The leak of the Panama Papers led to concerns about New Zealand's role as a tax haven.

EDITORIAL: Sunlight is the best disinfectant and the release of the so-called Panama Papers threw the windows wide open. More than 11 million documents belonging to Panamanian law firm Mossack Fonseca​ were leaked by a whistleblower in 2015, initially to German media. It took more than a year for journalists to pick through the complex tax information contained within and stories began to appear in 2016.

New Zealand was not immune from the fall out. While denying that New Zealand had been used as a tax haven, the Government grudgingly moved to tighten up rules around the activities of foreign trusts. And, lo and behold, we find a year later that nearly three-quarters of the trusts have stopped operating.

Without jumping to conclusions, this would seem to very strongly suggest that thousands of trusts registered in New Zealand were hiding foreign money from international tax agencies. We are talking about money laundering and tax evasion.

ROSS SETFORD/NZPA Government appointed tax expert John Shewan reported back in June 2016 that "there is a reasonable likelihood that the regime is facilitating the hiding of funds or evasion of tax", and changes to the rules followed.

Of course, Revenue Minister Judith Collins may be right when she says that some may have been put off by new paperwork and a greater fee, but then again, it is hard to imagine that the managers of trusts involving large sums of money would really resent the time and minor costs involved. The costs are a one-off charge of $270 and an annual fee of $50.

READ MORE:

* NZ foreign trust numbers plummet after post-Panama Papers rules kick in

* Panama Papers - what are they and why should we care?

* Foreign trusts hiding darker secrets than tax avoidance

* ANALYSIS: Can NZ's foreign trust industry survive Shewan's fix?

* John Key to implement 'most' Shewan report recommendations on foreign trusts

As Labour revenue spokesman Michael Wood says, "The people engaged in setting up foreign trusts are by definition wanting to hide their assets from their own jurisdictions and don't want there to be any sunlight on their activities".

Former prime minister John Key's assurances that there was nothing to see with foreign trusts were ultimately unconvincing.

The numbers tell the story. There were 11,645 foreign trusts registered in New Zealand in April 2016. But fewer than 3000 foreign trusts met last week's deadline to provide more information about their activities and structure.

Another 3000 or so reportedly told Inland Revenue that they did not wish to be part of the new registration regime and the remaining 5000 trusts were not heard from before the deadline, meaning that they can no longer operate here.

Extra compliance means that owners of foreign trusts have to tell Inland Revenue who is taking money out and putting money in, as well as filing annual financial statements. Suspect transactions can now be more easily reported to other jurisdictions.

Some argue that New Zealand should go even further and create a fully transparent, searchable system, similar to the Companies Office register.

It took considerable pressure from the media and opposition politicians before an apathetic Government appointed tax expert John Shewan to run an inquiry. Former prime minister John Key's assurances that there was nothing to see were ultimately unconvincing. Shewan reported back in June 2016 that "there is a reasonable likelihood that the regime is facilitating the hiding of funds or evasion of tax", and changes to the rules followed.

The story of the disappearing trusts also emphasises the need for fearless investigative journalism. There are occasions when leaks of private information can be justified as being in the public interest and when whistleblowers are heroes, even if they remain anonymous. It has now become clear that the Panama Papers was one of those times.