Fraud trail leads to Cook Islands

Wednesday 8 January 2014 | Published in National

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A private investigator from New Zealand is in the Cook Islands trying to locate millions of dollars allegedly defrauded from a US company.

Mike Gillam, who works for Auckland-based firm Thompson and Toresen, said he is here on behalf of an American investigation company, which is representing the client.

The victim had been doing business with a German company when it was defrauded “to the tune of millions of dollars”, Gillam said.

That stolen money appears to be hidden in a Cook Islands trust company, he said.

“Enquiries thus far show that that (German) company is hosted by a trust company in the Cook Islands. Our research suggests it’s going to be incredibly difficult to reveal the beneficiaries of that trust.”

Gillam said he is here to gain a better understanding of the local trust industry and the laws surrounding it, before digging deeper.

“The aim was to come up and put the feelers out to see what the process is going to be from here. It’s all pretty blocked by bureaucracy and certainly doesn’t favour our client.”

The defrauded company believes it will be “almost impossible” to recover the funds, he said.

“We’re expecting to be laughed at by most people we’re speaking to, such as trust company administrators. The law currently favours these trusts.”

The nation’s offshore financial sector was recently in the international spotlight after being described as “a paradise of untouchable assets”.

In an article, New York Times journalist Leslie Wayne described the Cooks as “a global pioneer in offshore asset-protection trusts, with laws devised to protect foreigners’ assets from legal claims in their home countries”.

Wayne claimed local courts disregard foreign court orders, making it easier to keep assets from creditors, or anyone else.

“The Cook Islands offer a different form of secrecy. The long arm of United States law does not reach there,” she said.

In June, Kiwi investigative journalist Nicky Hager visited the Cook Islands to pursue his own inquiries into tax haven activities.

He gave a controversial address on why the Cook Islands should stop being a tax haven, which ruffled feathers in the offshore finance industry.