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.

• READ MORE: The Pandora Papers – The secret keeper
• Other Pandora Papers reports

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.

What do some bankers and fund managers, a few senior government officials, a dozen top taxpayers, and a handful of companies located in the Philippines have in common?

They are among some 200 Filipinos, Philippine residents, and corporations that own or are linked to offshore accounts in tax havens across the world, according to the “Paradise Papers” cache of 13.4 million confidential electronic documents that had been leaked and exposed this month.

READ MORE: PCIJ’s Malou Mangahas to speak at Pacific Media Centre’s 10 years On event in Auckland

While having offshore accounts is not a wrongdoing per se, in some cases, these may be used to avoid or evade tax payments in their host countries, hide unexplained wealth, or move illicit and fraudulent financial flows across borders.

The latest expose by “Paradise Papers,” which has led to stories by media outfits such as the BBC and the UK newspaper The Guardian, covers offshore investments made by the law firm Appleby and corporate service providers Estera and Asiaciti Trust in 19 tax jurisdictions in the world.

About 120,000 people and companies are enrolled in “Paradise Papers,” including Philippine citizens, residents, and business entities.

Leaked papers
The “Paradise Papers” data files were leaked to the German newspaper Süddeutsche Zeitung, which shared these with the International Consortium of Investigative Journalists (ICIJ) based in Washington, DC, and its global reporting network of over 380 journalists from 100 news organisations, including PCIJ.

PCIJ reviewed the list with special attention to apparent transparency and accountability issues. PCIJ thus sent inquiry letters to about a dozen individuals who had served as senior state officials, donated to candidates for president, own or run major corporate entities, or are tied to contracts with government.

Not all the Philippine accounts are active as of the current year. Most accounts are listed to be operational still while some turned out to have been dissolved already, according to those PCIJ reached for comment.

PARADISE PAPERS: For the full list of persons and companies, check out ICIJ’s Paradise Papers database

This is the second round of PCIJ reporting on offshore accounts with ICIJ. In 2013, PCIJ wrote about the offshore ties of then re-electionist Ilocos Norte Gov. Maria Imelda “Imee” Marcos, then senator Manuel “Manny” B. Villar Jr., and then senatorial candidate Jose Victor ‘JV’ Ejercito. They all failed to disclose their interests offshore in their Statements of Assets, Liabilities, and Net Worth.

Five of those PCIJ sought for comment, as well as replies from the law and accountancy firms that had assisted them, invariably disowned or denied any wrongdoing had been committed in regard to their offshore accounts.

But Filipino and Philippine-based offshore account holders may have nothing to worry about for now. At present, the Philippines has neither law nor rules, nor any effective regulatory framework for monitoring or even recovering taxes possibly due from monies in these accounts.

Split opinion
Also, between former and current finance officials, there is a split opinion on what the Philippine government should do to regulate such accounts and to run after their owners.

Interviewed recently by PCIJ, former Internal Revenue Commissioner Kim Jacinto-Henares said that in her view, when someone or some entity opens an offshore account, that should raise concern at once among government officials.

In contrast, Finance Secretary Carlos G. Dominguez — who admits his connection to an offshore account himself until 2001 – told PCIJ that “there is nothing illegal per se about these accounts… and we are not about to declare them illegal”.

“Actually,” Henares said, “nobody can stop you from incorporating anywhere in the world.” But, she said, “the question is if that company has an asset that matches (its) net worth.”

She pointed out, “The important thing to ask is if the tax for that had been paid, and second, did it come from questionable deals. Kasi ‘yung galing sa masama rin, hindi mo rin binabayaran ‘yung buwis (Because if it came from something illegal, you wouldn’t pay the tax due).”

Why hide monies?

Henares continued: “Ibig sabihin, hindi mo siya maipasok mainly sa pangalan mo kasi hindi mo ma-explain saan nanggaling ‘yung income, saan galing ‘yung pera. ‘Yun lang naman ‘yung tinatanong d’yan, pero itself, wala namang problema (In other words, you couldn’t place it under your name because you won’t be able to explain where the income was sourced, where the money came from. That’s really the only question there, but itself, there’s no problem).”

