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Chinese bent on a life in New Zealand can “lose their honesty”, a student group claims (Photo: Getty Images)
Chinese bent on a life in New Zealand can “lose their honesty”, a student group claims (Photo: Getty Images)

BusinessOctober 10, 2018

The Chinese students on a crusade to expose immigration fraud in NZ

Chinese bent on a life in New Zealand can “lose their honesty”, a student group claims (Photo: Getty Images)
Chinese bent on a life in New Zealand can “lose their honesty”, a student group claims (Photo: Getty Images)

An anti-corruption student media start-up says there’s an ugly underbelly to building a new life in Aotearoa.

Leo Shao is an unlikely caped crusader. The softly spoken 20-something looks like any other student striding around Auckland’s CBD in his dark duffle coat, takeaway cup in hand.

Yet behind this understated exterior lies an alter ego. Shao and a band of fellow young Kiwi Chinese are on a moral crusade to expose wrongdoing among their countrymen. PhD and Masters students by day, by night they work to fulfill a duty they believe they owe to their adopted nation and the Chinese migrant community alike.

There is an unsavoury side to the business of building a new life in Aotearoa, the group says. Immigration fraud, worker exploitation, tax evasion, mortgage fraud – you name it, they have it in their sights, and their reach is surprising.

The students have established a non-profit think tank called Youth Startup Herald, or YS Herald (no connection to the NZ Herald itself). On the surface YS Herald’s website looks like a collection of musings on New Zealand immigration and economic news, international affairs, and the like.

But dig a little deeper and you will find details of investigations it has conducted into Chinese Kiwis it claims have established themselves here by less than legal means.

While the group publishes high level details of these cases on its New Zealand website, it says it releases the real oil via Chinese social media – both because it seeks to publicly shame the alleged perpetrators in their home country, and in order to circumvent New Zealand’s privacy and defamation laws. The law is less stringent in China, the group says.

YS Herald has received threats, so only Shao speaks publicly while the other members remain anonymous.

Shao came to New Zealand four years ago to study for a PhD in mathematics, and now works as a system analyst at an Auckland luxury vehicle services company. Although he views this country as his new home he hasn’t started applying for residency just yet.

But most Chinese who come here are on a mission to create a better life and this quest can lead to desperate actions, he says.

“Because they care about residency they lose their mind so sometimes they will do bad things, this kind of thing happens every day,” the YS Herald spokesperson says.

“They lose their business honesty, they will try to defraud people to get money, residency, everything.

“We warn all Chinese people, ‘you should follow the rules, you should not forget your traditions. Be an honest man, do good business, be a nice person.’

“Everything has a cost. If any person believes that he does the wrong thing but there’s no cost, that’s not right.”

The wheels of justice move slowly, however, and government agencies rely on tip-offs, says the YS Herald spokesperson. And so they have taken matters into their own hands.

Its access to information about its targets is impressive. The Spinoff has seen copies of emails, personal bank statements from both New Zealand and China, passports, drivers licences, visas and other documentation.

“Some people are very scared [of] us because we can research very deeply,” Shao says.

Initially YS Herald tried working with local Chinese media, but felt these outlets were more concerned with keeping their advertisers happy than breaking stories.

“They care about money things too much, they don’t want to create conflicts among the Chinese community, so they cover each other,” Shao says.

YS Herald has no such qualms.

Its extensive investigations into the activities of a local businessman and his cousin are a case-in-point.

One of the cousins – we’ll call him W – ran a west Auckland fast food outlet. YS Herald alleges that between 2014 and 2017, W funnelled proceeds from the restaurant through a bank account in the name of his cousin – X – in order to avoid paying tax.

In return, it is alleged, W gave his cousin X a job as a chef at the restaurant so that he could get a New Zealand work visa. But, YS Herald claims, X never actually worked at the fast food business, and in addition had to pay W thousands of dollars for the privilege of getting the visa.

X got his work visa in April 2017. The Spinoff has seen copies of bank statements from 2017 which support YS Herald’s claim that X was making large payments to his cousin.

W also had another business, an auto company providing services such as car grooming and nano coating. YS Herald says this is where X actually worked, and once again it claims payments to the company were being channeled through X’s mother’s bank account to avoid tax. The Spinoff has viewed copies of the account statements from 2017 showing deposits with descriptions such as “car wash”, “Qashqai Cam”, “Passat” and “car clean”.

Meanwhile W appears to have become a prosperous man. YS Herald says between October 2014 and July 2017 he bought five Auckland properties – one each in Mt Albert, Mt Eden, Hillsborough, and two in Epsom. The Mt Albert property was sold after a year at a profit of $260,000, while one of the Epsom homes was sold after just three months for a profit of $170,000.

