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.

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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.

More than 900 individuals and companies linked to the Philippines have figured in millions of files on offshore accounts leaked from finance providers, and which a broad group of journalists from 117 countries recently investigated.

An extremely small number of these accounts are tied to big businesses with legitimate sources, and whose reasons for moving and keeping their wealth overseas may be indicative of how the Philippine financial system has been slow on reforms.

The rest of the Philippine-linked accounts are mysterious at the very least.

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Some individuals, who are either previously unheard of in elite circles or never found in legitimate databases, turned out to be the beneficiaries of multiple accounts. The purpose of many accounts could not be ascertained.

On a global scale, the International Consortium of Investigative Journalists (ICIJ) – leading 140 media outlets in 117 countries in this latest investigation – found that fugitives, con artists, murderers, and world leaders used offshore accounts to hide wealth and buy properties.

Rappler and the Philippine Center for Investigative Journalism (PCIJ) parsed through all the names and companies from documents collectively known as the Pandora Papers.

Of the 14 offshore service providers whose documents were accessed by ICIJ partners, five had Philippine-based clients:

• Trident Trust
• Commence Overseas Limited
• Overseas Management Company Trust Limited
• Asiaciti Trust
• Alcogal

We found very little information about the people with the most links to offshore accounts in the ICIJ documents. (Check the complete list from the ICIJ here.)

Details were scant to be able to identify the purpose of 259 offshore companies, while at least 282 names from the list could not be linked to registered or active companies.

While Rappler and the PCIJ do not necessarily imply that illegal transactions were done through these companies of unknown individuals, we raise questions on the purposes of keeping these offshore.

Why go offshore?
It is legal for Filipinos to set up offshore accounts. These companies, however, operate in various shades of gray areas that are worthy of scrutiny from regulators.

A seasoned corporate lawyer who has wealthy clients acknowledged in an interview with Rappler and PCIJ that companies in so-called tax havens attracted both high-net worth individuals and criminals. He asked not to be named.

For one, the British Virgin Islands is an established favourable taxing jurisdiction. While the Philippines has recent laws which reduced estate and income taxes, the British Virgin Islands still has significantly lower rates.

“We have this client, she’s a matriarch, she owns shares of high value. Now, her concern is that she does not want to burden her children and grandchildren with taxes related to inheritance,” the lawyer explained.

“I think the tax could reach P30 million (NZ$900,000). What if you’re rich but not liquid? Where will you get that money just to inherit the shares?

“So I advised her to establish a trust, because, when those shares go into the trust, the trust will hold the shares for the benefit of your children…and effectively cut what could have been perpetual taxes once it goes down to the grandchildren and their children. That saves a lot of money.”

For another, the territory is very lenient when it comes to disclosure of ownership of companies.

‘Layering’ wealth
BVI companies can help in “layering” one’s wealth so as not to attract “too much” attention.

The lawyer, however, admitted that these functions operate within gray areas that corrupt individuals could abuse.

“It’s not wrong per se, but, like all other things, it can be used for bad purposes. For example, you’re a politician who got kick-backs, then you have lodged your funds here in the Philippines, it’s quite possible that the bank secrecy can be lifted during a litigation.

“But if you lodge it abroad, it would mean that the court may have to ask for cooperation from that country, that company or bank – that’s a lot of steps,” the lawyer said.

We reached out to the business executives we were able to identify on the list. They said that their offshore companies were either created for business deals or for cost and tax efficiency. Some remained dormant and were not used at all.

Moreover, corporate lawyers we spoke to pointed out that the rich have every reason to move their money out, as the Philippines’ laws “unnecessarily” taxed wealth several times over.

“While there have been reforms, the tax laws need to be improved further,” a corporate lawyer said.

Most importantly, moving assets abroad also provided some security for their legally-acquired wealth.

What’s fishy, what’s not
With the mix of the good and the bad operating within the BVI system, how does one tell which account holds dirty money?

“There really is no clear way,” said another corporate lawyer, who also wanted to remain anonymous so as not to “alarm” his high-profile clients.

“I have a client whose child was almost kidnapped because of their perceived wealth. Setting up an offshore account hides their money in a legitimate way from people who have bad intentions, while also keeping it accessible whenever they need the liquidity,” the second lawyer said.

Former Bureau of Internal Revenue Commissioner Kim Henares shared this view, saying that prominent names on the list may “not be an issue,” as these individuals could easily justify their wealth.

“But if a name does not come up on Google, but has lots of offshore accounts,” the second lawyer said, “I simply ask: What are you doing there?”

Moreover, the secrecy of the offshore system makes it impossible to distinguish which are tied to legitimate sources and which come from criminal activities.

ICIJ also pointed out that even legal transactions have to also be put into question. For instance, profits of businesses from high-tax countries are transferred to companies that only exist on paper in tax havens.

Does this put the host country like the Philippines at a disadvantage? Or are there gaps needed to be plugged in such countries and territories?

Unclear purposes
After careful investigation, Rappler and PCIJ found that the purpose of the majority of the offshore companies linked to Filipinos on the Pandora Papers are unclear.

The Philippines is not a unique case. According to the Paris-based Organisation for Economic Cooperation and Development (OECD), at least $13.3 trillion is held offshore.

Who’s who on the list?
The tree map here shows that most of the individuals on the list linked to the Philippines are unknown or have scant publicly available records.

The chart was made by carefully checking each name on search engines and databases and matching them with a company. These companies are then categorised per industry.

While the majority of the companies can’t be traced to prominent Filipino personalities or firms, we were able to identify 36 offshore companies linked to conglomerates and mall operators, some of which have responded to our queries.

The names of the Sy siblings of SM Investments Corporation, for instance, showed up on the Commence list and are linked to 10 offshore companies incorporated in the British Virgin Islands. Their companies were created sometime between 2002 and 2015.

The Gaisano family, which owns malls and retail outlets mostly in the Visayas and Mindanao, are linked to 12 companies.

The Commence list also indicated the Gatchalian family of the Wellex Group owning 10 BVI companies.

Some members of the Aboitiz clan were named owners of 13 companies. (View the responses of prominent Filipinos here.)

The documents were able to identify 156 Filipinos, 21 Chinese, and 9 Britons.

But the nationalities of 160 other names on the list cannot be ascertained. Almost all of these names, however, are Filipino and Chinese-sounding.

The Philippines has a long way to go.

While leaks via the Panama Papers and the Paradise Papers of 2017 have prompted legislators to follow the rest of the world in lifting the bank secrecy law, the Philippines continues to keep the lid on.

• CONTRIBUTORS TO THE ‘PANDORA PAPERS’ PROJECT: Carmela Fonbuena, Miriam Grace A. Go, Karol Ilagan, Elyssa Lopez, Pauline Macaraeg, Ralf Rivas, Felipe Salvosa
• Other stories in the Pandora Papers Philippines series

Reported in partnership with the International Consortium of Investigative Journalists and the Philippine Center for Investigative Journalism. Republished with permission.