John Key MP
National Party Finance Spokesman

15 April 2005

Cullen signs off on Cayman Islands tax deal

“Michael Cullen must front up on a complicated tax deal that allows Transpower to funnel money through a Cayman Islands holding company,” says National Party Finance spokesman John Key.

“This is Michael Cullen’s winebox. He is prepared to risk our long-term international reputation for a mere $34 million.

Mr Key is referring to a Christchurch Press investigation which has revealed Transpower was given permission by the Finance Minister to grant a long-term lease over the South Island high-voltage network to unnamed US investors, who then lease it back through an intermediary body in the Cayman Islands. It helps the investors manage their tax liabilities.

“When you talk about the Cayman Islands and tax in the same breath there should be automatic suspicion.

“What sort of message is this sending to other New Zealand companies?”

In the US, these types of deals have been slated as tax scams and have cost hundreds of billions of dollars in lost tax revenue.

“It would appear our Finance Minister has learned nothing from the collapse of Enron.

“Technically this may not be against the law, but is it ethical behaviour from an SOE?

“Dr Cullen is the ethical gatekeeper charged with guarding our international reputation. If the boot was on the other foot how would the New Zealand taxpayer feel about subsidising US investors?

“It certainly weakens our bargaining position going forward and I’m not convinced this is an isolated case. There have been reports Airways may also have a similar arrangement

“How many other such deals has Dr Cullen approved?” Mr Key asks.

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