Shewan versus Little on no apology

John Shewan has released a letter he sent to Andrew Little’s office in June requesting an apology for Little’s remarks alleging Shewan’s involvement in helping the Bahamas preserve it’s tax haven status.

See Little slams Shewan who slams Little for the original allegations and Shewan’s response in April.

Shewan released the letter after Little this morning claimed he had not been asked to apoplogise.

Shewan’s letter to Little on June 10:

The suggested response is not acceptable. It does not recognise the severity of the incorrect statement made by Mr Little.

It’s reasonable to expect a person in Mr Little’s position to understand the impact and damage the statement he has made would have on me personally and the potential they have to negatively impact my business now and in the future.

I have been fair and extremely patient. It is close to two months since Mr Little caused me and my family considerable stress and humiliation.

My efforts to address the issue in a fair and timely way were responded to by procrastination and vain efforts to fob me off, whereas they could and should have brought a prompt resolution to this matter.

The statements made were patently wrong and damaging to my reputation and I now require an unqualified retraction which will go some way towards mitigating the damage that has already been caused.

A correction along the lines you are suggesting would be unacceptable.

I now request the statement I sent to you yesterday be issued with the following additions: ‘I apologise to Mr Shewan for any embarrassment I have caused him through my statements’.”

Please advise Mr Little’s position by 5pm today.

NZ herald reported earlier today that little was refusing to apologise and had not been asked by Shewan to apologise: Andrew Little on John Shewan: I will not apologise

Following the release of Mr Shewan’s inquiry yesterday, Mr Little said he did not need to go further.

“He explicitly said I don’t need you to apologise, I want a correction of a statement, and that’s what I’ve done,” he told reporters this morning.

And NZH later today: John Shewan says Andrew Little’s claims are misleading

When asked again to confirm that Mr Shewan had not asked for an apology, Mr Little said: “That’s my recollection of the first face-to-face discussion that we had.”

Little should be having a field day slamming John Key’s switch from denial there was any trust or disclosure issues to supporting the bulk of Shewan’s report and it’s recommendations to toughen up on trust disclosure requirements.

And David Seymour has highlighted Labour’s own shift in attitude on the trust issue and on Shewan’s report.

Andrew Little, then:

“John Key’s decision to appoint John Shewan to review New Zealand’s dodgy foreign trust rules shows a serious lack of judgement . . . A closed door review led by Mr Shewan will not restore our international reputation which has been so damaged by the Panama Papers.”

Grant Robertson, now:

“John Shewan’s report into foreign trusts is a rebuke to John Key . . . Labour supports the improved disclosure and transparency recommendations of the Shewan report. These will make for a system that is more open and will give foreign Governments greater ability to track down those who are avoiding their tax obligations.”

It’s no wonder Labour are struggling to get anywhere despite the growing number of  problems and stuff-ups the Government has been accumulating.

UPDATE: Andrew Little in Parliament today:

Andrew Little: If at least one member of the House is capable of accepting when he has got it wrong and publicly acknowledging that, when is he going to acknowledge to the public of New Zealand that he misled them about the state of our foreign trust tax laws?

Little unrepentant, Shaw sensible

Andrew Little is so far unrepentant after attacking tax expert John Shewan in Parliament, although has tried to shift the focus of his attack onto John Key.

In contrast Green co-leader James Shaw has taken a much more sensible tack. However his sort of reason is drowned out by the Little storm.

Radio NZ: Tax reviewer allegations a ‘storm in a teacup’

The Labour Party is not resiling from its latest attempt to discredit the man appointed to carry out a review of foreign tax rules, John Shewan.

In Parliament, Labour leader Andrew Little accused Mr Shewan – appointed to review the rules on foreign trusts – of giving the Bahamas advice to preserve its status as a tax haven.

Mr Little was asked what evidence he had, other than a newspaper article from the Bahamas.

“I can go on the reports that we have got, the government here has set up a review of our foreign trusts regime, but that review is being conducted by somebody who is now associated at the very least with advice to the Bahamas, a well known tax haven who following that advice has sought to preserve their tax haven status.”

Mr Little made no apology for his comments about Mr Shewan.

“John Shewan is a highly competent tax specialist and tax expert.

