Police warn Government ‘hundreds of millions’ of dollars of drug profits laundered via construction jobs

The subcontractor then invoices the construction project for the labour services provided, with the subsequent payment made into their bank accounts.

Those funds are then transferred into shell companies – masquerading as construction businesses – which are ultimately controlled by the gang that provided the cash.

The practice has been described in court documents as a “marriage of convenience” between organised crime and unscrupulous figures in the construction industry.

While it enables gangs to convert illicit cash into seemingly legitimate income to fund their lifestyle, cash wages money-laundering also benefits the subcontractors providing labour.

By paying workers in cash, the subcontractor pays lower wages but also avoids paying tax and other employer obligations such as ACC levies.

This allows them to undercut rival businesses by significant margins when tendering for work.

On uncovering the cash wages scheme in Operation Scuba, police soon realised the problem was spread far wider than the criminal laundering of drug money alone.

A multi-agency working group was established in September last year to address the additional risks of tax evasion, exploitation of vulnerable migrants, and unfair competition against legitimate businesses.

Those findings have been presented to construction industry leaders this year, with Police Minister Mark Mitchell and Casey Costello, the minister responsible for tackling organised crime, also briefed on the issues recently.

The revelation has pushed the main industry body, Master Builders, to tighten controls over the integrity of the labour supply chain, while Costello has hinted that wider reform in contract procurement is possible.

“It was a pretty open conversation,” Detective Superintendent Greg Williams said of the initial meeting with senior construction figures.

“There was some genuine shock, and they understood that they have a problem … a major problem.”

Deep dive into Comancheros

The new method of money laundering was only discovered when the National Organised Crime Group decided to target the newly appointed “national commander” of the Comancheros in 2021.

The role was an important one for the gang. Nearly all of the Comancheros’ founding members had been imprisoned for money laundering or serious drug dealing offences in recent years.

Despite being incarcerated, it became clear that the gang’s leaders were still able to call the shots by using smartphones smuggled inside by corrupt prison guards.

But the national commander was the linchpin: the most senior Comanchero outside of prison who could be the conduit between the gang’s imprisoned hierarchy and the rank-and-file members.

Detectives believed following the new national commander would, with a little bit of luck, give the police a chance to expose the inner workings of a gang that had become a juggernaut since arriving here.

An Australian motorcycle club, the Comancheros established a chapter in New Zealand in 2018 after a small, but influential, group of senior members were deported as “501s” by Australian authorities.

They announced their arrival in a now-infamous post to Instagram.

The six founding members of the Comancheros in New Zealand. All have now been convicted of money laundering or drug dealing. Photo / Instagram

Law enforcement agencies were concerned about the gang’s connections to international organised crime groups, and their fears were soon realised.

The gang’s arrival led to a radical shift within the criminal underworld, with far larger importations of methamphetamine and cocaine, as well as violent conflict between gangs, including tit-for-tat shootings and arson.

Even though the most senior members were in prison (or perhaps because of that), the Comancheros continued to grow in size and influence.

So police decided to launch Operation Scuba, led by Detective Sergeant Mike Clubb, in early 2021 to focus on the recently promoted national commander: Lihai Vimahi.

Vimahi proved to be an elusive target. The detectives struggled to find clear evidence of his direct involvement in the drug trade, so they decided to “follow the money”.

That same year, Vimahi was listed as the sole director and shareholder of five companies whose names suggested that he worked in the construction industry.

The companies had been incorporated by the same Auckland accountant, Khieng Chiv, who was now firmly on the radar of the police inquiry.

With the help of a forensic accountant, Operation Scuba eventually unravelled the complicated financial structures that Chiv built to disguise the dirty money of the Comancheros.

Millions of dollars were funnelled into shell companies set up by Chiv to fund the purchase of a $3.8 million home for Pasilika Naufahu, the most senior figure in the Comancheros, as well as a gang pad.

Chiv also arranged the purchase of two businesses in Ōrewa, a bar and neighbouring cafe on the main street of the seaside township, for just over $1.8m, on Naufahu’s behalf.

Trading as Coast Bar and Oliver’s Cafe, both were placed into liquidation this year owing hundreds of thousands of dollars in unpaid tax to Inland Revenue, staff wages, and suppliers.

