New Zealand Prime Minister John Key, the Whale Oil Blog, and International Organized Crime

A new book is causing a stir in New Zealand. It’s called “Dirty Politics“. From the blurb:

Early in 2014 Nicky Hager was leaked a large number of email and online conversations from Cameron Slater’s Whale Oil blog. Many of these were between Slater and his personal allies on the hard right, revealing an ugly and destructive style of politics. But there were also many communications with the prime minister’s office and other Cabinet ministers in the National Government. They show us a side of Prime Minister John Key and his government of which most New Zealanders are completely unaware.

Key has constructed an easy-going and relaxed public image, declaring to the public that ‘there’s no room for negative campaigning in New Zealand’. The reality is very different. His government has worked hand in hand with Slater and his collaborators in a sustained campaign of personal attacks against their political enemies, a deliberate but hidden strategy to avoid being held responsible for negative campaigning.

The New Zealand elections are on 20th September 2014, so the timing of these revelations is most unfortunate, at least for Prime Minister Key and his incumbent National Party. Here’s a brisk summary of the very numerous allegations, and a prognosis:

Key has already dismissed Hager’s book (‘left-wing conspiracy theory’) so it looks like he might try to bluff this out. I really, really, really doubt that will work.

So far, that prognosis is correct. The bluffing has already led to one first-rate trainwreck of a media appearance. Here’s part of the transcript:

ESPINER:  OK. Well what about the behaviour of your minister Judith Collins?  Is it acceptable for her to divulge the name of a public servant, because he may have leaked details ?

KEY: Well I don’t have the details on that one

ESPINER: she suspected he did.

KEY: I just don’t

ESPINER: Well, why don’t you ask her?

KEY: Well because I. A: it’s very. Sorry it’s.  Look to be

ESPINER: In fact, in fact, with respect, Mr Key, she has admitted that. She conceded she did pass on that name.

KEY: Yeah, but I don’t know the details under, of all of that scenario.

ESPINER: So why don’t you ask her?

KEY: Because, at the end of the day, we’re five weeks out from an election, people can see that Nicky Hager’s made a whole lot of things up in his book. He can see that he can’t back a lot of them up.

ESPINER: Well, I’m talking about one that can be backed up. You’re not going to get away with that.

KEY: See he

ESPINER: Because, because, this is one that can be backed up, because the Justice Minister of New Zealand has conceded publicly, that she did pass on the name of a public servant.  That resulted in him getting some pretty severe death threats. And you think that’s, OK?

KEY: And people can see that

ESPINER: It’s OK?

KEY: And people can see

ESPINER: Yes or no? Is it OK?

KEY:  And people can see that this

ESPINER: Is it OK?

KEY: People can see

ESPINER: Is it OK that Judith Collins did that, yes or no?

KEY: And people can see that this is a smear campaign by Nicky Hager and

ESPINER: I’m not asking you for a critique about Nicky Hager’s motivation

Key: Well I

ESPINER: I’m asking you about something that is publicly in the arena. Judith Collins has said, “I passed on the name of this public servant.” And we know what happened after that.

KEY: But the

ESPINER: I’m asking you a simple question. Was that appropriate, Yes or No?

KEY: context  is totally relevant, because at the end of the day, I don’t know all the context of what happened here and in all those situations

ESPINER: You know the context here, Prime Minster. Please answer the question.

KEY: We don’t know

ESPINER: Was it appropriate for your Justice Minister to pass on the name of a public servant doing his job, who was then severely sanctioned on a website?

KEY: So, I don’t know all the details behind all of that. But what I do know, is that this is a series of selected pieces of information. Many of which can’t be backed up. I know that this was

ESPINER: I’m asking you about one of them.

KEY: Yeah, well, I’m not going to go into your individual ones, because in the end, this is a smear campaign, about which, I gotta say, started the week with with people, you know, out there

ESPINER: No, I’m not, you’re not going to talk about burning effigies, etc, because it has nothing to do with this.

KEY: Well, it does [voice hits a squeaky note]

The precedents are sparse to nonexistent, but surely it can’t be entirely a good sign when a Prime Minister starts squeaking.

For my part, I’d like to focus on another of the allegations, and, as my dogged readers might expect, drag in New Zealand shell companies, investment frauds, and the Russian mafia. That’s my one trick, after all.

One of Whale Oil blogger Cameron Slater’s “personal allies on the hard right”, is Ms Catherine Michelle Odgers, aka award-winning blogger Cactus Kate, citation (2010):

Intelligent, persuasive and influential, with the sort of investigative journalism Metro should be publishing. This is a blog which has contributed to changes in the administration of some of New Zealand’s most important regulatory bodies, as well as providing a healthy degree of humour.