This is about John Key’s judgement, this is about his decision-making. He and his cabinet made the decision to appoint John Shewan to do a review into this area that is causing a lot of consternation amongst a lot of New Zealanders.”

Except that Little clearly targeted Shewan – see Little slams Shewan who slams Little and John Shewan on Radio NZ where Shewan says “And it’s very disappointing to hear the statements made today because they’re completely and utterly inaccurate.”

In contrast Green co-leader James Shaw is taking a much more reasonable and sensible approach to the controversy.

Green Party co-leader James Shaw said he did not see anything untoward about Mr Shewan’s trip to the Bahamas.

“Well I’ve been very careful not to target John Shewan personally, and I don’t think that somebody like that should be caught up in the political shenanigans.

That’s something that Little should take on board as an example of leadership with integrity.

“I think the really important thing here is to focus on what does the public need in order to have trust in the credibility of the review that’s been undertaken.”

Mr Shaw said Mr Shewan was obviously a tax expert, but it would be good to have a broader group doing the review.

I agree with Shaw, it would have been better to have had a broader group doing the tax and trust review, but sensible suggestions have been overwhelmed by Little’s lurch into attack politics.

The Greens must despair at Labour’s approach, because it is unlikely to help the chances of a credible Green-Labour coalition.

And I suspect more than a few Labour supporters will be concerned by Little’s line of attack. I’m sure more than a few ex-Labour voters will be disappointed in their ongoing lack of choice.

If the current Opposition gets a shot at forming a coalition it’s likely to be long time political attack mongrel Winston Peters competing with new pup Little for the top dog position of Prime Minister.

It’s no wonder more and more people are being turned off by dirty politics and are turning away from voting.

John Shewan on Radio NZ

Radio NZ – John Campbell interviews John Shewan on 13 April 2014 after Andrew Little made accusations against Shewan in Parliament earlier in the afternoon.

John Campbell: Did you go with Don Brash to the Bahamas to advise on tax policy?

John Shewan: Yes I did, we were both requested to go up there to advise the Bahamas Government on their VAT.

John Campbell: Requested by who?

John Shewan:By John Key, by the New Zealand Government. The Bahamas Prime Minister had requested John key for some assistance because they were having difficulty in the Bahamas getting acceptance for the proposed VAT legislation and we were sent up there to have a look at why there was such resistance and to make recommendations for change.

John Campbell: OK, so VAT is exactly the same as our GST, well not exactly the same but more or less the same right?

John Shewan: It is exactly the same.

John Campbell: Ok. Did you recommend a zero rating for off shore financial services industry in the Bahamas?

John Shewan: No we did not. And it’s very disappointing to hear the statements made today because they’re completely and utterly inaccurate.

John Campbell: Sorry I’m just going to, because you, it’s absolutely been said in Parliament that you did. So without equivocation in a very singular way – did you recommend a zero rating?

John Shewan: No. And let me say that apparently what’s been said in Parliament today is based on a report from one of the Bahamas newspapers. I have in front of me the section of the report on financial services, and it’s very important just to cover the two points.

Firstly by the time Don Brash and I arrived in the Bahamas the draft legislation had been put before the Parliament and as is the case with most countries they had proposed to exempt financial services domestically and they financial services would be zero rated. That’s standard practice.

What we recommended was that the base be broadened so we recommended a number of other items be brought in.

In relation to financial services we recommended that they retain that exemption for domestic services, but they considered zero rating business to  business supplies just within the Bahamas as New Zealand had done a few years earlier.

John Campbell: So wait a sec, this is confusing now and it sounds like semantics to me, in other words is there zero rating for the offshore financial services industry in the Bahamas, and were you part of that? I guess that’s the nub of this.

Are you using semantics to get around the fact that somehow you were influential over that zero rating?

John Shewan: Absolutely not, as I just said by the time we got up there the draft legislation already had in it zero rating financial services, just as New Zealand does.

What we were looking at was in the context of the overall regime could they actually expand the base so for example…

John Campbell: So did they show you the draft legislation, did they say ‘what do you think of this’?

John Shewan: Yes they did.

John Campbell: Ok, and so did you sign off on the zero services, did you say ‘yeah that’s a good idea we stand by that’?

John Shewan: Well what we said was, what they were proposing in relation to financial services was entirely consistent with the rest of the world including New Zealand, and we recommended that they go have a look in due course and we said, and I’ll quote what we said here. I’ve got it in front of me.

