By Gareth Vaughan of www.interest.co.nz, Denise McNabb, and Richard Smith of Naked Capitalism. An earlier version of this post appeared at www.interest.co.nz.
A foreign exchange business that looks and smells like a Ponzi scheme targeting Malaysians, a "stock exchange" based in Nelson (pop: 46,000), a warning from the Czech Republic’s central bank, the fantastical President of a nonexistent dominion that disappears at high tide, and curious French-Latvian connections, all have one thing in common: New Zealand registered financial service providers.
While the NZ government looks, albeit unenthusiastically, at changing foreign trust laws in the wake of the Panama Papers, here’s a reminder the country’s international reputation is being degraded by more than just Mossack Fonseca and foreign trusts. This statement is based on our probe of just a handful of NZ registered financial service providers.
When I say "our" probe I am referring to Gareth Vaughan of interest.co.nz, Richard Smith of Naked Capitalism, and NZ freelance journalist Denise McNabb. This is the first article in a series in which we aim to show NZ has a considerable problem and profile in some very dark parts of the offshore finance world.
Whilst the review of foreign trust disclosure rules by ex-PwC chairman John Shewin and the Ministry of Business, Innovation & Employment’s review of abuse of NZ’s Financial Service Providers Register (FSPR), offer opportunities for the Government to make meaningful changes, the worry is years of tinkering around the fringes of the problems may continue. And we don’t believe this would be acceptable.
As Transparency International puts it in its submission to the Shewin review, existing lax foreign trust and corporate entity disclosure rules, gaps in the Anti-Money Laundering and Countering Financing of Terrorism Act (AML-CFT Act), and reactive and ineffective international data sharing arrangements enable the exploitation of NZ’s national systems. This threatens the country’s international reputation, which Transparency International argues generates immense returns to the economy including a major contribution to billions of dollars in exports, tourism and online business earnings.
"By assuming an aggressive leadership role in international efforts to eliminate misuse of trusts and corporate entities, NZ will enhance both its reputation and the return to the economy," Transparency International says.
Key in denial
Unfortunately Prime Minister John Key remains in denial, stating time and again – since NZ was named as one of 21 global tax havens Panamanian law firm Mossack Fonseca operates in – that NZ isn’t a tax haven. Trouble is whatever the PM says, those providing services for clients seeking tax havens consider NZ as one and use it as such.
Key’s dream of an NZ financial services hub, or a Switzerland of the South Pacific, appears to have morphed into more of an offshore financial centre.
The focus of this first article is a handful of registered NZ financial service providers that operate overseas. The entities featured below are but a flavour of companies registered in NZ that operate overseas without regulation by NZ, or in many cases, any other jurisdiction.
Anyone in the business of providing a financial service, such as a financial adviser, bank, lender or insurer, is required to be registered on the FSPR. However, as the Ministry of Business, Innovation & Employment (MBIE) puts it, some offshore-controlled firms have sought to register on the FSPR in order to take advantage of NZ’s reputation as a well-regulated jurisdiction. Some such entities then misrepresent that they are licensed or actively regulated in NZ when they are merely registered here.
Another problem is caused by the guidelines on the territorial scope of NZ’s AML-CFT Act, which say: "An entity incorporated or formed in New Zealand, which carries on financial activities wholly outside New Zealand, will not be a ‘reporting entity’ under the AML-CFT Act." Thus NZ-registered financial services providers operating overseas are not supervised for compliance with the AML-CFT Act.
This FSPR area is one we have written plenty about previously. You can see all interest.co.nz’s stories on the topic here, and here’s Richard’s back catalogue at Naked Capitalism.
And finally before we get to the financial service providers that are the subject of this article, we acknowledge that in some of these cases we simply don’t know what they really do. Whatever it is, however, remember it’s in NZ’s name. Trusts, meanwhile, we’ll address in another article.
United Global Holdings/FX United, big in Malaysia
First up is United Global Holdings, trading name FX United Exchange & Trading. This entity appears to be causing mayhem in Malaysia and is poised to be struck off as both a NZ financial service provider and company having been drawn to the attention of both the Financial Markets Authority (FMA) and Companies Office.
United Global/FX United claims its headquarters are at Level 9 Technology One House, 86 Victoria Street, Wellington. We’ll start the story there. Signage at the building, and the offices on the ninth floor, show no evidence of either a United Global Holdings or FX United.

