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Beijing has allegedly corrupt NZ-resident Chinese in its sights

Monday 8th December 2014

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The Chinese government has its eye on an unknown number of New Zealand resident Chinese citizens who are thought to have established themselves here with funds obtained through corrupt practices, the Prime Minister, John Key, says.

The issue came up in talks between Key and the Chinese president, Xi Xinping, during his three day state visit to New Zealand last month and came to light during questions to Key on the impact of an alleged influx of Chinese buyers into the Auckland residential property market for recent signs the property market is going into another inflationary burst post election.

While that issue did not come up in talks with the Chinese leader, President Xi "expressed concern about people arriving with money that he would claim is not theirs and is from corrupt activities," Key said. "They are keen to get a few people back from New Zealand."

Xi has overseen a crackdown on corrupt activity by senior Ministers and officials across China.

Key gave no firm figures, but said there was "a reasonable number that they (Chinese authorities) believe may be in New Zealand on those kinds of resources."

New Zealand had no extradition treaty with China because of that country's application of the death penalty for a wide range of crimes, including economic and commercial malfeasance, although discussions on establishing such a treaty had been ongoing for some time.

On the question of surging Auckland house prices, Key said the evidence of foreign buyer influence was "all anecdotal" and pointed to post election confidence as a possible reason for house prices to start moving up again.

"Elections are bad for the economy," he said. "I think people over estimate the number of foreign buyers", especially now that some 39 percent of Aucklanders were born outside New Zealand.

"The vast majority of buyers are local."

While a register of foreign buyers might help by gathering better statistics on the issue, it would not help solve the issue if it was found to exist, Key said.

Asked whether he thought the Reserve Bank governor, Graeme Wheeler, would have to try measures beyond the loan to value ratio lending restrictions already in place to damp housing price inflation, Key said he was not aware of any such plans and had "not seen other suggested tools."

"He (Wheeler) may have talked to the Minister of Finance, but not to me."

Speaking at his last post Cabinet press conference for the year, Key also batted away questions on the potential to introduce new ways of taxing multi-national corporations that don't pay significant or any tax in New Zealand, as is proposed in the UK with the mooting of a so-called "Google tax".

"You can't just tax by name," said Key, while a tax levied against a company's turnover would need careful thought if it was not to produce unintended consequences.

On taxing e-commerce transactions that allow New Zealanders to avoid GST on small ticket items bought on-line from foreign websites, Key said New Zealand would follow the OECD's lead.

"It's unfair that you can buy online something that you're paying GST on. The challenge is administration."


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