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February 19, 2008

Owen Glenn’s Shady Friends

 

FEB 06 Edition of Investigate

 

The Tycoon

The PM,

The Dirty Money

& Labour's Links To Big Tobacco

 

DECK: Helen Clark may be on target to take a tilt at the United Nations' top job but, as IAN WISHART reports, domestically and internationally her route won't be plain sailing while scandals and hurdles continue to dog her administration

 

Imagine the irony. You're a self-titled "popular and competent" Prime Minister, "a victim of my own success". You have a reputation as a control freak, for attention to the kind of details that would sink lesser mortals than yourself. You know what your enemies are thinking before they even do, and you have a well-oiled publicity and protection team whose 24/7 job it is to keep your nose clear of even the slightest whiff of scandal.

So imagine your surprise when you read in a national magazine that the Labour Party's largest campaign donations at the last election came from a man whose company is the exclusive freight handling agent in Australasia for one of the world's largest tobacco companies.

It's an embarrassing revelation for Prime Minister Helen Clark, who pioneered New Zealand's smokefree legislation and who – ironically – personally arranged for the businessman to become a financial friend of Labour. Even so, it's not the only embarrassment surrounding ex-pat billionaire Owen Glenn's crucial $500,000 donations to Labour's touch and go re-election campaign last year. Investigate has also discovered the shipping magnate and his company were forced to pay around NZ$1.5 million to the US Government in a 1999 out-of-court settlement to avoid prosecution for fraud.

But wait, as the TV commercial hucksters might say, there's more!

Investigate has also discovered a director of Glenn's New Zealand company Vanguard Logistics is embroiled in a massive $20 million banking collapse and fraud investigation in the Caribbean – potentially staring down the barrel of a prosecution. Adding extra salt to the story, one of the director's alleged associates teamed up with a murderer and an armed robber in a separate banking scandal to stage what the US Department of Justice is calling "the largest non-drug-related money-laundering operation ever brought to justice".

So again, did Labour do any background research on its single largest campaign donor, or did the party just take the money and hope?

The story of Owen Glenn's involvement in bringing Labour back to power is an interesting one. Born in India 66 years ago, his parents returned to England soon after, before emigrating to New Zealand when Glenn was six. According to a brief biography in the NZ Herald last year, he attended Auckland's Mt Roskill Grammar before leaving at 15, in 1955, to join Tasman Empire Airways Ltd, or TEAL, the forerunner of Air New Zealand, as a cargo handler. He left the country in 1966 to seek his fortune, and hasn't returned to live since. He is listed, variously, as a resident of Australia and the United States.

But from relatively obscure beginnings, Owen Glenn shot to comparative fame in New Zealand early last year, when he donated what is believed to be one of the largest sums of money ever in this country to a philanthropic cause: $7.5 million to the University of Auckland School of Business. In return for this generosity, the University has agreed to name its new building, currently under construction, "The Owen G. Glenn Building".

Glenn has also donated $500,000 towards establishing a marine research chair at the marine centre at Leigh, north of Auckland, and he is a familiar face on his website making various charitable donations, whether to the restoration of Australia's historic heritage fleet of sailing vessels, or simply funding a cheerleading team in California, where he lives.

Glenn was photographed with Helen Clark at a ceremony at the University of Auckland marking the occasion of his big donation, but at that time – February last year – no one else knew that Glenn was also bankrolling the Labour Party to ensure Helen Clark returned to power.

As the story goes, Clark had bumped into Glenn at a Tourism New Zealand promotional dinner in Sydney on July 8, 2004.

"Seriously wealthy ex-pat Owen Glenn," wrote the Herald's Gareth Vaughan, "[who] is worth hundreds of millions of dollars and lives in Sydney – told Prime Minister Helen Clark he was willing to give money to Labour when the two met at a tourism dinner in Sydney. But when Clark got home…bugger, she could not remember his name."

Labour Party president Mike Williams was about to go trawling through a list of the guests invited by Tourism NZ to see if any of the names rang a bell with Clark, but Glenn saved them the trouble, emailing the Prime Minister directly.

