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Many Asia Pacific countries have been included in a report comprehensively detailing the inner workings of offshore tax havens from a watchdog reporting network, by which could spark an unprecedented increase in financial accountability.
The investigation, the International Consortium of Investigative Journalists (ICIJ), will release the secrets of more than 120 000 offshore companies and trusts exposing the dealings of politicians, con artists and the mega-rich of more than 120 countries. Even though specific cases are trickling out slowly it has massive implications for a range of countries in the region.
Former Pakistani Deputy Prime Minister’s son and politician Moonis Elahi has been revealed as a shareholder of a British Virgin Islands firm set up with the help of Swiss bank UBS. This is the latest report from the ICIJ probe that has added to the corruption scandals plaguing Pakistan’s government. Successive attempts to initiate credible investigations into these oversights eventually led to Chief Justice Iftikhar Chaudhry ordering the arrest of both President Asif Ali Zardari and Prime Minister Pervez Ashraf in January.
ICIJ has also named key members of the Malaysian government, their families, and well-heeled associates as among those owning secretive offshore companies in Singapore and the British Virgin Islands. French banks, helicopter deals in the Congo and even Bridget Bardot’s husband millionaire Gunter Sachs has been reported by ICIJ as having used offshore accounting to avoid paying taxes and being otherwise financially accountable.
Reportedly included in the investigation are previously undisclosed details about secret bank accounts of Sri Lankan hedge fund manager and former billionaire Raj Rajaratnam, who was found guilty of insider trading by the U.S. and handed an 11 year prison sentence.
Government officials and their families and associates in Myanmar, Indonesia, Azerbaijan, Russia, Canada, Pakistan, the Philippines, Thailand, Mongolia and other countries have embraced the use of covert companies and bank accounts, the ICIJ insists.
“The files illustrate how offshore financial secrecy has spread aggressively around the globe, allowing the wealthy to avoid taxes, fuelling corruption and economic woes in rich and poor nations, said ICIJ Director Gerard Ryle, adding that growing economic disparities are one symptom of this trend.
ICIJ has dwelled into the gathering of documents, which represent the largest inventory of inside information about the offshore system ever obtained by a media organization.
The full size of the files, measured in gigabytes, is more than 160 times larger than the leak of U.S. State Department documents by Wikileaks in 2010. A list of the personalities they have investigated so far are on their website with additions being made periodically.
Drawing from 2.5 million secret files, the organization helmed “what may be the largest cross border journalism collaboration in history, it notes on ICIJ.org.
The mega-rich use complex offshore structures to own mansions, yachts, art masterpieces and other assets, gaining tax advantages and anonymity not available to average people.
Many of the world’s top’s banks – including UBS, Clariden and Deutsche Bank – have aggressively worked to provide their customers with secrecy-cloaked companies in the British Virgin Islands and other offshore hideaways, according to the report.
What such reports and investigations underline is the need for countries, developed and developing alike, to foster frameworks of accountability that put a peg on greed. As populations increase and resources become even more finite the need for equitable development becomes ever more important. This means that tax collection and investment in public services such as education, healthcare and housing become ever more important.
Sustainable development cannot be achieved without inclusive law and order. Economic progress in the last two decades that have lifted millions out of poverty in the Asia Pacific region and around the world, but these programs depend on equitable distribution of income, which is in turn dependent on tax collection.
In such a scenario governments have a responsibility as never before to be accountable to the people and put their interests first, which means that corruption, has to be bottlenecked. This, as the report proves, is a significant challenge and in fact a universal one.
Better media freedom is one aspect that would need attention in this regard as transparency and access to information means that people are better informed and have the capacity to lobby for tougher action against offenders. Another unintentional but important result could be an increase in corporate accountability as conscious consumers could stay away from unprincipled companies. A stronger and impartial regulatory framework would also demand that multinationals as well as local companies take greater care of the work that they are doing in all parts of the world.
The consciousness for financial accountability is undoubtedly growing in the Asia Pacific region and this is a positive development as it would give as much as one fifth of the global population and chance at a better life. What better reason is there to be honest?
Uditha Jayasinghe
APD staff writer