The address is actually that of a legitimate Wellington forex trading company, Forex Ltd. Its part owner, Simon Greig, says his firm first discovered the unauthorised use of its address about two months ago when a man who said he was from the Malaysian Embassy visited the office, inquiring about United Global Holdings because of concerns raised by people in Malaysia who were investing money in its schemes. There is no embassy in Wellington, rather a High Commission.
But Greig said that after the man from the "Malaysian Embassy" departed, Forex Ltd made a complaint to both the FMA and the Companies Office about the abuse of its address. He said Forex Ltd was also in the process of contacting United Global Holdings, asking it to cease using Forex Ltd’s office as its front. Greig said he had looked at its website and as far as he could see the affiliate programme being promoted looked like "a big Ponzi scheme."
Here’s the description of the affiliate program from a company that describes itself as a world leading foreign exchange broker;
What is MultiLevel Affiliate Partnership and how does it work?
Cooperation based on FxUnited Affiliate Partnership program provides the possibility of developing your own business by attracting new clients. Moreover, you benefit not only from trading on the Forex market but also from attracting customers and partners to the community of traders. If your referral is registered using your referral link, he will automatically become you 1st level affiliate, and you will get 54% commission from his trading activity. And every client he introduce, he will get 54%, and you will get 20%. Again, his sub-affiliate can also attract both clients and affiliates.
You can earn up to 85% of total 5 level multicommision.Thus, you can get commission not only for the activity of your referrals, but also for the referrals and affiliates of your sub-affiliate. FxUnited offers up to 5 level of sub affiliate.
FX United certainly has a significant profile on the internet. There is a range of FX United videos on YouTube. The picture below was taken from one of the videos, and includes use of the entity’s former Auckland address.


‘Legal, licensed and regulated’
A voice over in one of the videos says:
We are part of FX United Power Team International. Power Team was established as an introductory broker which is basically a bridge between the brokers and the clients so this opportunity is based in the currency trading industry.
And:
"[We] have our registered office in New Zealand and expanded into Malaysia. They launched in Malaysia and from then on this programme has been very successful…FX United is legal, it’s licensed and it’s regulated under the financial services provider regulatory which is the regulation in New Zealand."
The false claim that FX United/United Global Holdings is compliant with NZ’s AML-CFT Act is also made. Additionally we’re told you need to stump up US$500 to open an account with FX United.

A press release dated May 10 this year (see picture below) touts a new partnership between the Lamborghini Super Trofeo Asia team-Aylezo Ecotint Racing and "leading foreign exchange broker" FX United. Partnering the Lamborghini team, we’re told, will provide the "New Zealand based FX broker" with a strong platform to build their brand across Asia and expand their client base.


Springing into action
Having been drawn to FMA’s attention, United Global Holdings has sounded alarm bells, with this warning posted on FMA’s website on May 4.
United Global Holdings Limited, trading as FX United  Name of Business: United Global Holdings Limited, trading as FX United. Website: www.fxunited.com and www.fxunitedpowerinternational.com Date Published: 4 May 2016
Additional Information: The FMA has received reports that United Global Holdings Limited, trading as FX United, has been falsely claiming that the FMA has endorsed the company as being legitimate and highly regulated.  The FMA does not confirm legitimacy or endorse any entity in this manner. We recommend NZ consumers exercise caution when dealing with any business claiming to be endorsed by the FMA.
Down in Wellington, Registrar of Companies Mandy McDonald has moved to deregister United Global under her powers of inspection.
Company removals notice dated 19 May 2016 – s318(1)(ba)
Public Notice | Section 318(1)(ba) Companies Act 1993 | New Zealand Gazette

Notice of intention to remove companies from the register I intend to remove the following companies from the Register under section 318(1)(ba) of the Companies Act 1993 on the grounds that the companies failed to respond to a requirement made under section 365(1)(caaa) or (c) of the Act.
BLESSING LIFE LIMITED | 5827907
EZYMART LIMITED | 5872824
MAXFIT TRUSTEES LIMITED | 5737831
PRODJECT LIMITED | 3404475