What followed were a series of massive payments, deposited into Labour's bank account on the ninth of each month from November, 2004, through to March, 2005. One hundred thousand dollars a month, half a million dollars in total.

The last time Labour is believed to have been given that much money by a single donor was back in the late 80's, when merchant bankers, philanthropists and tax haven entrepreneurs Michael Fay and David Richwhite were ruling the political roost.

When news of the latest donations broke in June last year, Owen Glenn told the Herald he was a big fan of Clark's governing style, and felt she "stacked up well" on the international stage.

"I particularly like her stance on seeking free-trade agreements with China and the United States," he said.

So who exactly is Owen Glenn, and why would an NZ free trade deal with China and the US prompt him to become Labour's biggest benefactor?

Well, Glenn is now a shipping magnate, and free trade deals mean much more freight and more business for his global empire. Especially as he's one of only a handful of western businesses to obtain a sought after "Class A" trading licence to do business in China.

But although he's described as a "shipping magnate", it is a little more complex than that. You see, apart from owning a 112ft motor yacht, Ubiquitous, Glenn is a shipping tycoon who doesn't own any ships. His empire is what is known in the industry as a "non-vessel operating common carrier" – essentially, he buys space on other people's ships or aircraft to ship freight for his customers. He's a middleman.

Although the National Business Review Rich List estimates Glenn's wealth at $1.1 billion, we've been unable to verify that and it may well be less. According to a report on Sealink-USA's website last year, Glenn's global empire is turning over only NZ$500 million a year. But that's turnover, not profit. As you'll see from the figures below, it's hard to see where Glenn is making a profit.

Investigate has managed to track at least ten companies ultimately controlled by Glenn and registered in New Zealand, although four of them have been struck off, including two on New Year's Eve just passed: Direct Container Line (NZ) Ltd, and AFS Freight Management NZ Limited.

The last recorded directorship Owen Glenn held in New Zealand was 1993 when he resigned from the local board of Direct Container Line (NZ) Ltd, although a Michael Andrew Glenn was appointed the same day and continued until his own resignation in 2002.

But if Owen Glenn is a billionaire, he must be making his money somewhere else. Documents filed with the Companies Office show DCL (NZ) Ltd incurred losses of: $109,000 in the year to December 1998

$394,000 in the year to December 1999

$182,000 in the year to December 2000

The company ceased to trade at the end of 2000, but wasn't struck off until December 31, 2005.

But even that doesn't tell the full story. According to documents filed with the Companies Office, one of Glenn's subsidiaries, UAC New Zealand Limited, has declared operating revenue of $39.1 million dollars from 1999 through 2004, but only declared a taxable profit for the same period of $175,000, less than the price of a two bedroom hovel. Expressed another way, on an average annual operating revenue of $7.8 million dollars, Glenn's company could only manage an average annual profit before tax of $35,000.

Admittedly, things have been "sluggish" recently in the logistics business, according to global mega-carrier TNT, which says its profit margins on logistics last year were only 1.4%.

Even so, 1.4% of UAC's $39.1 million is closer to $550,000 than $175,000. But taking Owen Glenn's global revenues as $500 million and applying a 1.4% profit margin, you're left with a global profit for his companies of only NZ$7 million a year. Hardly lifestyles of the rich and famous.

Returning to TNT Group as a comparison, TNT's annual turnover is around NZ$21 billion, and the group's net profit is around $1.3 billion (the group includes more profitable divisions than just Logistics). Overall, TNT managed to make a 6.2% profit on its turnover. Assuming this as a best-case scenario for the much smaller Owen Glenn companies, that's a global profit of only NZ$31 million a year.

The records held by the Companies Office reveal other interesting facts about the structure of Owen Glenn's global network, such as a holding company in the British Virgin Islands tax haven that provides a no-interest, no-repayment million dollar loan each year to his other major NZ operation, Vanguard Logistics Services (NZ) Ltd. In effect, this money from a tax haven props up the NZ operation.