“The Bahamas Government may wish to consider refinements to financial services provisions at some future point. The regime is complicated and based on the New Zealand experience it’s best added to an existing regime and it’s more practical experience. Attempting to implement this now would likely delay the implementation of VAT”.

So we did not recommend the zero rating for offshore financial services, that was already in the legislation and indeed it’s entirely consistent with rules in New Zealand, Australia and other countries.

So this is a complete red herring, a storm in a teacup, and very disappointing and I would have been more than happy to take a call  from Mr Little’s office to respond rather than people going off on the basis of what would seem to be a completely misleading newspaper article from the Bahamas.

John Campbell: Ok does this speak to a kind of broader sense coming from some quarters that you are a fox that’s been put in charge of the chicken house?

John Shewan: Ah well that may be the case, and I’ve been asked to do a job, I intend to do it, and I’d ask that the report be judged on the integrity of the report and it’s author, be judged on the basis of the report.

John Campbell: Which seems to be absolutely fair enough. And if you’re am empiricist, you say ok wait and let’s see what John Shewan comes out with.

But I guess what people are suggesting is gosh this is the man that quite likes zero ratings, this is the man that quite likes financial trusts.

And can I just ask you a couple of questions about this.

Have you ever placed foreign clients in New Zealand based trusts?

John Shewan: No I haven’t.

John Campbell: Never not once in the course of your career as a tax expert with PWC?

John Shewan: I’ve had no involvement whatsoever with foreign trusts. It’s not an area I ever worked in.

John Campbell: Have you ever put New Zealand clients in foreign trusts.

John Shewan: Ah no I haven’t.

John Campbell: Ok, have you ever put, have you ever been associated in any way with Monsack Fonteta?

John Shewan:No, never heard of them.

John Campbell: So you’d never heard of them prior to the release of the Panama papers?

John Shewan: No I hadn’t. I had no reason too John.

Can I come back to this allegation by Mr Little, because I really take it very seriously, because the assertion is that we made recommendations to protect the Bahamas state as a tax haven.

This is one hundred percent incorrect, totally wrong. And for such statements to be made without any consultation is to me quite alarming.

The Bahamas was and still is a low tax country, a tax haven, that’s correct.

Our role was actually to enable them to start raising taxes through the implementation of it’s VAT that worked . The regime was actually in not a good shape when Don Brash and I arrived and we made substantial recommendations to broaden the base.

Ironically what we did, and this makes what’s been said in Parliament today such a joke,  we materially increased the level of VAT that will be collected by the Bahamas government by broadening the base, and including key areas such as general insurance and…

John Campbell: Absolutely. But I guess and this is the point, and, but you didn’t include the offshore financial industry right?

John Shewan: No we did not.

John Campbell: Ok. One final question. Everyone’s talking about this Westpac case. Now I’d only read reports of it so today I got the judgment of Justice Harrison.

So this is Westpac versus Inland Revenue, you know the case, and if we turn in to point 564:

“Mr Shewan recommended that Westpac pay thirty to forty million annually even though that sum represented a rate of only 6.5% against the reported profit.”

So that’s in Justice Harrison’s judgment from the high court. Is that true?

John Shewan: Ah well it’s been taken out of context but it was part of an overall letter which I’m limited in terms of what I can say about that, but actually what it was saying is, and most tax advisers at the time were saying the same thing, is that there were likely to be changes made to the banking and tax rules to tighten the tax base, and that was in fact done. And then these cases came before the courts after that, but the rules had actually already been tightened so they were historical.

And actually that advice was actually in line, in terms of saying the banks should be paying tax.

John Campbell: And by golly they had to, right. I mean there was a huge award made against them.

John Shewan: The entire banking industry was included in that…

John Campbell: Absolutely…

John Shewan: …and it would have been fifty to eighty tax advisers involved, and all I can say is in the context of 38 years working in the tax area there are cases that you will win, there are cases you will lose.

I’m entirely satisfied with my record and I’m entirely satisfied that I have consistently acted with integrity. I accept that some Members of Parliament have had more litigation experience than me and they may have a better track record and good luck to them on that.