UNITED GLOBAL HOLDINGS LIMITED | 5247841
Unless, under section 321 of the Companies Act 1993, written objection to removal of the above companies is delivered to the Registrar by 17 June 2016, being not less than 20 working days from the date of this notice, the Registrar is required to remove the company from the register.
Dated this 19th day of May 2016
MANDY MCDONALD Registrar of Companies
Lots of inquiries & some complaints
Speaking yesterday an FMA spokeswoman said the FMA has received "just over 100" enquiries about United Global Holdings/FX Global, all from people overseas. This includes "a small number" of complaints.
"The FMA has directed the Registrar [of Companies] to deregister United Global Holdings as a financial service provider and we expect the register will be updated tomorrow [Friday]," she says.
So it will cease to be a NZ company and financial service provider, but will it go away? And what sort of mayhem is it leaving in its wake?
Questions have also been raised elsewhere about what’s described as potentially the biggest scam in the history of Malaysia. The website behindmlm.com shows here it has been investigating FX United since February. The man behind it, "Shah" was invited to FX United’s last annual dinner and says he "smelled something fishy" so began researching it. He also says he remained anonymous because the aim of multi level marketing (MLM) is to be a useful resource to people curious about the industry and the companies that exist within it.
Following his research Shah says he has all the evidence to prove this will be go down as the biggest scam in Malaysia. He has complained about the operation to the FMA, Malaysian authorities, including its tax office, and is threatening to name everybody involved soon.