But as revealed earlier in this article, tax havens and their resident directors can be double-edged swords. In Vanguard NZ's case, the company has two directors according to official records: Australian Tony Holt, and Bermuda resident Peter Maxwell Dickson. It is Dickson who's at the centre of a major fraud scandal in the northern hemisphere.

"A Caribbean offshore bank closely associated with the Bermuda-based Grosvenor Group has been accused of perpetrating a US$20 million fraud against two of its clients. The allegation against Horizon Bank International Limited (HBI), which is licensed in St. Vincent & the Grenadines, was made in a civil lawsuit filed at Ontario Superior Court of Justice, in Canada," reported the international taxhaven journal Offshore Alert just over a year ago.

As a result of that first court action, nearly $12 million in funds that Horizon Bank had deposited in a proper bank, Bermuda Commercial Bank (BCB), were frozen while investigators tried to get to the bottom of who actually owned and controlled Horizon Bank. The essence of the case is that a group of shady Canadians had either gone into business with Horizon Bank's directors, including Peter Maxwell Dickson, or at least persuaded the tax haven bank to turn a blind eye to what investigators were calling "a Ponzi fraud".

Bolstering the prosecution's case was Bermuda Commercial Bank's senior vice president, who blew the whistle on who controlled the HBI deposit account at her branch, according to the Offshore Alert report:

"In an affidavit dated August 17, 2004 Dominique Smith, BCB's Senior Vice President, stated that the ownership of HBI, which was formed in Antigua on April 25, 1995 and continued to St. Vincent & the Grenadines on September 14, 1999, was in dispute."

Smith then highlighted some of the documents she was holding:

"Attached to her affidavit were documents from BCB's records, including:

• A letter from Grosvenor Trust Company Limited, of 33 Church Street, Hamilton, Bermuda showing that HBI was owned by the Networth Investment Trust and by the Genesis Investment Trust, with each holding a 50 per cent stake. The letter was signed by Peter M. Dickson; and

• A document that was part of the continuation from Antigua to St.Vincent & the Grenadines stating that the shareholders of HBI were Grosvenor Group Holdings Limited as the "legal shareholder" and Peter Dickson as the "beneficial shareholder".

Smith also attached "various correspondence and documents pertaining to the dispute/confusion as to the beneficial ownership of HBI" which were produced after the controversy flared up.

From Bahamas-based HBI employee Kevin Coombes, there was:

• The Minutes of an Extraordinary Shareholders Meeting held on December 12th , 2001 in Hamilton, Bermuda declaring that "Mr. Peter Dickson, the ultimate beneficial owner of Grosvenor Group Holdings Limited, the sole shareholder of Horizon Bank International Limited, was appointed Chairman of the meeting". Dickson signed the minutes as Chairman, stated Smith;

• A USA PATRIOT Act disclosure form completed by Coombes "in his capacity as Vice President of HBI" in which he declared that "he, Kevin Coombes, is the owner of HBI";

• Another declaration from Coombes dated July 27th, 2004 in which he specified the ownership of HBI was "legal shareholder is Grosvenor Group Holdings Limited, beneficial shareholder is Peter Dickson – pending approval from the IFSA [International Financial Services Authority of St. Vincent & the Grenadines] of change of ownership from Peter Dickson to Kevin Coombes and Brian Trowbridge";

• A letter from the IFSA to Peter Dickson to "confirm that their records show Peter Dickson as the beneficial owner of HBI and that the ownership will remain so until the authority has given its written approval of change in beneficial ownership"."

Initially Peter Dickson denied being the beneficial owner of the tax haven bank at the centre of a $20 million fraud, but midway through last year authorities felt sufficiently convinced that they revoked HBI's banking licence by way of an official memorandum, cc'd to Peter Dickson.

Offshore Alert, meanwhile, has been doing some corroborative digging of its own, discovering: "That HBI used to maintain a now-defunct web-site at http://www.tcn.net/horizon/horizon1.html which, as of October 5, 1999, identified its principal officers and directors as Peter Maxwell-Dickson, Director; Gordon Howard, Director; and William Cooper, Managing Resident Director.

