Winebox Inquiry

The Winebox Inquiry was an inquiry undertaken in New Zealand to investigate claims of corruption and incompetence in the Serious Fraud Office (SFO) and Inland Revenue Department (IRD).

The full name of the investigation was the Commission of Inquiry into Certain Matters relating to Taxation. The Commissioner was Sir Ronald Davison. The Commission concluded that there were no grounds supporting the allegations of fraud and corruption. The inquiry was characterized by extensive litigation, both during and afterwards and by an extremely high level of public interest. The Commission was established in September 1994 and reported nearly three years later in August 1997.

The Commission became popularly known as the Winebox Inquiry, as Winston Peters brought the documents at the centre of the allegations to Parliament in a winebox. The wine box contained numerous documents relating to a range of transactions entered into or contemplated by a number of parties.

In 1994 the Winebox Inquiry was formed. The terms of reference of the Commission of Inquiry required it to report upon whether the Inland Revenue Department and the Serious Fraud Office had acted in a lawful, proper and competent manner in dealing with the relevant transactions, and to examine whether any changes to the criminal or tax laws should be made to protect New Zealand's income tax base from the effects of fraud, evasion and avoidance.

The genesis for the inquiry lay in repeated claims by Winston Peters of criminality associated with tax planning undertaken by some of New Zealand’s largest companies (some involving tax deals with the Cook Islands) as well as fraud and incompetence by both the Inland Revenue Department and the Serious Fraud Office. Public pressure eventually forced the government to set up the inquiry.

The transaction at the centre of the Winebox Inquiry was known as the “Magnum” transaction. In fact the documents in the winebox outlined more than 60 different transactions involving a range of parties.

In September 1986 a European Pacific Investments subsidiary based in New Zealand lent money to another subsidiary based in the Cook Islands. Withholding taxes on that loan were paid to the Cook Islands Tax Office of $2 million and a tax certificate for that sum was duly issued. European Pacific presented this certificate to the tax office in New Zealand, and as there was no further New Zealand tax to pay, paid a dividend to an investor, called Magnum, a brewery. In the Cook Islands, another member of the EPI group received a financial benefit from the Cook Islands government, and simultaneously forgave a loan to the government. The net effect: one EPI company received a benefit of $850,000 from the Cook Islands government, and yet another subsidiary received a New Zealand tax credit of $2 million.

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