It’s a question, according to her, of what would drive someone or some entity to open an offshore account. “Siyempre, medyo may tanong lang na ano bang objective mo (Of course, there’s a bit of a question there on what really your objective is),” Henares said. “Parang lahat ng tao feeling nila na kapag Pilipino ka, naiisahan mo ‘yung gobyerno mo. Bakit mo ginagawa ‘yan? (So everyone starts feeling like, if you’re a Filipino, you can easily put one over your government. Why do you do that?)”

‘No law, not illegal’
Dominguez takes the contrary view. Indeed, he said that there is no clear, cogent legal framework to regulate offshore accounts, but getting one “would require legislation by Congress.”

At the moment, he said, “we’re all focused on the tax reform bill until December.”

“But really,” Dominguez said, “there is nothing illegal per se about Filipinos or Philippine residents opening accounts overseas.” Still, he said that “when information like this comes out, then we look at it case by case.”

“In truth, there is nothing illegal about it,” Dominguez said. “It is legal, and we are not about to declare it illegal.” He then cited one instance when he was told that a friend of his staff had planned to open a dollar account in Hong Kong to buy bitcoins. Recalled Dominguez: “I told her, ‘Go ahead, that’s okay’.”

These comments by the Finance Secretary came on the fourth time that PCIJ had called him in the last month, to follow up on a request letter for an official opinion on offshore accounts from his department.

PCIJ mailed its letter to Dominguez last November 8, prompting a quick call from him; at the time, though, he was still in Vietnam for the Asia-Pacific Economic Cooperation Summit (APEC).

Working group promise
He promised then that he would organise a technical working group of his staff, as well as officials of the Bureau of Internal Revenue, and — if they would agree, he said — of the Bangko Sentral and the Anti-Money Laundering Council.

The ASEAN (Association of Southeast Asian Nations) Summit intervened and kept Dominguez busy for a week. He received PCIJ’s second and third calls during the week, however.

Last November 16, he said, “My staff will write you a letter. We discussed this yesterday. There is no law prohibiting anyone from opening offshore accounts. It’s allowed by law.” Offshore accounts “may be a tax leak for us,” Dominguez said, “but it is a small leak.”

He added that offshore accounts are a lesser problem than tax incentives that some companies and sectors have been enjoying for so long. “We have a list of tax incentives given, and you’d be surprised how big those amounts are,” Dominguez said. “Some have been receiving tax benefits for over 40 years.”

Tax leakage on account of incentives given to corporations is, in Dominguez’s view, “a more important issue than someone buying, registering a plane or cargo vessel — that is a one-off thing.”

In an offshore leaks database reported in 2013, Dominguez’s name had actually come up as an offshore account holder. The company listed in his name was called Radstock Corp.

Connection admitted
When PCIJ asked Dominguez about this, he promptly acknowledged his connection with Radstock.

“I saw that before,” he said. “I was involved with them a long time ago, 2001 ‘ata.” As he recalled it, his engagement as a director of Radstock was connected with a project of the Philippine National Construction Corporation.

Like Dominguez, many other finance experts say that offshore accounts are legal. They also note that these are rather common among multinational enterprises with global operations.

Yet when account holders turn to tax havens offshore to avoid or evade paying taxes, hide illicit wealth, and conduct illegitimate or abusive financial flows in secret, they cross over to forbidden territory in law.

Evade, avoid taxes
International companies, finance experts say, operate in tax havens to be able to transfer the taxable income to jurisdictions where tax rates are lower. Companies that make profits in the Philippines, for instance, can transfer these to other jurisdictions. This means that what should have been part of the tax base of the Philippines becomes instead part of that of another country.

Tax havens also use secrecy as a prime tool to hide identities. Individuals and entities can hold shares in offshore companies without being identified, unlike in the Philippines where incorporation and registration records are public.

