrar to require a person to confirm or correct information on the register. Corresponding removal grounds were introduced which allow removal of a company where a request under section 365 is not complied with," the MBIE spokeswoman said.

"Companies incorporated prior to 1 May 2015 were given 180 days - until 28 October 2015 - to comply with the requirement to have a NZ or Australian director otherwise they were able to be removed from the register. These measures provide a New Zealand point of contact and accountability to make it more difficult for criminals to operate undetected, helping protect New Zealand’s integrity and reputation as a good place to do business. There were 2,433 companies removed in December 2015 following the ending of the grace period, for failure to comply. The Registrar continues to remove companies where they are found to be in breach of section 10 of the Companies Act, and the Companies Office is continually assessing the Register to ensure compliance."

'Anyone who has information to suggest that the Taylors may be offending against the Companies Act should lodge a complaint'

Additionally the MBIE spokeswoman said the Companies Office Integrity and Enforcement team (IET) routinely requests additional identity and address verification from directors and shareholders who meet certain risk criteria, under section 365 of the Act.

"These requests can include overseas based directors and shareholders. Over the last two years, section 365 requests initiated by IET have increased from 236 requests in the 2015/2016 financial year to 869 requests in the last financial year. Stringent verification of applicants from high-risk countries, as per the European Commission anti-money laundering blacklist, is now undertaken," said the MBIE spokeswoman.

"IET has also significantly increased the number of site visits conducted at addresses meeting certain risk criteria, up from 21 visits in the 2015/2016 financial year to 194 visits in the last financial year. This number includes regular site visits to addresses that have high volumes of companies registered at that location, such as company incorporation agents and virtual office addresses."

"Site visits are conducted to ensure compliance with the requirements of section 189 the Companies Act, which requires that a company’s books and records must be kept at the company’s registered office address. Failure to comply with these requirements may be used by the Registrar to form the view that there are grounds to initiate the removal of the company from the Companies Register. In the 2017/2018 financial year IET initiated removal action on 551 companies, of which 278 companies were removed from the Register. The remaining 273 companies either complied with the requirements of the Act, enabling them to remain registered, or lodged objections against the removal action," the MBIE spokeswoman added.

"The Companies Office has not initiated any prosecution of the Taylors to date. We note your suggestion that the NZ police have received ‘hundreds of enquiries from overseas about NZ companies the Taylors incorporated on behalf of their clients’. The Companies Office would expect Police to refer on any complaints which indicate possible offending against the Companies Act. Anyone who has information to suggest that the Taylors may be offending against the Companies Act should lodge a complaint with IET. Contact details for the IET are as follows:

In writing: Companies Office
                Integrity and Enforcement Team
               Private Bag 92061
               Victoria Street
               West AUCKLAND 1142

By Phone: 0508 266726

By email: https://www.companiesoffice.govt.nz/about-us/our-enforcement-approach/m…  (via online complaint form)."