Panama Papers NZ - The PM should cut ties with his personal legal advisor, who has been linked to Panamanian law firm Mossack Fonseca, Labour says.

The prime minister is unconcerned about new revelations his advisor Ken Whitney has connections to Mossack Fonseca, saying he was happy with previous assurances he had been given.

But the Labour Party leader says Mr Whitney is now compromised and John Key should end his personal relationship with him.

Photo: RNZ / Claire Eastham-Farrelly

Only a few weeks ago Mr Key was asked whether Mr Whitney "was linked to Mossack Fonseca in any way".

In response he said "definitely not", after seeking assurances from his legal advisor.

The Panama Papers are an unprecedented leak of 11.5 million files from the database of Mossack Fonseca, the world's fourth biggest offshore law firm. An investigation into the papers by RNZ, TVNZ and investigative journalist Nicky Hager have showed New Zealand is at the heart of a tangled web of secretive shelf companies and obscure trusts being used by foreigners to organise their private wealth, business affairs and channel their funds around the world.

The latest revelations in the saga show Mr Whitney, who has handled Mr Key's personal legal matters for years, had links to the under-fire firm through his part directorship of Rothschild Trust NZ.

He also provided a reference for Karen Marshall of Cone Marshall in 2009, when her firm was seeking to do business with Mossack Fonseca.

But Mr Key said he did not consider these facts a connection.

"Seems to me they are reporting some very tenuous associations between a range of New Zealanders. Unless there is something unlawful that people have done, I don't think that New Zealanders have much concern about that."

Mr Key said he would not be reviewing his professional relationship with Mr Whitney.

Photo: AFP / RNZ

Labour leader Andrew Little said the prime minister had been caught flatfooted by the link between Mr Whitney and Mossack Fonseca.

"I'm surprised he wasn't aware there were other links that Mr Whitney had to Mossack Fonseca."

IRD finds 200 NZ trusts with links to Mossack Fonseca

Mr Key said an initial assesment by Inland Revenue Department (IRD) has found fewer than 200 New Zealand trusts with any links to Mossack Fonseca - and they've all been disclosed.

IRD has now gone through the leaked papers as best it can, he said.

Greenpeace International is also one of the beneficiaries of one of the trusts, the prime minister said.

Figures from IRD showed there had been a steady increase in the number of foreign trusts in New Zealand, which now total more than 10,000.

But Revenue Minister Michael Woodhouse said that did not point to any problems with the current regime.

"I don't see it as an explosion. It's a steady growth," he said.

"Prior to 2006 they didn't need to be registered in that way with the IRD. Dr Michael Cullen as Minister of Revenue at that time put it in, and there was an initial period where there was strong growth obviously because they needed to be registered."

Not all foreign trusts were illegal, Mr Woodhouse said.

"It's a legitimate way of doing some things and for that reason, I think any trust arrangement, whether their foreign or domestic, will still have a future.

"The question is whether or not people are complying with their obligations under tax law and whether IRD is proactive in sharing information with other jurisdictions around that - and that's obviously part of the Shewan review."

Mr Key said New Zealand has a good trust regime but if improvements were needed, the government would make them.

Review should be broadened into inquiry - Greens

The Green Party said the National Government has helped facilitate a Mossack Fonsecca's tax avoidance business in New Zealand.

"Over the past few years the IRD has warned the National Government that New Zealand was being seen as a tax haven, but instead of doing something about it, the government told the IRD to back off," Green's co-leader James Shaw said.

"The Prime Minister should signal he takes this fiasco seriously by broadening John Shewan's one-man Trust Review into a proper inquiry that involves a panel of experts, and public input."

New Zealand First has called for a Royal Commission of Inquiry into what it said was New Zealand's "opaque" tax system.

Deputy Leader Ron Mark said that was needed to combat any possible risk to the country's international reputation.

"With the ongoing Panama Papers revelations we believe things have escalated well beyond the narrow focus of the government's inquiry by John Shewan into foreign trusts," he said.

Mr Mark there were, for example, 621 companies registered in New Zealand in which the main holding company is overseas.

"There are 152 based in the Caribbean, Central America and the Indian Ocean alone.

"We need to find out more because registered companies have been disclosed by authorities overseas as being used for money laundering and bribery and there is the added fear terrorist organisations could also be involved."

'A conflict of interest' - Little

The journalists working on the Panama Papers also revealed today that New Zealand law firms which lobbied the government in 2014 against shutting down the foreign trust industry in this country had extensive links to Mossack Fonseca.

Mr Little told Morning Report today that this was a conflict of interest on the law firms' part.

"And I'm just as surprised now, at least with the benefit of hindsight, we're seeing ministers, including the prime minister, allowed their (foreign trust industry) interests to prevail over the public interest that the IRD represents."

Mr Little said it raised questions about how the long foreshadowed review was buried so quickly.

"Who knows what was exchanged, whether threats were made. But it certainly looks very peculiar from the outside."

Mr Key said Inland Revenue will be using the database made public by the International Consortium of Investigative Journalists to cross reference any New Zealanders who might be trying to hide earnings offshore.

Hubbards appear in Panama Papers

The late South Canterbury businessman Allan Hubbard and his wife are named in the Panama Papers as directors of an Australian-based iron ore company.

The founder of South Canterbury Finance was killed when the car he and Margaret Jane Hubbard were in collided with a four-wheel-drive north of Oamaru in September 2011. His wife survived.

South Canterbury Finance was placed in receivership in 2010, costing taxpayers nearly $1.8 billion dollars.

The couple are listed as having had shares in South American Ferro Metals limited, which was registered in the British Virgin Islands until June last year.

*The investigation into New Zealand links in the Panama Papers is a journalistic collaboration by reporters from RNZ News, One News and investigative journalist Nicky Hager, and with the assistance of the International Consortium of Investigative Journalists and the German newspaper Süddeutsche Zeitung.

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