Too, one can sell shares offshore without having to pay capital-gains tax.

Secrecy jurisdictions provide structures that enable people or entities to skirt or undermine laws of their home country or jurisdictions elsewhere. In the Philippines, the lack of a legal and regulatory regime over offshore accounts makes it difficult for government to run after tax evaders and money launderers.

According to the Tax Justice Network, between $21 trillion and $32 trillion of private financial wealth is located, untaxed or lightly taxed, in tax havens around the world. Illicit cross-border financial flows have also been pegged at $1 trillion to $1.6 trillion per year, a huge amount compared to the $142.6 billion in global foreign aid in 2016.

Founded in 2003, Tax Justice Network or TJN is a UK-based independent international network that conducts research, analysis, and advocacy on international tax, the international aspects of financial regulation, the impact of tax evasion, tax avoidance, tax “competition,” and tax havens. Not aligned with any political party, TJN has global and regional partners in Africa, Asia, Africa, Europe, Latin America, and North America.

TJN has a Financial Secrecy Index that ranks jurisdictions according to their secrecy and the scale of their offshore financial activities. The higher the rank, the more secretive financial activities are in the country.

The scoring is based on an assessment of 15 secrecy indicators that can be grouped around four broad dimensions of secrecy: knowledge of beneficial ownership, corporate transparency, efficiency of tax and financial regulation, and international standards and cooperation.

Of the 92 countries surveyed by TJN for its 2015 Index, Bermuda was ranked No. 34 and Isle of Man at No. 32. The Philippines was 46th. Switzerland, Hong Kong, and the United States are first, second, and third, respectively.

The Financial Secrecy Index reveals that the stereotypes of tax havens are misconceived. Said TJN: “The world’s most important providers of financial secrecy harbouring looted assets are mostly not small, palm-fringed islands as many suppose, but some of the world’s biggest and wealthiest.”

Wanted: Evidence
As of this posting, PCIJ has yet to receive a written reply from Dominguez himself, or even from the “technical working group” that he said he plans to convene to study the matter of offshore accounts.

He tossed PCIJ’s query letter to Finance Undersecretary Antonette C. Tionko, who recently replied to PCIJ. She said in part that they had “gone through the attached list which contains names of Filipinos and a few foreign corporations which appear to have Philippine ownership (although this is not clear considering that only the name of said corporations are provided).”

“Please note,” Tionko said in her letter dated November 22, “that under Philippine tax laws, income of Filipino citizens are subject to Philippine income tax regardless of where earned. On the other hand, only income of foreign corporations from Philippine sources is subject to Philippine income tax.

“Hence, if we assume that the listed corporations are all foreign corporations, evidence must be presented… that income is earned and not reported in the Philippines to constitute a violation of the Tax Code.”

She then asked for “further information” on the Filipinos on the Paradise Papers list. According to Tionko, information “such as purported types of investments, amounts of said investments, and the like will be relevant in determining whether or not there is a violation of Philippine laws.”

Global vs local firms
To Henares, meanwhile, big companies and top taxpayers who have offshore ties are not suspect. She is more concerned, she said, about those on the list who have no global business or reason to have offshore companies.

Asked Henares: “If you have no international corporation, then what are you doing there?”

Henares said that she welcomes having more information into offshore transactions primarily because without information and appropriate regulations, governments have no way of running after tax evaders who hide their wealth offshore.

The BIR, with Henares at the helm, had set to investigate Filipinos with offshore accounts following PCIJ’s 2013 report. But Henares said she could not recall updates on the planned investigation.

When contacted by PCIJ on the matter, BIR Assistant Commissioner Marissa Cabreros said that the Bureau cannot confirm or deny any information about it because its staff are bound by law to keep silent.

In any case, Henares said that the country’s strict bank secrecy law in a way already offers “a domestic haven” for people who may want to hide their cash assets. Tax havens offshore meanwhile offer options for people who may want to hide their ownership of properties.