The 46-year-old accountant also invested $1.8m into cryptocurrency on behalf of Naufahu and Vimahi.

During his trial at the Auckland District Court this year, Chiv claimed the millions in cash deposits flowing through the supposed construction companies were legitimate income, and he was unaware that his clients were gang members.

This stance was undermined by messages exchanged between the accountant and Vimahi on the encrypted Signal platform.

Chiv’s username was “Dragon King”.

Wearing a colourful Louis Vuitton sweater, senior Comanchero Lihai Vimahi appears in the Auckland District Court for sentencing on drug and money-laundering convictions. Photo / Sylvie Whinray

There were messages from Vimahi about needing to send $5m to Mexico as payment for drugs, with Chiv indicating there was $3m available “sitting in Dubai”.

In another conversation, Vimahi sought assurances from Chiv after Australian police successfully infiltrated a money-laundering syndicate across the Tasman.

“Brother, I trust you. But I need to know that the people you work with are not pigs?”

Chiv replied: “Yes brother 100%. They are our people, not outsiders. They are not a pig brother. They are our own people in Hong Kong … The funds bypass [the] banking system and the cash [is] spent in construction cash wages … no trace.”

Other conversations between the pair, when combined with banking records and surveillance footage, exposed exactly how the cash wages money-laundering worked.

Vimahi would give a large sum of cash to Chiv, sometimes at his office in East Auckland, who would pass the money to one of his associates in the construction industry.

Some of these exchanges were caught on camera.

On one occasion, after $55,000 was paid in one of these money drops, Chiv sent Vimahi a photograph.

It was a calculation to show that Vimahi would receive $51,150 after Chiv took his 7% commission as the money launderer.

A few days later, there was a series of deposits into the bank accounts of Vimahi’s five “construction” companies.

The payments, which ranged from $4500 to $18,500, came from New Zealand-based shell companies masquerading as construction entities.

The total was $51,150.

To prove the deposits had been made, Chiv sent screenshots of the transactions to Vimahi with a simple text message.

“The banking is done”.

‘Major problem’ in construction

Despite his denials, Chiv was found guilty of false accounting, using an altered document, obtaining by deception, participating in an organised criminal group and 20 counts of money laundering.

He was convicted of laundering nearly $7.8m of drug proceeds for the Comancheros over three years, and sentenced in July to 10 years and 10 months in prison.

The sentence is the longest imposed for money laundering in New Zealand, while several senior Comancheros such as Pasilika Naufahu and Lihai Vimahi will also spend years behind bars.

But the true legacy of Operation Scuba may be measured outside of the courtroom.

After being briefed on the previously unknown method of money laundering, Detective Superintendent Greg Williams, the officer in charge of the National Organised Crime Group, directed his staff to analyse the problem with Inland Revenue.

Their joint report, released under the Official Information Act, described how the typology posed “unique challenges”.

This was because the illicit cash is laundered without ever entering the financial system, circumventing existing anti-money laundering rules designed to flag suspicious cash transactions.

The report noted that New Zealand’s lucrative methamphetamine market generates hundreds of millions of dollars each year, mostly in cash, for organised crime groups [OCG] who need the proceeds to be converted into the banking system.

To mitigate this risk, the organised crime groups have formed relationships with money-laundering organisations [MLO] who process the cash on their behalf.

“This is a mutually beneficial relationship as it provides the OCGs a trusted means of dispensing with their cash and provides the MLOs with access to large quantities of cash they require to facilitate the broad range of transactions requested by their clients,” according to the joint report written in January 2025.

Those clients are often involved in “New Zealand’s hidden economy” as subcontractors providing labour who need large amounts of cash to pay their workers “cash in hand”.

“These businesses appear to be subcontracting for larger and reputable construction firms who are likely high integrity and low risk from a tax compliance perspective,” according to the report.

“Once the subcontractors receive the payments for services rendered, a portion is then diverted to shell company accounts, which is almost certainly a tactic to siphon off a portion of business proceeds to evade tax obligations.

“To balance the debt arising from this cash handover, the MLO facilitates the transfer of electronic value from the contractors back to the OCGs via the banking system,” according to the cash wages report.

