HSBC in the Cook Islands threatened to sue ANZ for allegedly handing over customer details to the Australian Tax Office without telling clients first.
ANZ’s relations with the providers of secret trusts in the remote Pacific Islands tax haven turned suddenly nasty in 2012 after ANZ caved in to pressure from the ATO, recently leaked Paradise Papers reveal. HSBC Trustee of the Cook Islands, which had customers in the tax haven who banked with ANZ, said ANZ should be sued or even prosecuted for breaching local privacy laws.
The battle was part of the confusion caused by a Federal Court decision in March 2012 forcing ANZ to hand over all the information on any Australians who held secret accounts in ANZ’s Vanuatu subsidiary even though they were protected by local bank secrecy laws, reports The Financial Review.
This posed a wider problem for ANZ and Westpac in other tax havens around the South Pacific including the Cook Islands which has come to light from emails of offshore advisory firm Asiaciti.
According to those emails, the association of Cook Islands trust companies in May 2012 after the Federal Court’s judgment resolved to ask David Dennis, ANZ chief executive for the Cook Islands, whether ANZ could move its information storage out of Australia.
In September the full bench of the Federal Court upheld the lower court’s decision and Dennis wrote to Asiaciti on December 28 that ANZ had decided after considering the “ramifications of the case” that it would no longer provide “protected” services to Cook Islands customers after January 31, 2013.
Taki Anaru, HSBCs general manager private wealth, however wrote on March 26, 2013 to the other trust managers that he had learnt that ANZ had recently illegally released client information to the ATO.
He said ANZ had given “no notice to affected parties prior to the unlawful release of information and thus deprive them of the ability to access the High Court”. He said the matter was being taken seriously within the HSBC group and he would have to report internally.
The ANZ and Westpac departures caused problems for many of Asiaciti’s US clients in the Cook Islands, including Kevin Wessell, a director of US-based Companies Incorporated and 1800company.com.
He was then facing a multimillion-dollar lawsuit under US racketeering laws for operating a fake “asset protection” scheme which promised to set up offshore companies for investors but then trousered the money. Wessell lost the racketeering case in October 2013.
Wessell wrote on February 12, 2003 to Asiaciti that he wanted to set up a new Westpac merchant account linked to credit cards for “his customers”. He added, “naturally we will report all taxes to US authorities as required”.
Adrian Taylor, managing director of Asiaciti in the Cook Islands, wrote back that Westpac was no longer opening new “offshore accounts”.
He said ANZ and Westpac banks had decided “the cost of trying to fight the orders of Australian courts to reveal information contrary to South Pacific Islands confidentiality legislation was prohibitive”.
Westpac sold its operations in Vanuatu in 2015 to Papua New Guinea-based Bank South Pacific.