19 July 2013

Big business in little New Zealand?

Like me, you probably didn't know that the disreputable megacorp Goldman Sachs has (or had) over a hundred subsidiaries registered in New Zealand. This comes as a surprise because this website visualisation highlighting the Byzantine complexity of big companies' ownership arrangements mainly depicts no-doubt-legal but still questionably tortuous chains to countries famed for their loose control over high finance, like the Cayman Islands (739 GS subsidiaries), Luxembourg (202), and the UK (122). But there are also 155 New Zealand subsidiaries connected to Goldman Sachs, including such impenetrable titles as Hauraki Private Equity Fund No.2 Limited, TTPE 07 No.25 Limited (de-registered in January 2013, actually), and innocuously-sounding, the Tourist Hotel Corporation of New Zealand Limited (dissolved in 2000). For the latter THC listing, the website lists a control chain as follows:

GOLDMAN SACHS GROUP, INC., THE > GS HLDGS ANZ II PTY LTD > GOLDMAN SACHS AUSTRALIA GROUP HOLDINGS PTY LTD > GOLDMAN SACHS AUSTRALIA INTERNATIONAL PTY LTD > GOLDMAN SACHS NEW ZEALAND HOLDINGS LIMITED > GOLDMAN SACHS NEW ZEALAND MANAGEMENT LIMITED > PORTFOLIO CUSTODIAN LIMITED > TOURISM HOLDINGS LIMITED > WAITOMO CAVES LIMITED > TOURIST HOTEL CORPORATION OF NEW ZEALAND LIMITED

Got those 10 steps straight in your head? Me too. And of course I'm sure it was all 100% legal and above board. Te Ara notes that 'in 1990 the government sold the Tourist Hotel Corporation to US-based South Pacific Hotels Corporation', and in the 1990s it seems to have wound up owned by GS.

I don't know much about high finance, but I'd be interested to read why New Zealand features so prominently in Goldman Sachs' ownership structures, and what that means for our economic sovereignty. Is this just a by-product of a generation of state asset sales to overseas investors, or should we be more concerned about the strength of our company laws for international investors? Is the prevalence of outdated or expired listings in the New Zealand register significant?

Goldman Sachs ownership via OpenCorporate

The OpenCorporate blog indicates that perhaps New Zealand's strong presence in the visualisation is due to the principles of open government:

The shareholder data from the New Zealand company register, for example, is granular and up to date, and if you have API access is available as data. It talks about parental control, often to very granular data, and importing this data allows you to see not just shareholders (which you can also see on the NZ Companies House pages) but also what companies are owned by another company (which you can’t). And it’s throwing up some interesting examples, of which more in a later blog post.

In other words, New Zealand is prominent because elsewhere in the world the company listings are far more opaque. From an earlier blog post in April, OpenCorporate cites the New Zealand register as a potential exemplar for other countries seeking to open up to proper public scrutiny:

So which company registers perform well, and which perform badly, from a public-purpose perspective? Well, the stand out is the New Zealand company register, which makes everything freely available, without any significant exemptions, and in our dealings with them have been clear in their position as a public register with a public purpose. That’s not to say there are no problems with New Zealand companies, but we suspect that one of the reasons they come to light is the ease of access.
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