“Typically, there is little or no contact between the participants. They operate in isolation of one another and have no knowledge of the greater scheme … only the MLO has complete knowledge of, and visibility over, the entire money laundering typology.”

Detective Superintendent Greg Williams, the director of the police National Organised Crime Group. Photo / Mark Mitchell

By getting his head around the cash wages methodology, Williams, who has had a long career overseeing drug and money-laundering investigations, said he found new insight into organised crime.

The key wasn’t just about drugs, or money, or tax evasion – it was people.

“Once upon a time, I would have said it was money-laundering,” Williams said of discovering the cash wages scheme.

“But really, it’s about using people as a commodity. Organised crime is luring migrants to New Zealand on false promises to work for them. They’re paying a large amount of money – the most I’ve heard is $80,000 – to secure a job here. When they arrive, there’s no job.

“They’re effectively forced into labour, then everything flows off the back of that: the money laundering, tax evasion, undercutting legitimate businesses – they’re clipping the ticket everywhere.

“The moment these migrants arrive here, they are being used as a commodity to make money. That’s the key to what we’ve uncovered here.”

Realising the police couldn’t tackle the problem alone, Williams established a multi-agency working group in September 2025 to come up with solutions.

As well as the police and Inland Revenue, the Ministry of Business, Innovation and Employment (MBIE) was invited into the fold.

The so-called “super ministry”, MBIE hosts different departments separately responsible for regulating immigration services, labour exploitation and company registration.

In February this year, compliance officers made unannounced visits to 147 construction sites across Auckland and the wider North Island as part of Operation Rimu.

Simon Humphries, head of the Labour Inspectorate, said several construction company directors reported being aware of cash‑wage and other unlawful practices in the sector.

“They said there were whispers in the industry, particularly in Auckland residential construction, about instances of businesses being significantly undercut to a degree that raised suspicions about the legitimacy of competing contracts,” Humphries said in a press release at the time.

“Working with our regulatory partners, we know organised crime groups are exploiting weaknesses in the sector to launder money and exploit workers, setting up businesses in ways that undercut those operating legally and tilting the playing field against good, lawful business.”

Formal enforcement action was taken against 15 employers, while a further 20 are still being investigated.

Two businesses had their immigration accreditation revoked, another was suspended, while 16 others were red-flagged for “concerns”.

Ten companies were now in liquidation, five others were removed from the Companies Office register with two more pending.

In the next phase of Operation Rimu, an MBIE spokesperson said, a further 160 construction businesses were now being “assessed” for enforcement activity.

Through Immigration New Zealand processes, there have been two accreditation revocations, one suspension, 14 businesses with identified concerns and two businesses with serious concerns.

On the same day that MBIE was making surprise visits to construction sites, Williams and other senior detectives were presenting the findings of Operation Scuba to executives in the construction industry.

“It was a pretty open conversation,” Williams said. “We explained that these labour subcontractors – sitting under these major companies – were in fact organised crime groups.

“We told them ‘your systems are not robust enough’. There was some genuine shock, and they understood that they have a problem … a major problem.”

The Operation Scuba slide presentation to the construction industry leaders, obtained under the Official Information Act, revealed that $71m was transferred from the construction industry into six shell companies over three years.

The problem is probably far bigger than that.

Casey Costello is the Customs Minister and Associate Police Minister and is also responsible for tackling organised crime. Photo / Mark Mitchell

According to a new briefing given to Police Minister Mark Mitchell and Casey Costello, who is the minister responsible for tackling organised crime, police have identified “hundreds of millions of dollars” moving through shell company structures.

“The true scale is likely to be higher.”

The briefing, delivered in August, states that the multi-agency working group is “progressing 42 activities” across enforcement, intelligence, tax, immigration, employment, and company director settings to address this significant issue.

The sections labelled “regulatory and reputational risks” and “risks and sensitivities” have been redacted from the report released under the Official Information Act.

Mitchell and Costello were not asked to take any action at this stage.

But a report by a panel of experts advising the Government on how to tackle organised crime has previously recommended that “high-risk” industries like construction and horticulture should be banned from paying wages in cash.

The advice was set out in a report to Costello in May last year which explained how weaknesses in the financial system were exploited to shift criminal profits overseas.