His investigation now has 90 posts in response, including one from FX United itself. He has posted extensive details about the NZ registration of United Global Holdings and is now claiming another NZ registered company,Venus Financial Markets Ltd will take its place. Its director and shareholder are listed as Shahidrawadey Shahidan of Auckland.
Shah says FX United appears to exist in NZ in name only:
"You get a generic looking website, generic sounding company name and a whole lot of confusion. FX United is no different, and I can’t think of any legitimate reason for it to be registered in New Zealand, when it’s quite clearly being run out of the UK. Ditto why somebody in Queensland, Australia, is listed as a Director. To me that just screams something dodgy is going on, either on the trading side of things or potentially money laundering."
United Global’s director and shareholder is Priscila Lamoste Lustre of Queensland. Others who have featured as directors, shareholders and presenters of documents to the Companies Office include a Rujina Begum and Brian Johnson.
Lustre shows up in the UK companies register using one of Ian Taylor’s maildrops as her correspondence address, suggesting she may be part of the GT Group operation. (See more on GT Group and Geoffrey Taylor, Ian’s dad, later in this article).
Shah says Johnson, a NZ-based American, was portrayed at the FX United annual dinner as the Asia manager for FX United. Aside from Malaysia, FX United claims to be active in other countries including the UK, Singapore, the US, Australia and Hong Kong, and has pictures online purportedly from a meeting in Perth.
Brian Johnson, ‘scapegoat’, and an unregulated bank
On LinkedIn, Johnson, who is no longer either a director or shareholder of United Global Holdings, describes himself as CEO of FX Intelligence (a NZ registered company) and Prime Intelligence (a deregistered NZ company), and says he’s from/in Auckland and New York.
Two other NZ companies where Johnson has been a director, LQD Markets Ltd (he was also a shareholder there) and Eurokasse New Zealand Ltd, are in liquidation. Liquidator Simon Dalton of Gerry Rea Partners outlines a trail of destruction left by the two, but appears sympathetic towards Johnson, describing him in the LQD Markets case as a "scapegoat."
LQD Markets, Dalton, says is "a bit of a can of worms." An online forex trader, it enabled customers to trade in real time. However, administrators of the insolvent UK sister company – there’s another in Cyprus – who have access to the firm’s records, say the trades the clients thought they were doing weren’t being actually being actioned, "which is obviously a direct breach of trust," Dalton says.
Eurokasse, where Johnson was briefly a director, is "more of a complicated matter," Dalton says. It started out providing advisory and investment services and then appeared to operate as a bank, that was "completely unregulated here." Customers were from Germany and elsewhere in Europe.
"We’re having quite a lot of fun at the moment, shall I say, trying to trace where their investments went. We’ve managed to identify and find a bank in Malta [Sparkassse] and a legitimate investment house in Malta where funds were invested but the funds have been moved on from there through Poland [to Bank Pekao]."
Dalton says Johnson is an American who has been in NZ for some time providing advisory services.
"He has been as helpful as he possibly can [in the LQD liquidation] in terms of providing information. But obviously that doesn’t negate any potential director’s responsibility in terms of reporting requirements that weren’t met [in NZ]. He seems to be quite a competent guy but his fellow directors weren’t meeting accounting standards, they weren’t keeping appropriate records and they essentially didn’t tell him the full story. The word scapegoat springs to mind."
"In that [LQD] case essentially he has taken a directorship to ensure compliance here of an overseas entity and the underlying shareholders/directors appear to have not given him all the information he required. They certainly, if you read the administrators reports in the UK, appear to have acted inappropriately," adds Dalton.
Meanwhile, FX United responded to the feedback on behindmlm.com with this:
COMPANY RESPOND TO NEGATIVE REMARKS FROM BLOGGERS
Dear valued clients,
Of recent there has been some very negative remarks from bloggers on the social media. In response to their remarks, the company has come up with the following response.
Foreign exchange and networking business is a trillion dollar a day business and when you merge these two together the impact it causes and the potential it generates is tremendous.
People who realize this come into our business and make a lot of earning. So do not be jealous of these people who really made it. You didn’t have the courage to do so and they did and now they are reaping their benefits.
People who pass negative remarks about us are just failures and want more people to be failures like them. Before we listen to them ask ourselves if these people who are making these remarks are qualified to do so, do they have any experience in the forex industry, are they themselves just bloggers who are trying to get some attention for themselves or are they scammers themselves.
In todays world of information technology anybody can create blogs and post remarks on the social media but are they qualified to do so?
Company A, multi billion dollar business once used to be published in the internet as a scam but until today they are still standing strong. If they are scammers why are they still here?
The returns that has been given by FXUnited is actually a proven system. Any forex trader will understand how the broker pays the profit from the spread or charges earned by the Broker. The commissions that FXUnited makes with trading which they instead of keeping it all to themselves they share it with their clients. FXUnited instead does not allow clients to have more than 10 accounts in CGAT for example. This is actually to protect itself in the market. This is a system that no other broker shares with their clients and because of this many people who do not know us neither our product think that we are scammers.
If we were scammers we would have closed shop and left a long time ago with millions in our pockets but no we are still here. FXUnited has IB’s that have been in the business since day one and are still here standing as the trustee to the broker to assist the traders all over he world. If we were scammers these IB’s would have left a long time ago together with their teams to join our competitors.
We are a NZ based company. Our company started in Belgium in 2006 catering to corporate clients only. That explains the photos of the Bastion Towers that the blogger has alleged to be our effort to hoodwink people.
But then in 2013 we decided to go retail thus incorporate in New Zealand. That explains our address in New Zealand.
Please be advised that the address was actually the address of our consultant who helped us in setting up the company and has since left the company after he had completed his job. Naturally we had to use his office address for this purpose.
Yes the office is a small address but honestly does size really matter or what it can produce matter? You be a judge of that.
Yes there were other companies registered at this address but it is nor duty to check who has been or is operating from this address. Our consultants address was here as I say again and we used his address as were using his services.
We are currently renovating a multi million-dollar office in Manila in a very prestigious neighbourhood to house our regional headquarters and also our customer service department that handles our clients from Malaysia, Singapore, Indonesia, Thailand, Myanmar, Hong Kong, China, Taiwan, India, South Africa, Australia, Korea, Philippines and moving on to other countries.
Now tell me if we were really scammers would we be moving into these countries so aggressively? Wouldn’t we just concentrate in only in one particular country as the blogger has claimed and scammed their money and move on to another country and start all over again? Think about it.
Another thing if we were really scammers why do we limit the investment and number of accounts that each individual can have? Wouldn’t it be more profitable for us to allow clients to invest as much as they want and to have as many accounts as they want? Wouldn’t it have been better to allow clients to pump in all their money without any limit, make billions as clients are greedy ( as what the blogger claims) and run away to our neighbouring countries and start all over again? Again I say think about it.
FXUnited has helped many people make good income. Now these guys work hard around the clock travelling from state to state and country to country teaching people about us and helping them too to earn a living.
FXUnited has brought forex into the Networking concept and has made a lot of people earned good income but that is what the business world is getting into today.
Famous author Mark Yarnel of WAVE 5 IN NETWORK MARKETING said that by 2030, 85% of the global business will be in the form of Networking. People who condemn us are actually people who know the system but do not have the courage to do it and they do not want other people to do it and succeed and leave them alone.
Ask anyone in the market if they have faced any major problems in getting back their investments or capital. Apart from the usual glitches that any major player will have everything is fine.
We hope that with this announcement it will clear any doubts that you might have in case you read any of the negative comments on the social media.
Thank you.
MANAGEMENT 


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