Until this week (ahem), Odgers was part of the NZ Herald’s election reporting team. Ms Odgers’ media profile shades off from blogging and occasional column writing, into something more like attention-seeking behaviour: here she is in a ninja suit, with an America’s Cup-related stunt from last year that made it to the then-friendly NZ Herald. I assume that Ms Odgers is the small one with the strong-looking thighs: “The Lawyer”. The attention-seeking sits oddly with her day job, which requires Ms Odgers to be the very soul of discretion, for she is an expatriate New Zealand lawyer specializing in the offshore trust business, for instance in Hong Kong and Samoa.

Ms Odgers has a particular beef with the author of Dirty Politics, Nicky Hager, for his reporting of the New Zealand connections that surface in the ICIJ offshore leaks database (here, for instance, last year). Her way of settling the score, as implied by her message to her mates Farrar, Slater and Hooton, published in “Dirty Politics”, is a little hair raising:

First, note that the posting of Nicky Hager’s address details isn’t just a revenge fantasy; it’s an actual attempt at revenge, with Hager’s “full details” provided to Odgers’ clients, who, she hopes, are appropriately “vicious”. Happily, her Chinese clients do not appear to be as morally defective as Ms Odgers, and, in fact (so far anyway), there has been no “Chop chop for Nicky”.

Second, note that Ms Odgers is perfectly aware who her very shy clients are. She talks to them on the phone.

One bit of the excerpt deserves a more extended parsing: “Shame Russians don’t seem affected”. In context it means something like “It’s a shame Hager’s piece hasn’t earned the ire of my Russian clients, since they would be really effective agents of my revenge.”

As if by a miracle, Ms Odgers appears to be quite right about that. Here’s the background.

Between the 8th of September 2006 and the 20th November 2009, Gannaway Mercer, a firm of chartered accountants in Auckland, New Zealand, incorporated at least 118 shell companies (now struck off) for clients of a rather secretive & diffuse international incorporation network that, for want of a better term, I will call the “Maharal network”.

It’s probably best to explain what I mean by that by way of the recently dissolved UK company agent Meridian Companies House. Meridian’s officers were, at one time or another:

• Erez Maharal of Israel;
• Marianne Gemenitzi of Cyprus;
• two corporate entities registered in Belize, Advance Developments Limited and Corporate Solutions Limited;
• and finally, with a touch of the bizarre, Meridian itself.

Is a UK company permitted to act as its own company secretary? Not really, but on this occasion, UK Companies House didn’t seem to mind. Erez Maharal also acted briefly as a director of another UK company, Administrative Office Limited; another director there was Sabine Boze, who is also a director of yet another business services company, B2B Company Secretary Limited. Meridian Companies House, Administrative Office Limited and B2B Company Secretary Limited all have registered addresses in Cornwall Buildings, 45 Newhall Street, Birmingham, UK.

Between them, these names link together a reasonably large shell company network, and that’s what I am calling, for the moment, the “Maharal network”. The pieces of it that one can find in easily accessible public info imply that it is, or was, quite a big deal.

For instance, Meridian Companies House has been an officer of 238 UK companies, Administrative Office Limited of 340, B2B Company Secretary Limited of 233. The Belizean entities add still more: Advance Developments Limited, 848, and Corporate Solutions Limited, 843. Via LVL Finance Limited we discover another entity acting as a company officer in the Maharal network, Trinitron Investments Limited (another 403 UK companies), which, the ICIJ leaks database tells us, is another Belizean company. There’s also Consulting Group Corp (domicile unknown to me, but I’m pencilling in Belize…), officer of 569 UK LLPs.

There’s plenty more to the Maharal network than that, but one has to stop somewhere, and we now have enough to establish a link between the Gannaway Mercer incorporations in NZ and the Maharal network in the UK. As usual, it boils down to a shared taste in nominee directors. The Gannaway Mercer NZ companies that I am highlighting have, between them all, just six directors, all offshore.

• Andreas KAKOURIS of Cyprus
• Fiona PARASKEVA of Cyprus
• Lana ZAMBA of Cyprus
• Marianna GEMENITZI of Cyprus
• Najwa SMAILI of Cyprus
• Sabine BOZE of the UK

Of course, Gemenitzi and Boze have actually directed companies alongside Maharal, so their links to him are immediate. The other directors are nominees who, in the UK, are only used by the Maharal network, as you will see from the hyperlinks, which take you to the Opencorporate entries for each director, with their UK and NZ companies.

In other words, the Gannaway Mercer NZ companies represent the New Zealand end of the international Maharal network.

There’s another link between these Gannaway Mercer NZ companies: each and every one of them is 100% owned by  GCSL (New Zealand) Limited, whose director, since January 2011, is Catherine Michelle Odgers of Hong Kong. That’s our Cathy Odgers, of course.