The Hillsborough and Mt Eden properties are currently on the market.

YS Herald alleges W dealt with a mortgage broker at a major bank who was known in the Chinese community for taking on “tricky” situations. The broker has since left that role and is working for another major bank.

X has now returned to China. The Spinoff has heard various explanations for the move, ranging from from personal relationship issues to health concerns.

W denies all of YS Herald’s allegations.

“Who told you? What this person doing?” he told The Spinoff. “Before you call me you should do some homework.”

W says his cousin X did work at at the fast food restaurant, while it was X’s wife who worked at the auto service company. X got his work visa when he was employed at a restaurant in Christchurch, he says. “I never charged him any money.”

He also strongly denies not paying tax on the income from his businesses, saying everything goes through his accountant.

He insists the allegations are retaliation for a family falling out over rival auto service businesses. “We are not happy with each other,” he says.

Wherever the truth lies, YS Herald has reported the cousins’ activities variously to Inland Revenue, Immigration Minister Iain Lees-Galloway, the Serious Fraud Office, and both major banks.

Immigration New Zealand’s general manager of compliance Peter Devoy says he isn’t able to comment on individual cases.

However complaints to the agency about alleged immigration fraud have more than doubled in the last three years, he says.

In the 12 months to June 2016 it received 882 reports; by June 2018 that number had jumped to 1842.

Reports to Immigration New Zealand of alleged fraud have more than doubled in three years. (Source: Immigration NZ)

There is “evidence to suggest that the exploitative-type practices that you’re describing to me are becoming more prevalent,” he says.

“The amount of work that’s coming to us, getting my resources across it is difficult.”

Some complainants are migrants who have tried to buy their way in, he says. “People come to us when they get desperate, and quite often if a person has been complicit and they are borrowing money and investing significant amounts of money, as you’ve attested, when something goes wrong in the process, that’s when they complain.”

In cases of serious workplace exploitation migrants who come forward may be allowed to stay in New Zealand while they apply for a new visa.

People try to buy jobs in many ways, from working extra hours without being paid, to a work payback system and buying shares, Devoy says.

“That often involves a structure where Inland Revenue are being paid so that a work record can be established… but it may well be a non-existent job.”

One of the challenges is New Zealand’s “welcoming” structure, he says. A person who is here unlawfully can still get an IRD number and other documentation such as a driver’s licence, giving them the facade of legitimacy.

The agency does take a whole of government approach to immigration fraud, and in particular works closely with the Labour Inspectorate which looks at work standards such as whether people are being paid minimum wage, Devoy says.

Inland Revenue says it also co-operates with its fellow agencies to identify tax fraud and other criminal activity. It is a member of the Combined Law Agency Group (CLAG), a group of around 25 partners that looks at serious non-compliance against one or more agencies, it said in a statement.

It’s also a member of the Joint Assessment Group co-ordinated by the Ministry of Business, Innovation and Employment (MBIE) which applies another multi-agency lens to compliance risks. “The Labour Inspectorate is part of MBIE so topics such as aggressive labour practices, employee manipulation and non-compliance with wider labour laws do come up,” it says.

And cash jobs leave a trail, Inland Revenue says.

People either spend the cash on travel, lifestyle, gambling or use it to acquire assets or pay the mortgage. We can trace all of those.”

However there are limits to the taxman’s ability to share. While the Privacy Act allows government agencies to pass information to each other, Inland Revenue also operates under the Tax Administration act which says it must keep taxpayer information secret. In short, tax law trumps privacy law.

Mechanisms that allow for better inter-governmental information sharing is “a discussion that needs to be had”, Immigration New Zealand’s Peter Devoy says.

Leo Shao describes YS Herald as “kind of freaky” in the local Chinese community. Another word for that might be “disruptive”, and the group says it has plenty more cases up its sleeve of immigrants sidestepping New Zealand regulation to better their situation. They are adamant that they will work to ensure corrupt practices that have flourished in other societies don’t take root in Aoteaora.

Keep going!
Xero NZ managing director Craig Hudson is on a mission to improve Kiwi SME owners’ mental health. (Photo: Supplied)
Xero NZ managing director Craig Hudson is on a mission to improve Kiwi SME owners’ mental health. (Photo: Supplied)

BusinessOctober 9, 2018

The great imposter: Xero boss Craig Hudson on his mental health battles

Xero NZ managing director Craig Hudson is on a mission to improve Kiwi SME owners’ mental health. (Photo: Supplied)
Xero NZ managing director Craig Hudson is on a mission to improve Kiwi SME owners’ mental health. (Photo: Supplied)

The New Zealand head of accounting success story Xero talks to Maria Slade about battling his demons, and helping Kiwi businesses through their own dark days.

