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Opinion

Winebox -much ado about nothing

David Barber

Wellington

So the Winebox Affair, which dominated New Zealand politics for five years and brought rela tions with the Cook Islands to a new low, was much ado about nothing. - What MP Winston Peters dubbed “the most telling example of political and big business corruption ever to rear its vile head in this country” turned out to be a very expensive drama that enriched a lot of lawyers but achieved little else.

The whole affair now hopefully put to rest, it left, however, a lingering sense of unease. It confirmed a couple of things that

many people had always suspected, namely:

Big business can get away with avoiding massive tax bills they morally ought to pay because they can afford lawyers able to con struct their affairs in ways that look legal. But the man in the street has no similar opportunity to avoid his personal tax liabilities.

MPs can use parliamentary privilege to make damning accu sations against individuals, who suffer considerable damage to their personal lives as a result, with little hope of redress.

This did little to improve the public’s confidence in the way it is governed. It all began back in October 1992 when an Auckland businessman delivered a winebox of documents to the Serious Fraud Office.

The papers had been allegedly taken from a company called European Pacific (then jointly owned by merchant bankers Fay Richwhite and Brierley Investments Ltd and subsequently invest ed in by the Bank of New Zealand).

They outlined a series of complex transactions in the late 1980 s which used the Cook Islands tax haven status to help companies avoid paying tax in New Zealand and other countries. In March 1994, Mr Peters accused a number of major companies and lead ing businessmen, who he named, of millions of dollars of tax fraud by using the transactions.

He claimed Inland Revenue Commissioner David Henry had conspired to pervert the course of justice and Serious Fraud Office head Charles Sturt had turned a blind eye to “corporate criminals” because they made donations to political parties.

Peters, who largely built the New Zealand First party on his anti-corruption campaign, eventually forced the government to set up the Winebox Inquiry under former Chief Justice Sir Ronald Davidson.

It began as a series of hearings in November 1994 which were constantly delayed by legal arguments and challenges, some of which went to the Court of Appeal and the Privy Council.

Along the way, the Cook Islands refused to cooperate, leading Foreign Affairs Minister Don McKinnon to note that bilateral rela tions had reached a low.

On August 14, after a 29-month-long investigation in which 73 witnesses gave evidence filling 13,000 pages of transcript, Sir Ronald reported; “There is simply no evidence at all of the exis tence of such a fraud as he alleged in any of the Winebox transac tions.

“The allegations made against the corporates and individuals claiming that they were guilty of conspiracy to commit such frauds were false and completely unjustified.”

The companies were merely using loopholes in New Zealand law and the Cook Islands tax haven to legally minimise their tax, he said.

“One might question the ethics of seeking to escape the impact of heavy taxation, but the realities were that tax was regarded as a cost of doing business and something to be minimised to the extent possible within the letter of the law,” Sir Ronald said.

It was cold comfort to ordinary people who have no option but to pay their tax or to Henry (who took early retirement during the hearings) and Sturt (who resigned, citing ill health due to the pres sure of work).

And it was a damning finding for Peters, now deputy prime minister and treasurer, and another embarrassment for Prime Minister Jim Boldger, whose coalition with NZ First had a 77% disappro\ al rating in a poll eight months after it was formed.

Boldger apologised to Henry and Sturt but there was no remorse from Peters, who true to form vowed to challenge the findings. He shrugged off opposition and editorial demands to resign and comments like: "We are now in banana republic terri tory” from the Labour Party’s deputy leader Michael Cullen.

To the horror of Bolger and other National Party MPs, Peters insisted: "I intend to have this matter tested and it won’t be the first commission of inquiry findings to have been overturned.”

The inquiry having cost taxpayers about $l7 million and the companies involved another SNZBO million, Bolger urged him to call it a day. The government meanwhile set about closing some of the tax loopholes to ensure there is no repeat performance of the long-running Winebox saga. ■ • The regular coulmn by Debbie Singh has not been included this month due to unforseen circumstances.