"Mr. Maxwell-Dickson has served at a number of firms including Deloitte, Haskins & Sells and KPMG Peat Markwick (sic)," stated the site. "From 1986 to 1990, he was the executive vice president of the Wraxall Group of companies, a large, diverse international trading and financial services company."

"Research by Offshore Alert showed that Peter Maxwell Dickson, a 54-year-old British national, is also a director of Vanguard Global Logistics Limited, formerly known as Direct Container Line Limited [Owen Glenn's company], of Barking, Essex, which was incorporated in England and Wales on January 18, 1982."

But Owen Glenn's right-hand man on the Vanguard NZ board appears to hang out with a bad crowd, according to the Offshore Alert report. The "William Cooper" referred to as HBI's managing resident director is the same William Cooper sought by the US for the world's largest non-drug-related money laundering prosecution, a US$240 million dollar fraud committed in association with a convicted murderer and armed robber, using an Antigua tax haven bank he'd set up..

Because of Antigua's tax haven secrecy laws, Cooper was not handed over to US authorities despite a four year legal battle by the feds. He remains in Antigua today, still operating in the tax haven business. And Peter Dickson's Horizon Bank International had been set up in Antigua, by Cooper in 1995.

"Offshore Alert has previously reported that Cooper was criminally indicted for money laundering at the U. S. District Court for the Northern District of Florida on April 28, 1999 – less than five months before HBI moved from Antigua, where Cooper lives, to St. Vincent. An attempt by the U.S. authorities to extradite Cooper from Antigua failed.

"Cooper has been implicated in numerous illegal activity involving offshore banks, including American International Bank, of Antigua, which closed its doors in December, 1997 when faced with a criminal investigation and insolvency.

"HBI listed AIB as one of its correspondent banks on its web-site," reports Offshore Alert.

Just before Christmas, the Bermuda Sun's official gazette notices revealed that Dickson's Grosvenor Group Holdings was due to be struck off the companies register in the tax haven a few weeks from now. Documents filed in Canada recently by Horizon Bank International's statutory liquidator also reveal Peter Dickson could be in the gun for some of the $20 million lost in the Horizon Bank scandal, as well as facing potential legal action for breaching fiduciary duties. And remember, Peter Dickson remains listed on the NZ Companies Office website as the director of Owen Glenn's NZ company, Vanguard Logistics.

Investigate also understands Dickson may be the director of tax-haven based OTS Global Limited, which is believed to be the ultimate holding company for the OTS group worldwide, and is listed as the majority shareholder in OTS Logistics Group Ltd in New Zealand.

We're not suggesting that Glenn is aware of the scandal surrounding his appointee, but with the tax haven structure appearing to feature centrally in the OTS group, and with 177 offices in 105 countries, we believe Glenn does have a duty as chairman and CEO to be aware of matters like this, especially as they're already in the public domain in the northern hemisphere.

So if you're beginning to think that the New Zealand Labour Party's biggest campaign donor associates with types from the financial fringes, take a look at our next revelation: Owen Glenn has himself faced court action by the US Government for alleged civil fraud, and had to pay around $1.5 million on behalf of his company in an out of court settlement.

In 1999, investigators from the Federal Maritime Commission's Bureau of Enforcement hauled Owen Glenn and his US-based shipping company Direct Container Line into court on three counts of violating the Shipping Act by fraud.

"Respondent DCL is a tariffed and bonded non-vessel operating common carrier that furnishes transportation services worldwide," notes a document on the Commission's website, "including services from US ports and points to ports and points in the Far East and South America. Respondent Owen Glenn is the Chairman and Chief Executive Officer of DCL.

"The Commission initiated two formal investigatory proceedings into the activities of these respondents."

The first investigation, commencing January 1999, "was begun to investigate allegedly unlawful activities by respondent DCL in the South American trade, specifically, allegations that DCL had misweighed and mismeasured cargoes in order to pay vessel-operating carriers less freight than what they were allegedly due, and also that DCL had not properly charged its own shippers the rates filed in its tariff.