Many people would think Craig Hudson has it all – sporting talent, good looks, a lovely wife and four children, and a great job as New Zealand managing director of cloud accounting platform Xero.

Yet the former New Zealand Sevens representative has endured moments so dark that if it weren’t for good friends and family he may not be here today. Suffering from “major imposter syndrome” has shaped his leadership style and created a desire to improve the mental health of Kiwi small business owners, he says.

The biggest problem for 80% of small businesses is isolation and the fact that they’re in it alone, Hudson says.

Xero has around 300,000 SMEs on its platform across the country, so it’s in a unique position to be a voice for what has almost been a hidden economy, he says.

Business confidence surveys drive him mad, because they’re based solely on sentiment. “How do we put factual information out into the mainstream, rather than something that’s just putting the boot into someone that’s already struggling?” he says.

Is poor mental health an issue among business owners? 

Yes. It manifests itself in further isolation, because you’re already thinking you’re alone, there’s a stigma around it still, and it impacts on not only you as the business owner but also your family life and business connections.

Has Xero done much research into the mental health of small business owners? 

We’re in the process of kicking off something in that space at the moment. If we’re going to do it, we have to do it right, so it’s early days.

I’ve got a little bit of a private passion around it with my background, it’s also something that comes up on a consistent basis with small business owners, and isolation. The downside of being able to work remotely is that you don’t get that sense of community. The things I’m looking at are around how can we, together with multiple different avenues and agencies and businesses, create more of a community and sense of sharing? There’s multiple different support things everywhere, but it’s filtering that through to someone in Taumarunui that’s running a plumbing business and have always only done it themselves.

So you’re passionate about this because you’ve had your own battles?

I’ve personally probably had battles with mental health all through my rugby career, now that I look back, which manifested itself in lacking confidence and being my biggest critic, which meant that I never really felt like I deserved to be anywhere and ended up having to work harder to try and prove it to myself, which pushed me to the point of breaking, where I was forced into early retirement at 23.

Since [then] I’ve battled with the inner voice of not being able to provide for my family, not being good enough, not having a degree, not knowing what I’m doing and faking it and thinking that I’m going to get found out. Major imposter syndrome. If it wasn’t for the support of my wife and certain close friends I probably wouldn’t be here, I think it’s safe to say, with where I was at a point in time.

One of the darkest points was when my second child was born. I almost missed the first year of her life because I was on medication and struggling along the way. She’s now 10. I still have guilt around that, I almost compensate with her because of it.

But being able to reach out and having, in my previous employment, my boss (Allan McFall of McFall Fuel) realising something was going on and setting up support for me through an external business coach who’s also a psychologist, gave me some practical tools to be able to help me through that. And it was a big step for me, to be able to, one, have a conversation with my boss, but then for him to be also in the same thought process of wanting to help. Realising that he can’t help other than being there kind of set my foundation for what I do as a leader.

Why did things get so bad around that time?

I think it was a combination of things. I struggled for identity, because I’d made a comeback and made it into the New Zealand Sevens. In 2003 I had a virus that attacked my heart, when I was playing up in Europe. I got over-training syndrome. Then I got talked into coming back into the Sevens, and the 2006 Commonwealth Games. It was the stupidest decision of my life. I made it back into the team but noticed my body was starting to give up again. The Hong Kong Sevens was the tipping point, I collapsed again, and got rushed into hospital.

My first son was born then, just after I was forced into retirement for the second time. And I had no job, nothing to fall back on. I was trying to find out what I was good at, with a young baby, and then having another one quite quickly afterwards. All I was was a rugby player and all I ever wanted to be, and for that to get taken away was a hard process to go through.

My wife was a teacher, so we were going back to a beginning teacher’s salary. The sense of isolation I had when my wife was going off to work – I got a dog to drag me out for walks every day as part of the routine to get me better and give me something to focus on. That was really important, but it was a constant battle.

It took me 12 months to get back into work, and my first job was as a part-time swim coach. Then I fell into a job that was phone-based sales. I was good at it because I was able to fake things. But I wasn’t enjoying it, so my wife made me quit even though we had a brand new baby. If she’d have made me stay because we had two kids, I probably wouldn’t have got better. Starting afresh meant I was able to join Alan McFall’s business.

You’ve obviously learned a lot about how to deal with it – what kinds of things keep you on track?

