Mexican has US$100M in NZ trusts

  • 05/04/2016
Mexican has US$100M in NZ trusts

By Paul Purcell

A high profile Mexican businessman with three offshore trusts based in New Zealand has been accused of using his relationship with the country's president to win business contracts.

The details of Juan Armando Hinojosa Cantu's New Zealand trusts which reportedly hold about US$100 million (NZ$145M) in assets were revealed after 11.5 million documents were leaked from Panama-based law firm Mossack Fonseca.

An email and other documents show Mr Hinojosa set up the Huiracocha Trust in the name of his mother-in-law.

Mr Hinojosa, considered a mentor to Mexican president Enrique Pena Nieto, is named as a beneficiary in the trust established last year by Mossack Fonseca with the help of Auckland accounting firm Bentleys.

The trust was set up for asset protection, confidentiality and privacy, and family succession planning purposes, the trust questionnaire and due diligence form says. His wife, Maria Teresa Garcia Cubria, and two children are named its beneficiaries.

It is one of three trusts set up for Mr Hinojosa in New Zealand.

An email from a Miami advisory firm included in the document leak revealed it was asked by Mr Hinojosa for the trusts to handle the transfer of around US$100 in assets from six companies

"This is only a small part of the client's portfolio and we see great potential of growth as he is one of the most prominent business man in Mexico," the email dated July 1 last year said.

"Unfortunately due to his success and high profile, he has quiet [sic] a number of people whom greatly dislike him and unfortunately there is a great deal of negative publicity surrounding the client."

The email, which does not directly name Mr Hinojosa, requests utmost confidentiality.

Mr Hinojosa has been called President Pena Nieto's "favourite contractor" and the New York Times claims his business empire had secured at least US$2.8 billion of business with government agencies.

It has led allegations Mr Hinojosa has received special treatment, with the governor of Nuevo Leon, where a controversial aqueduct is being built, accusing the federal government and its contractors of collusion.

A report commissioned by opposition members of the Mexican congress found that his companies or those linked to him were the clear favourite when it came to winning government contracts.

The leaked documents, called the Panama Papers, date back four decades and were initially given to a German newspaper which shared the data with the International Consortium of Investigative Journalists and 100 major media outlets.

More than 214,000 offshore entities connected to people in more than 200 countries are included in the data, along with information about how banks helped create 15,000 companies in tax havens.

Mossack Fonseca director Ramon Fonseca told Reuters that the "vast majority" of the companies his firm set up were used for "legitimate purposes".

The documents link at least 12 current and former heads of state and 128 other politicians to schemes to limit their tax liability.

Those implicated include Russian President Vladimir Putin, longtime Egyptian autocrat Hosni Mubarak and Syrian President Bashar al-Assad.

The revelations about Mr Hinojosa's trusts come after other leaked papers show Malta's energy minister Konrad Mizzi and the Prime Minister's chief of staff, Keith Schembri, set up two offshore trusts in New Zealand in 2015 through Mossack Fonseca.

Prime Minister John Key has denied New Zealand is a tax haven despite the existence of around 12,000 foreign trusts.

He says the OECD reviewed the tax system in 2013 and gave it a clean bill of health.

But Massey University tax expert Dr Deborah Russell says New Zealand is caught up in international tax avoidance.

"The loophole in our laws that allows New Zealand foreign trusts to escape taxation has been known about for years," she said.