WELLINGTON, New Zealand (AP) – New Zealand is reviewing its liberal system of company registration after investigators found a shell company based here leased an airplane that smuggled arms from North Korea, the commerce minister said Friday.
Adding to concern is a spike in applications this month to set up New Zealand companies with only overseas directors and shareholders.
Some 5 percent of the new applications are for foreign-directed companies – 56 out of a total 1,125 received as of Jan. 20, compared to about 3.6 percent for all of last year, according to government figures.
Commerce Minister Simon Power said that the increase is “a particular area I’m looking at.”
“Recent events mean that some questions are timely,” about tightening up on foreigners registering companies, Power told National Radio. “(Foreign registration) is probably the one (difference) that is holding us apart from similar jurisdictions.”
But he said the government would not rush into any changes of its liberal system that allows a company to be registered within 24 hours using online facilities without a New Zealand-based director or documentation to confirm data used in the registration.
A New Zealand shell company, SP Trading Ltd., leased an airplane seized last month in Thailand carrying an illegal arms shipment from North Korea.
Thai authorities seized the Russian-made Ilyushin-76 cargo plane and its five-member crew – four Kazakhs and a Belarusian – after finding 35 tons of explosives, rocket-propelled grenades, surface-to-air missiles and other weaponry during a refueling stop in Bangkok. The cargo manifest listed “oil industry spare parts” of various types but no weapons.
All five crew have been charged with possessing arms and are in a Thai jail pending investigation.
The shipment appeared to violate U.N. sanctions banning export of North Korean arms. The flight plan named Iran as the cargo’s destination.
An Associated Press investigation identified Aerotrack Ltd. of Ukraine and the Korean General Trading Corporation of Pyongyang, North Korea, as the companies responsible for the cargo. SP Trading, the company that leased out the plane to make the North Korean shipment, was registered in New Zealand on July 29, about four months before it flew to Bangkok.
Power said New Zealand authorities, including the company registrar, were continuing to investigate those involved with the registration of SP Trading Ltd.
“But I’m advised that on the information available there is nothing that could have been done under the current company registration requirements to prevent the registration of SP Trading Limited, or its activities,” he said in a statement.
The commerce minister defended New Zealand’s liberal system of company registration, saying it complied with international standards on combating money laundering and terrorist financing.
“We won’t be rushing into any changes,” he said. “We have an excellent reputation of being a country where it’s easy to do business, and we must not allow that to be harmed.”
The government Companies Office also said it had no way of knowing what was behind this month’s surge in registration of companies with foreign directors and shareholders.
“The Companies Office doesn’t collect information on the reason companies are registered, so we’re not in a position to comment on the number of overseas applicants,” spokeswoman Emilia Mazur said.