Now, the Maharal network is an important part of the so-called Russian Laundering Machine,

The money allegedly stolen by Russian authorities through Hermitage Capital passed through a series of front companies including Nomirex Trading Ltd. Nomirex is part of an international money laundering platform identified by the Organized Crime and Corruption Reporting Project (OCCRP) and used by several major criminals.

The Hermitage Capital case caused an international furore after Hermitage’s lawyer Sergei Magnitsky was allegedly tortured to death by Russian authorities after he named high ranking members of the tax authorities in the scam.

You can find a summary of the ghastly Magnitsky story, which continues to ramify, in a really obvious place. Note the saga’s chilling impact on Russian-American relations, which were souring well before the current Ukrainian troubles, not least because of the Magnitsky affair.

Back to the Laundering Machine:

In all, US$365 million passed through the Nomirex bank account, according to account statements obtained by OCCRP. Most of the money is unaccounted for and comes from phantom shell companies or even Asian criminal groups.

…

According to Hermitage Capital Management Limited, the money taken in their name by Russian authorities flowed to Swiss accounts through a chain of phantom companies, including Nomirex from UK and Bristoll Export from New Zealand. Those companies in turn received money from a Moldovan company named SC Bunicon-Impex SRL. The shell companies hid the real perpetrators of the crime.

One of the key companies was Nomirex. Nomirex is tied to Tormex through at least one financial transaction between the two phantom companies.

According to the UK business registry, Nomirex was established in August 2006 and was wholly owned by a Cyprus company named Voilent Trade Limited. Voilent Trade Limited in turn is wholly owned by a company from Belize – Trade Invest System Ltd. According to UK business registry, the same Trade Invest System Ltd from Belize was at some point director in at least 250 UK companies, half of which no longer exist.

The agent which registered Nomirex was Meridian Companies House Limited, an international financial company, which specializes in the incorporation and management of firms and asset protection. The director of Meridian Companies House is Erez Maharal who is a specialist in offshore management.

…

Maharal says that he really doesn’t know anything about Nomirex’s beneficiaries, bank accounts or why the company filed no reports to the companies’ regulator. “We just registered the company, and nobody ever makes us aware what is going on with the company in future … I feel that I was framed.”

In July 2009 a yoga instructor from Cyprus Lana Zamba became the new director of Nomirex. Zamba, who is likely just a proxy, simultaneously was director of dozens of companies in Cyprus, UK and Eastern Europe. Zamba, however, fronts for significant financial and political interests. She is currently director of Eurobalt Limited, a UK company that owns controlling interest in Altkom OOO, a road construction company based in Donetsk (Ukraine). Altkom is a one of the major contractors for the Euro-2012 football championship and has received hundreds of millions of dollars in no-bid contracts. Altcom’s preferential treatment on lucrative contracts and its non-transparency led to a series of critical reports in the Ukrainian press most of which speculated that high-ranked politicians were behind Altkom.

While Nomirex’s annual reports from 2007 until 2009 described its business as “inactive,” OCCRP found that dozens of firms from all over the world transferred at least US$365 million to Nomirex’s Latvian bank account in Trasta Komercbanka in Riga, Latvia. The majority of the transactions relate to Russia.

Now, there aren’t all that many shell-company-related Russian murders, so it would be quite a surprise if the particular extralegal unpleasantness Ms Odgers had in mind for Nicky Hager were wholly dissimilar to the extralegal unpleasantness associated with the very shell company network whose New Zealand end was run by her company GCSL, 2006-2009.

That is the most economical explanation for what Odgers is saying in the leaked communication cited by “Dirty Politics”, at any rate. Of course, as a defender remarks in the comments at another Whaleoil-friendly blog, Kiwiblog,

Cactus Kate – pretty sure if you were an assassin, someone would be dead by now.

The innumerable logicians amongst NC’s readership will naturally object that it doesn’t follow, from the fact that someone is dead by now (Magnitsky, in particular), that Ms Odgers is an assassin. But given the associations, and what the knowledgeable Odgers says about her clients, herself, it’s perfectly conceivable that it’s Odgers’ clients who are the assassins: an outrageous idea, obviously, but by no means impossible.

Another possible objection is that Ms Odgers only became a director of GCSL New Zealand in 2011. Maybe GCSL’s previous director, Jack Flader, ran the NZ end of the Maharal network, not Odgers. Perhaps Flader stitched up Odgers, and perhaps they split up long ago. Or this whole Russian mafia connection is all just conspiracy theory.

Is that right? Not necessarily. In fact, probing the Flader/Odgers connections makes the whole thing look even worse.