But I absolutely reject any suggestion that I’ve acted in anything other than a totally professional way, and I do object to some of the very misleading so-called facts which are complete myths that are now being perpetrated in Parliament.

Radio NZ Report: Trust reviewer rejects Labour’s Bahamas accusation

Audio: “Completely and utterly inaccurate” – Listen to John Shewan’s live interview on Checkpoint with John Campbell

Andrew Little’s comments in Parliament: Little slams Shewan who slams Little

Little slams Shewan who slams Little

In Parliament today Andrew Little slammed tax expert John Shewan, but Shewan slammed Little back for not checking the accusations about the Bahamas with him first, which Shewan says are “completely and utterly inaccurate”.

2.ANDREW LITTLE (Leader—Labour) to the Prime Minister: Does he have any financial interests which may affect his decisions around foreign trusts; if so, what are those financial interests?

Rt Hon JOHN KEY (Prime Minister): No.

Andrew Little: Did he disclose to Cabinet his links to Antipodes Trust Group when making decisions on the review of foreign trusts in New Zealand?

Rt Hon JOHN KEY: I rely on the members knowing about my pecuniary interests.

Andrew Little: Did he send John Shewan and Don Brash to the Bahamas in 2014 to advise that Government on tax matters?

Rt Hon JOHN KEY: Yes. I think they went to talk to them about GST.

Andrew Little: Can he confirm that John Shewan and Don Brash advised the Bahamas that its financial services be zero-rated for value-added tax in order to protect the offshore services industry of that country?

Rt Hon JOHN KEY: No. I am not aware of that level of detail.

Andrew Little: I seek leave to table an article from a Bahamas news outlet, not widely available—[Interruption]

Mr SPEAKER: Order! [Interruption] Order! The member is seeking leave to table a document. I want to listen to what it is. If there are interjections coming from particularly my far-right quadrant, that makes it difficult. Would the member start his introduction again as to what the document is.

Andrew Little: Thank you, Mr Speaker. I seek leave to table a media report from the Bahamas, not widely available, on the advice given by John Shewan and Don Brash to the Bahamas Government to the effect that international financial services be treated as zero-rated to protect—

Mr SPEAKER: Order! The document has been well and truly described. I will put the leave and the House will decide. Leave is sought to table that particular media article from the Bahamas. Is there any objection? There is none. It can be tabled.

  • Document, by leave, laid on the Table of the House.

Andrew Little: Does he not see that there is a fundamental problem with appointing a person to review our foreign trust laws who has advised a Government on how to protect its tax haven status?

Rt Hon JOHN KEY: The member has proven over the last 2 weeks that he is completely unfit to judge who—

Mr SPEAKER: Order! [Interruption] Order! That is a straight personal reflection on the member who has asked the question, and that will be ruled out of order. Would the Prime Minister stand now and answer the question. [Interruption] Well, I have not heard the answer. [Interruption] Order! I have not heard the answer, so I am going to invite the member to re-ask the question so I can hear the answer.

Andrew Little: Does he not see that there is a fundamental problem with appointing a person to review our foreign trust laws who has advised a Government on how to protect its tax haven status?

Rt Hon JOHN KEY: I cannot confirm whether the Bahamas is a tax haven or not—I simply do not know. I do not think the member would know either.

Radio NZ followed up with Shewan: Trust reviewer rejects Labour’s Bahamas accusation

Labour leader Andrew Little has accused John Shewan, who has been appointed to review New Zealand’s rules on foreign trusts, of giving the Bahamas advice to preserve its status as a tax haven.

Mr Shewan told RNZ News the trip to the Bahamas had absolutely nothing to do with its status as a tax haven, and any suggestion of that was complete nonsense.

He said that the prime minister of the Bahamas had asked the New Zealand government to provide people to assist with putting GST in place in the Bahamas.

“Mr Key requested Don Brash and myself to go up there which we did.

“We recommended that they modify their proposed regime significantly and simply follow New Zealand’s rules across the board.”

Mr Shewan said they did recommend backing an existing exemption, as per international practice, that financial services be exempt from GST.

It appears that Little hasn’t bothered to check things out adequately, or he doesn’t care about facts as he continues his tax attacks against Key and Shewan.

More from RNZ: “Completely and utterly inaccurate” – Listen to John Shewan’s live interview on Checkpoint with John Campbell