Samoa Observer: Pandora Papers show tax reform vital, but not just for Samoa

Pandora Papers - Samoa
The Pandora Papers ... "Samoa’s reputation as an international tax haven - a sunny place for shady people - is without parallel." Image: Samoa Observer

EDITORIAL: By the Samoa Observer editorial board

How strange that an Australian should have emerged as the face of Samoa in the Pandora Papers leak.

Accountant Graeme Briggs’ role in establishing Samoa’s reputation as an international tax haven – a sunny place for shady people – is without parallel.

His Asiaciti group advised rich people worldwide about how to minimise their tax burdens and he put Samoa on the map for these clients, in favour of traditional places such as the Canary and British Virgin Islands.

Samoa had a lot going for it, clients were told, including secret trusts and an effective tax rate for offshore companies of zero.

For his services to raising Samoa’s offshore profile, the government made Briggs Honorary Consul to Singapore for 25 years.

But the latest release of data from the International Consortium of International Journalists (ICIJ) includes thousands of files from Asiaciti and shows just how he managed to help already wealthy bank executives and businessmen pay nothing to their governments.

He denies any legal wrongdoing – and he is most likely right.

Tax minimisation is not illegal, nor is doing business internationally.

Many of the names you are reading in connection to the investigation – the King of Jordan, Vldimir Putin, former British PM Tony Blair – will face no consequences. Their accountants and lawyers will have made perfectly sure of that.

The complexity of tax codes in wealthy countries make complex maneouvres such as blind and investment trusts, shell companies and other tax evasion moves possible.

Why haven’t more Samoans been exposed on this list?

It’s a good question with some simple answers. Living in a tax haven only requires an overseas business partner to acquire the benefits of offshore banking. But more practically, as Samoa is officially listed as a tax haven by bodies like the European Union every business in the country, down to innocent non-profits are flagged in the ICIJ’s system; Australians who do their banking in Samoa, by contrast, stick out like sore thumbs.

That places a huge burden on Samoan journalists in identifying the financial maneouvres of those in the top one percent.

This raises questions about the government’s goose that laid the golden egg: the Samoan International Finance Authority (SIFA) – an agency which assures us it is cleaning its act up.

Ads currently on the internet offer users the ability to establish an offshore company in Samoa virtually instantly for prices as low as US$900.

Last fiscal year the authority recorded a profit of $23 million. Ten years ago the authority was bringing in close to $20 million a year. It is not a soaring growth industry.

At what cost do we price our reputation and dignity?

We doubtlessly have a tax code that has in-built favourability for tax evasion, precisely because it appears to have been designed, at least in part by Briggs himself.

Two leaked emails reported on by Australia’s public broadcaster tell the story of Briggs’ pivotal role in tax policy. One came from a senior public servant in Samoa, who described Briggs as the “grandfather” of Samoa’s offshore Industry.

In another, an Asiaciti employee brags that Briggs was involved in “setting up the structure and legislation of the Samoa offshore finance centre”.

That second email may have been a bit of hyperbole but it is hardly stretching the imagination to think that his influence was substantial, if not total.

Prime Minister Fiame Naomi Mataafa’s call for a review of the entire tax code is highly welcome.

But before we get too harsh on ourselves, we must ask who are the biggest tax minimisers and money launderers in the world and from which countries do they operate?

The most significant corporate tax crimes take place in countries such as America and aided by big banks and the world’s “big four” accountancy firms registered in England and Holland.

They have helped clients avoid tax for years. Banks and accountants are safe in the knowledge that a slap on the wrist awaits them if caught.

Nobody’s hands are clean. But other countries’ rule-breaking far outweighs our island nation’s because of its volume and sheer disregard for the law.

In the last year alone, many of Credit Suisse’s executives were criminally charged for accepting proceedings of drug dealing while the Spanish Banco Santander was fined €5.6 billion for failing to investigate the source of clients’ wealth.

Perhaps the most infamous case involved American firm Goldman Sachs agreeing to wholesale defraud the people of Malaysia by creating a secret fraudulent future fund.

Goldman helped the government steal US$1.2 billion which was spent on private planes, dozens of crocodile skin Hermes handbags, apartments in New York, London and Paris and even financing the film The Wolf of Wall Street before it was exposed.

These scams are nothing compared to the money brought in by SIFA. Like climate change the problem is global but Samoa has contributed to only a tiny fraction of it and has received undue attention for doing so.

Nonetheless we believe that we should cease our reputation as a go-to country for tax evasion as soon as possible because it is the right thing to do.

But we should also diplomatically remind our development partners that they are saying one thing and doing another on tax evasion.

It would take a comparatively tiny contribution of less than US$10 million to replace SIFA’s profits and go toward funding a programme to develop technical expertise that would create a new, legitimate financial services industry long into the future.

The Samoa Observer editorial on 8 October 2021. Republished with permission.

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