Friday, July 17, 2009

bnz guilty of $650 million tax fraud

The Bank of New Zealand which now calls itself bnz has lost a High Court case in which the tax resulting from international structured finance transactions was disputed. The case is the first of a series facing the four main trading banks in New Zealand. In total they have been assessed to owe about $2 billion in unpaid taxes and interest. The tax in dispute for bnz, a unit of National Australia Bank (NAB), is $416 million. In addition, as at 30 June, bnz was liable for interest of $238 million net of tax. Penalties have yet to be considered by the Inland Revenue.

The is the third time that bnz has robbed New Zealanders, see the post about bnz's behaviour in the 1980s and the subsequent Government bailout; and Google "winebox enquiry".

This latest case involved six structured finance transactions with offshore counterparties. bnz made loans to overseas financial institutions at low interest rates. The transactions generated tax losses through fees and hedging costs. The Crown said the transactions were tax-driven and were designed to avoid tax.

"Clearly we are disappointed by the outcome," bnz's CEO Andrew Thorburn said. "We will review the judgment which spans 179 pages, and make a decision within 20 working days on whether we will appeal."

Although few people like the IRD, there is no doubt that this time the New Zealand public is right behind it in prosecuting greedy pig white collar fraudsters who fleece the public in more ways than one. Let's hope the bnz pig dies of Swine flu.

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