A lot of stuff that I learned is around my triggers – so diet’s really important for me, fresh air, so walking meetings now at work. Being able to know when things are starting to go off the rails for me. The statement is, ‘I’m okay today’, because I know tomorrow I might not be. Realising when things start to go astray and being open at home around what’s going on. And also knowing that I can be open with my staff, so that they know that they don’t need to be okay all the time.

Do you think people perceive it as a weakness?

There’s some people who still do. If you look at someone who is vulnerable in the workplace, traditionally they’d be called emotional, they wear their heart on their sleeve, they’re drama-hungry, whereas actually they’re just being real. It’s your ability to be able to hear and guide based on what they’re going through that’s really important.

Do you think people who have a tendency towards depression should watch their use of social media?

I do. We need less digital and more human interaction.

There’s an element of people living behind Facebook and looking in and going, ‘man those guys are amazing, my life’s crap’, when actually the reality of things is a bit different.

I’m a little bit addicted to my phone, we’ve got a lot of social interaction with Xero. But I find myself getting trapped a little bit with social media, you see the instant gratification that you get from putting something out. But for every good post there’s probably 10 bad ones that could potentially go up, but you don’t see the bad stuff.

A lot of leaders wouldn’t be prepared to talk about this stuff the way you have. Do you see it as a personal mission to change the view of leadership? 

Yes, I do. Not for my sake. I’m ridiculously thankful for being in the position that I am, and I’ve still got a little imposter on shoulder saying ‘how the hell did you get there?’. But I think it gives me the opportunity to be able to be heard a little bit more. For my team, first and foremost, if I’m able to help them understand themselves better and to come work to do the best work of their lives, whereas a traditional boss would say ‘you need to leave your personal baggage at the door’, actually someone saying ‘bring that baggage that’s part of who you are and that’s okay’, is quite a shift.

Despite all the support systems that are around for SMEs such as co-working spaces and incubators, do you still feel that there isn’t enough?

Co-working spaces are in big cities but there’s still whole chunk of regional New Zealand that doesn’t get access to that. How do you create an environment of sharing, and vulnerability, I suppose, of what’s going on? Is that where business mentors come in, is that where your trusted advisor comes in, your accountant? Do they become a voice of reason of what’s actually going on in the small business economy? That’s what bugged me the most about the negative sentiment around the business confidence surveys, that it’s all based on feelings. And then we get a little bit of actual data and, lo and behold, the business confidence bounces.

There’s a lot of fear around growth, so not being sure whether now is the right time to grow, their business is going okay on the whole. The survey we did a little while ago showed that only a third of businesses want to grow, and a large amount of that nervousness is because with growth comes pain, so needing someone to drive them through that tricky part. Small business is hard – you’re hustling, begging businesses to pay their invoices, which we should be way better at. There’s limited access to capital, how do we give small businesses seamless ways of being able to get access to decent capital, not at loan shark-type rates?

So you’re proposing practical solutions?

Yes. Access to talent is a big one as well, hiring the right staff at the right time. When you look at our data it shows small businesses are growing at 7-10% year-on-year in terms of employee numbers, so the access to regional talent is going to dry up way faster than it is for big businesses where the national average is only 3%. How do we help them find the right people, and attract people back from overseas if we have to? Because unemployment is already really low.

A lot of it comes down to education, getting entrepreneurial and business skills taught earlier. On average sole traders are around 55 – you talk to them about the traditional millennials, and they don’t want to go anywhere near it. How do we dispel the myths around what the workforce are actually looking for, how to harness them better?

Are younger entrepreneurs better off, in that they often form communities and hubs?

I think only for a small percentage that’s true. Because you still have to be an element of an extrovert, or be a bloody good actor like I am, to be able to get out and network with people outside your immediate circle.

Where to get help

Need to talk? Free call or text 1737 any time for support from a trained counsellor.

Lifeline – 0800 543 354 or 09 5222 999 within Auckland.

Samaritans – 0800 726 666.

Suicide Crisis Helpline – 0508 828 865 (0508 TAUTOKO). Open 24/7

Depression Helpline  – 0800 111 757 or free text 4202. This service is staffed 24/7 by trained counsellors

Samaritans  – 0800 726 666

Healthline – 0800 611 116

Youthline – 0800 376 633. Text 234 for free between 8am and midnight, or email talk@youthline.co.nz.

0800 WHATSUP (0800 9428 787) – Open between 1pm and 10pm on weekdays and from 3pm to 10pm on weekends. Online chat is available from 7pm to 10pm every day at www.whatsup.co.nz.

For more information about support and services available to you, contact the Mental Health Foundation’s free Resource and Information Service on 09 623 4812 during office hours or email info@mentalhealth.org.nz