"Such conduct violates sections 10(a)(1) and 10(b)(1) of the Shipping Act of 1984."

This alone was bad enough for Owen Glenn. At stake were financial penalties, and the possible suspension of DCL's tariff. But it got worse.

On April 29, 1999, the Bureau of Enforcement opened a second investigation, "to determine if DCL had been receiving rebates in its South American services under an arrangement set up by DCL's principal, Mr Owen Glenn, which arrangement had allegedly been operating subsequent to October 1994."

This time, the Bureau of Enforcement were going for Glenn's corporate jugular, saying they wanted "to determine if DCL's tariff should be canceled or suspended, its license as an ocean transportation intermediary revoked" and whether financial penalties should be imposed.

Was there hard evidence? According to the Bureau files, there was:

"It would introduce evidence in support of the allegations [showing] that DCL misdeclared cargo weights and measurements on bills of lading so as to pay lower rates to two vessel-operating carriers and that its documentary evidence, such as DCL's internal container manifest, would corroborate the fact that DCL routinely restated cargo measurements and weights for the same purpose.

"Moreover, BoE states that it would introduce evidence showing that DCL's "house" bills of lading issued to DCL's shippers show that DCL used higher figures than those on the bills of lading tendered to the vessel-operating carriers, and that DCL concealed equipment substitution practices whereby DCL obtained larger containers than those for which it was charged."

The Bureau also elaborated on what was essentially three years worth of secret kickback payments:

"BoE asserts that it would establish that DCL entered into an arrangement with a vessel-operating carrier for the receipt of rebates and that an officer of another shipping company would testify that in 1996 it was agreed that DCL and the other company would share in the rebates from the vessel-operating carrier.

"BoE asserts that it has documentary evidence to support the testimony. Moreover, BoE states that it would offer testimony of a second witness, a high-ranking sales and traffic manager of another vessel-operating carrier, such testimony showing that DCL and its officer, respondent Owen Glenn, established a rebate arrangement which covered hundreds of shipments during the period from 1994 through 1997.

"This second witness, according to BoE, would testify that respondent Owen Glenn suggested the method by which the vessel-operating carrier would pay rebate amounts that had been agreed upon."

According to the BoE documents, DCL received nearly NZ$1 million in "rebates" between 1995 and 1997.

A court judgement in the case records that, "After respondents recognized that BoE could submit a compelling case," all parties agreed that it would be in their best interests to proceed to settlement negotiations, "which settlement would include possible violations by DCL with regard to a third vessel-operating carrier…and an agreement that BoE would support dismissal of Mr Owen Glenn as a respondent."

The final terms of the settlement approved by the court were simple: DCL had to pay NZ$1.5 million to the Federal Maritime Commission, in return for the case to be dropped and an agreement that the Commission would not re-open the investigation or widen it or pursue Owen Glenn.

All of this may rise eyebrows among those on the receiving end of Glenn's philanthropic largesse (recipients include not only the Labour Party, but the University of Auckland and the marine research centre at Leigh), but it is Vanguard Logistics' boast that it is now the exclusive customs clearing and handling agent for British American Tobacco, responsible for importing and exporting hundreds of container-loads of cigarettes – especially to vulnerable communities like the Pacific Islands - that sits most uneasily for some. After all, the Prime Minister is no stranger to fraud herself, but the sight of New Zealand's leading anti-smoking politician accepting money from those involved in shipping cigarettes is anathema to the group Action on Smoking and Health (ASH):

"It's frustrating!" complains ASH director Becky Freeman. "First we find out the government pension funds are invested with British American Tobacco, and now we find out this! It's blood money, and they should have nothing to do with companies that associate with the tobacco industry.

"I would hope now that it's been pointed out that they will no longer accept donations from this particular source."

More likely, say cynics, is that Labour will keep taking the money, but just won't identify the donor next time around.

 

Documents and links relevant to the allegations made in this article have been posted on the Investigate website,

 

Posted by Ian Wishart at 06:12 PM | Comments (0)