An Auckland company may be caught up in an international money laundering controversy after it was identified helping to manage a network of New Zealand-registered companies and trusts for its secret clients.

Sources claim this network leads back to the Azerbaijan government, which has been accused of corruption and money laundering.

Last year, the Government tightened some rules around foreign trusts, requiring them to give more information about their activities and the people using them.

The New Zealand companies and trusts were uncovered as part of The Daphne Project, a media investigation involving 46 journalists from 16 countries.

Photo: AFP

The multi-country collaboration was created to pick up the work of Maltese journalist-blogger Daphne Caruana Galizia, who was reporting on Maltese government corruption and Azerbaijan-linked money laundering when she was murdered by a car bomb on 16 October 2017.

The investigation has revealed more connections to a world-wide network of companies and assets connected to the families of Azerbaijan leaders. The sources have provided the names of dozens of companies that hold property, factories and other assets across Europe held by these companies. Many of the companies have accounts with a controversial Azerbaijan-linked bank in Malta called Pilatus, whose chair was arrested on separate money-laundering charges last month.

The Daphne Project has revealed that many of the companies in the Azerbaijan-Pilatus network linked back to an address in Auckland, New Zealand - 112 Parnell Road.

The address was home to wealth management company Denton Morrell. The company's director, Matthew James Butterfield, is described in an online profile as a specialist in "ultra-high net worth clients" and in December 2016 it was mentioned in news stories about allegations that British football club manager Jose Mourinho hid millions of pounds from tax authorities in tax havens.

Earlier this year Denton Morrell moved to Level 2, 23 Shortland Street, Auckland.

New Zealand Companies Office records show a series of companies registered by Denton Morrell, each giving no hint of the ultimate beneficial owners. Each company has Mr Butterfield as director and is supposedly 100 percent owned by a New Zealand company called DM Corporate Services Limited, itself owned by Denton Morrell. These companies, and the bank accounts they allow to be opened, are usually beneficially owned by Denton Morrell's wealthy private clients around the world. In normal circumstances, without whistleblowers like those helping the Daphne Project, the owners and their money movements are impossible to trace.

There is no evidence or any suggestion that Denton Morrell or Mr Butterfield were aware of any allegations of money laundering by the Azerbaijan-linked companies, but it appears that the structure created by Denton Morrell may have been used to hide the ultimate beneficial owners of those assets.

Mr Butterfield was approached for comment but did not want to be quoted in this story.

Photo: RNZ/ Tom Furley

How New Zealand acts as a tax haven

New Zealand law makes it easy to hide real ownership, opening the country to foreign money laundering.

For example, a foreign person can anonymously set up a trust in, say, the British Virgin Islands and that trust in turn can own a company in New Zealand where, currently, the beneficial owner does not have to be publicly declared. The New Zealand company can then open a bank account in a third country such as Singapore, an account that is not connected in any visible way to the real owner.

The final step, organised routinely by the tax haven specialists who set up these structures, is that the company can grant power of attorney to a nominee or the real owner, allowing him or her to move money in and out of the bank account without anyone outside the bank ever knowing.

The Denton Morrell Connections

In November last year Denton Morrell helped to change the ownership of 16 suspected Azerbaijan-linked companies. On 29 November last year, Denton Morrell registered to two new New Zealand companies: Wolverine Asia Holdings NZ Limited and Hawk Asia Holdings NZ Limited.

The following day (30 November 2017) the full ownership of seven key Azerbaijan-linked companies with European property assets (five of them with Pilatus bank accounts) was transferred to the two New Zealand companies; 50 percent of the shareholding of the Azerbaijan-linked companies went to each New Zealand company.

These seven companies in turn owned other asset-holding companies in Malta, Bulgaria, Georgia and France. The real owners were effectively hidden behind the screen of the 100 percent shareholding by Denton Morrell in New Zealand.

Another key Azerbaijan-linked, New Zealand-registered company revealed to the Daphne Project team is Kubernao Trust Limited. It was set up by Denton Morrell in August 2014. The 100 percent shareholder is again the Denton Morrell subsidiary DM Corporate Services Limited, and Mr Butterfield is a director together with an Australian accountant whose name also appears repeatedly as director for the Azerbaijan-linked companies.

Like the other Azerbaijan-linked companies, Kubernao Trust Limited is used to hold property assets for the hidden owners. London property records show that the company owns two multi-million pound houses in central London: 11 St Mary's Place and 8 Ovington Square.

The company is, technically, the "person with significant control" of a British-registered and Aazerbaijan-linked company called Palex Properties Limited. Kubernao Trust Limited became the "person with significant control" of Palex Properties, and Mr Butterfield and another became its two directors, on 28 November 2017 - the same time as the Denton Morrell companies Wolverine Asia Holdings NZ Limited and Hawk Asia Holdings NZ Limited took over nominal ownership of the 16 other property-holding companies.

Photo: RNZ/ Tom Furley

Denton Morrell has a range of other clients around the world who normally stay secret. One who didn't was Jose Mourinho, manager of the Manchester United Football Club. A Sunday Times exposé in December 2016 alleged Mourinho was hiding millions of pounds from tax authorities in complex offshore structures. The "key entity at the centre of the whole structure" was a secret New Zealand foreign trust, the Kaitaia Trust, set up by Denton Morrell.

The Daphne Project inside sources also named various secret trusts, including one called Kubernao Trust, presumably related to the company of the same name. But in New Zealand, although some foreign trust reform happened following the Panama Papers, there is no way to find out about New Zealand foreign trusts.

Who is Matthew Butterfield?

Mr Butterfield is the owner and manager of Denton Morrell, a company he created in June 2014. UK company records say he is British. His biography says he previously worked in Switzerland and the Channel Islands, both traditional tax havens. In the Channel Islands he spent five years as Assistant Director, Ultra-High Net Worth Clients, for Rothschild Trust Limited.

In New Zealand he initially headed a company called Allianza, where he took over managing a set of high value offshore clients from a company called Equinor Trust. According to Interest.co.nz, the trust's executive director Lachlan Williams told the Reserve Bank it specialised in New Zealand foreign trusts for high net worth families. It managed "almost 150 trusts" with assets "conservatively" worth more than 5 billion euros.

* Freelance investigative journalist Nicky Hager is part of a team of 46 journalists from 16 countries that have continued the work of Daphne Caruana Galizia, under the banner "The Daphne Project".