Malaysiakini News

Need for independent probe in Malaysia on Panama Papers

Charles Santiago  |  Published:  |  Modified:

MP SPEAKS It’s almost like a scripted response, the way cabinet ministers and other prominent cronies nonchalantly dismissed names of prominent Malaysians on the Panama Papers.

And this is despite the fact that Malaysia adamantly remains the fifth in ranking for the highest average illicit financial flows and capital flight out of the country.

According to last year’s report from the US-based Global Financial Integrity (GFI), Malaysia had lost an accumulated amount of RM1.8 trillion since 2004.

In 2013 alone, Malaysia lost a total of US$48.25 billion, according to the global financial watchdog.

The illegal capital outflows, said the report, stem from tax evasion, crime, corruption, and other illicit activities.

In 2013, GFI chief Raymond Barker warned world leaders to act against anonymous shell companies, tax haven secrecy, and trade-based money laundering techniques that drained nearly a trillion dollars from the world’s poorest in 2011.

Three years down the line we have the mega dump of the Panama Papers that contain 11.5 million confidential documents, providing detailed information about more than 214,000 offshore companies listed by Mossack Fonseca, the top gurus who are clever at helping their clients hide their assets in order to avoid taxes.

The leaked documents show identities of shareholders and directors of the companies and how wealthy individuals, including public officials, hid their assets from public scrutiny.

And the list includes 2300 names of Malaysian individuals and entities in Caribbean shell companies such as the sons of Prime Minister Najib Abdul Razak and former premiers Abdullah Ahmad Badawi and Dr Mahathir Mohamad. Malaysian royalties, prominent business people and celebrities have also stashed away their cash.

And they share the list with underworld kingpins, Ponzi schemers, drug lords, brothel owners, Chinese Communist Party leaders, those involved in the blood diamond trade and even the Hezbollah.

So the Panama papers leak is not just a story of the two devils - tax avoidance and tax evasion, but has opened the doors to the world of ruthless crime.

While the use of offshore business entities is not illegal in the jurisdictions in which they are registered, clearly many of the shell companies from around the world may have been used for illegal purposes, including fraud, drug trafficking, and tax evasion.

The gravity of this exposure seems lost on Umno politicians, ministers and those close to the Malaysian ruling elite.

Paul Low, the Minister in the Prime Minister’s Department in charge of governance and integrity, said there was nothing wrong in avoiding taxes by shifting assets abroad as long as the gains were not ill-gotten.

Umno veteran Tengku Razaleigh Hamzah said it was acceptable to save on taxes using offshore accounts, despite acknowledging the concerns involved.

RM125.1 trillion stashed away

Tax Justice Network (TJN) says that RM125.1 trillion are stashed away in offshore companies and that, too, by only 10,000 people.

Can you imagine how much of this money would have contributed to the economy or public infrastructure?

Can you, just for a second, think about how many poor people were denied access to subsidised healthcare, food and tertiary education through tax evasion by greedy individuals and corporates?

Do we even dare to look at lives ruined and wars fought because of people and companies involved in criminal activities, tucked away in a safe offshore haven?

Last year, the government introduced the Goods and Services Tax (GST) that is levied on all Malaysians regardless of income levels.

The move was hugely unpopular as the people were already grappling with rising costs of living and escalating prices of goods and services.

Is it fair that the rich get to hide their wealth while the already poor are squeezed out even more?

While Mossack Fonseca claims to do business the right way and has fashioned itself as the victim of a data breach, investigations into the leak have already started in different parts of the world.

Football star Lionel Messi and his father will have to attend court next month for alleged tax evasion.

The Malaysian government must also start an independent investigation into those named in the Panama papers.

Or we can conclude that Umno and its partners are fine with tax evasion, tax avoidance, illegal business practices and even money-laundering.


CHARLES SANTIAGO is Member of Parliament, Klang.

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