There is, or was, a group of GCSL companies; the main one was based in Hong Kong. Odgers was its legal counsel; the CEO was Flader. Flader and GCSL of Hong Kong are best known in connection with the Australian Trio/Astarra pension fund scam:

THE suspected mastermind of a $120 million superannuation fraud, Jack Flader, has sold his company to two Liechtenstein businessmen who have been fined $157 million each for their part in a huge US loan scam.

Mr Flader is a US lawyer who made headlines most recently as a shareholder of the failed erectile dysfunction business Advanced Medical Institute.

In 2007 he founded a Hong Kong-based company-services business, Global Consultants and Services Ltd, which has been named in court as being instrumental in the disappearance of $120 million in Australian money invested in a hedge fund, Astarra Strategic.

The chairman of the Liechtenstein-based Jeeves Group, Bryan Jeeves, OBE, said in a media release last Thursday that his company had bought 100 per cent of GCSL’s shares and that Mr Flader would act as a consultant.

In November 2009 a US investor, Kevin Campbell, won a court case arguing that a stock-loan program involving the Jeeves Group and Mr Flader had been a $1US billion Ponzi scheme that ripped off investors and paid $US100 million to its promoters.

Bryan Jeeves and his son, Alexander, were named alongside Mr Flader as ”Racketeer influenced and corrupt organisations” defendants in the case before the US District Court in Charleston, South Carolina.

The Jeeveses were ordered to pay $157 million each after the court accepted evidence they had breached multiple laws by committing mail fraud, wire fraud, securities fraud and money laundering.

In April last year the court finalised default judgments against the Jeeveses and companies they own, after they failed to file a defence.

The Jeeves Group website states it offers company services, including trustee services, asset management and investment advisory services.

There’s something else that the Jeeves Group website states: Cathy Odgers (pic, but no thighs this time, this is business) is now one of its directors (archive). Evidently she, and, one might reasonably suppose, GCSL’s Russian clients 2006-2009, came along as part of the GCSL sale.

Anyhow, it is perfectly clear that Flader and Odgers were in business together 2006-end 2010; and, for some time after that, both were under the sheltering wing of Bryan Jeeves, OBE, who, as far as I know, still hasn’t coughed up his half of the $314Million that two Jeeveses still owe the US justice system. Of course, if Mr Flader is still “acting as a consultant”, then Flader and Odgers are still close together in 2014.

Mind you, as of October 2013, Flader is off the hook for the pension scam,

A parliamentary inquiry into the collapse of Trio Capital in May last year slammed regulators, including ASIC, for their scanty efforts to prosecute Mr Flader.

The following month, ASIC said it did not have enough evidence to show Mr Flader had breached Australian law, but would provide information to Federal Police, the Crime Commission and overseas regulators.

On Tuesday, ASIC said that since then, ‘‘ASIC, the Australian Federal Police and our overseas regulatory counterparts have sought to obtain extra evidence to establish that Mr Flader breached Australian law’’.

‘‘However, despite this work, there is insufficient evidence to prove Mr Flader breached Australian law,’’ ASIC said.

‘‘In the circumstances, ASIC is now finalising its investigation into Mr Flader.’’

…so maybe the embarrassing Australian part of the story has  all gone away, then.

Anyhow, there must, of course, be some reasonably innocent explanation for these very unfortunate recurring Odgers associations with major international white collar crime, other than that Odgers is a crook. Coming up with something else that’s plausible stumps me, I must admit. For instance, Odgers doesn’t appear to be an idiot; not, at any rate, in the formal sense of having a very low IQ. Whatever the explanation is, it will have to be something more complicated than that.

So, worst case: Odgers is a crook, directly involved in Russian mafia moneylaundering, a $1Billion US Ponzi scheme, and the largest pension fraud in Australian history. If that’s how it is, then Key, via Whale Oil,  looks a little too close to her.

Best case: Odgers is a monumentally oblivious idiot, with an astonishing knack for working with, or for, large-scale fraudsters, again and again. Even in that best case, and somehow discounting Trio Capital and the Russians altogether, it’s still only two steps from the Prime Minister to the crooks (Key => Whaleoil/Odgers => Flader/Jeeves), and that $1Billion US Ponzi, and $314Million in US penalties.

That’s snug, best case or worst, but in the very particular context of dubious politicians’ connections, not unusually intimate. So could the Odgers part of the Whale Oil story really blow back to Key and the election, in the end?

I’d be astonished if, by itself, it made any difference at all to voter intentions. It’s just another piece of a not-great picture. But many media hands are at work adorning that picture, so let’s see how it looks in a week or two’s time.

UPDATE 23/08: Heck, I had better name check John Hempton, who did so much for so long to expose the Trio/Astarra scam.