While most legitimate businesses in New Zealand prefer to make digital payments, cash is crucial to the criminal economy because it provides anonymity.

The sales of drugs, firearms and stolen property were conducted on the black market with cash, along with crimes linked to migrant exploitation and tax evasion, which made it difficult to monitor.

“In a perfect world, removing cash from the economy completely would have the greatest impact on organised crime,” the ministerial advisory group wrote to Costello.

“But we recognise this is not realistic at this time and New Zealanders should be assured of their ability to use cash for lawful purposes.”

The expert panel, chaired by senior prosecutor Steve Symon, pointed to Sweden as a country that had introduced policies to reduce the prevalence of physical cash over time.

Another example is France, where monthly salaries in excess of $2800 must be paid through the banking system. In Italy, the payment of wages in cash is prohibited.

Similar measures could be introduced in New Zealand, the advisory group wrote, including a mandate for electronic wages payments in “high-risk” industries such as construction, hospitality and agriculture.

“Payment of wages with cash is common in a range of industries – usually increasing the risks of tax evasion and exploitation of migrants and other vulnerable workers,” the panel wrote.

“Numerous countries have introduced statutory requirements to ensure that wage payments are made through verifiable, electronic means, to enhance compliance and combat financial misconduct.”

In a recent interview with the Herald, Costello said she thought the idea had merit and would put it on the agenda of the chief executive board, recently established to support her new ministerial role.

She floated the idea of making electronic payments for wages mandatory as part of the compliance conditions of any contract, especially for procurement in any publicly funded projects.

Similar clauses could be introduced to ensure no exploited migrants worked on the construction sites, which puts the onus back on the industry to ensure the integrity of its labour supply chain.

“I think it is workable,” Costello said.

While the scale of cash wages money-laundering was “staggering”, the NZ First MP – who has a background in investigating labour exploitation – said there was a human cost beyond the obvious crime.

“It’s not just about the money,” Costello said. “It’s about the anti-competitive nature of this.”

According to the Operation Scuba presentation to the construction industry, subcontractors paying cash wages (avoiding tax and other associated employer costs) could charge out labourers at $30 an hour and still break even.

This means they can undercut their law-abiding competitors who would have to charge around $50 an hour.

“Good, safe operators that have been employing New Zealanders for decades cannot compete with businesses using exploited labour. It’s driving legitimate businesses into the ground,” Costello said.

“In the meantime, we have these vulnerable workforces that are being treated poorly.”

Construction industry responds

The construction industry is working together to tighten the integry of the labour supply chain after being briefed on cash wages money laundering, says Master Builders chief executive Ankit Sharma. Photo / NZME

Since first being briefed by police and MBIE in December, Ankit Sharma, the chief executive of Master Builders, said his members “moved quickly” to reduce the risks posed by cash wages money-laundering.

“The vast majority of our members operate legally and ethically, and they are equally concerned about activity that puts workers at risk and allows dishonest operators to undercut legitimate builders and tradespeople who meet their tax and employment obligations,” Sharma said.

“In the immediate term, members are reinforcing checks before awarding work, setting clear requirements around further subcontracting, and strengthening verification of who is working on their sites and who employs them.

“Auditing and confidential channels for workers to raise concerns can also help identify warning signs early and reduce opportunities for criminal activity to become embedded within otherwise legitimate projects.”

Master Builders is also working on a permanent response to address the problem.

Sharma said his organisation’s Vertical Construction Leaders Group, made up of chief executives from major commercial firms, was working with Site Safe to develop a supply chain integrity framework.

“The framework will build on existing systems to strengthen checks on businesses and workers, improve visibility of subcontracting arrangements and provide greater assurance across construction supply chains,” Sharma said.

A pilot is planned to start in the next financial quarter.

“For builders, the key is to know who you are doing business with and who is working on your sites,” Sharma said.

“That means checking the businesses they engage, requiring transparency around further subcontracting, and maintaining accurate records of workers and payments. Those checks should continue throughout a project, rather than simply being undertaken when the subcontractor is appointed.”

Jared Savage covers crime and justice issues, with a particular interest in organised crime. He joined the Herald in 2006 and has won a dozen journalism awards in that time, including twice being named Reporter of the Year. He is also the author of Gangland, Gangster’s Paradise and Underworld.