“Let’s say,” she said, “without knowing how much they have in the bank, we already know they’re deficient by P1 million. What more if we have that bank figure? It would be much, much more ‘di ba? Then what more if we have the information about the international (accounts)? Then it could become much, much more din.”

Information exchange
The OECD Global Forum for Tax Transparency was specifically set up to address the risks to tax compliance posed by secrecy jurisdictions. Global Forum members, among them the Philippines, had agreed to implement transparency and exchange of information for tax purposes. This includes the Exchange of Information on Request (EOIR) and the Automatic Exchange of Financial Account Information (AEOI), which requires tax administrations to exchange taxpayers’ financial information.

Henares clarified, however, that the Philippines is involved only in the EOIR, which allows the BIR to exchange information only with a country that the Philippines has a tax treaty with.

The Philippines was reviewed as “largely compliant” in the first round of the EOIR review. But it currently has treaties with 41 countries only; it has no tax treaty with many of the popular tax havens.

The OECD and the Council of Europe also developed the Convention on Mutual Administrative Assistance in Tax Matters, which is said to be the “most comprehensive multilateral instrument available for all forms of tax co-operation to tackle tax evasion and avoidance.”

The convention not only provides for exchange of information, but also includes assistance in recovery, the service of documents, and facilitation of joint audits.

The Philippines signed onto the agreement in 2014 but has yet to ratify it.

The article was published by the Philippine Center for Investigative Journalism (PCIJ) and is republished here with permission.

The Campaign Against Foreign Control of Aotearoa (CAFCA) said today in a statement two “notorious tax havens” – the British Virgin Islands and the Cayman Islands – are among the top foreign owners of New Zealand companies.

“In both cases, they rank ahead of China, just to put it into perspective,” CAFCA said

“So who are the actual owners? They, of course, remain hidden or even ‘confidential’, because that is the purpose of tax havens,” said CAFCA coordinator Murray Horton.

“Who knows what dirty money and ill gotten gains, and from whom and from where, might be coming into New Zealand via these tax havens.

“But does the government care? Of course not, because it is ‘foreign investment’, which must, by definition, be a good thing. Don’t ask, don’t tell.”

New Zealand’s foreign control Key Facts:

“Statistics NZ figures, as of March 2015, list the biggest foreign owners of New Zealand companies as being from, in decreasing order: Australia, US, Hong Kong, UK, Singapore, Japan, Canada, Netherlands, British Virgin Islands, Ireland, Cayman Islands, China, Switzerland, Norway and France.

“All had over $160 million in foreign direct investment in New Zealand. These accounted for 96 percent of foreign direct investment in New Zealand and Australia alone accounts for 52 percent. British Virgin Islands and Cayman Islands are tax havens, and a Statistics New Zealand study showed that in 2010, large proportions of the foreign direct investment from the Netherlands, Singapore, Hong Kong and tax havens was in fact from other countries, led by the UK, US, Germany and Canada.

“In 2015, Other tax havens with investments in New Zealand companies include Vanuatu, Channel Islands, Liechtenstein, Bermuda and the Bahamas, but for all except Bermuda, the value of their holdings has been suppressed as ‘confidential’.

“Bermuda has shown a negative investment in New Zealand companies since 2009 (negative $1.8 billion in 2015). So has Germany since 2013. Negative investment suggests that the companies may have been loaded with debt to their parents or are technically insolvent.”

• The full CAFCA Key Facts plus tables
• The Panama Papers – the full ICIJ investigation

Last night’s Radio Waatea/The Daily Blog Fifth Estate on the Panama Papers, tax havens and money laundering.

The  Integrity Plus 2013 New Zealand National Integrity System Assessment (NIS) clearly described the concerns, says TINZ chair Suzanne Snively.

It also recommended straight-forward improvements to trust structures which to date have been ignored, she says.

“These loopholes allow people to hide money gained through crime and/or money-laundering using trusts registered in New Zealand,” Snively said in a statement tonight.

The Panama Papers are an unprecedented leak of 11.5 million files from the world’s fourth biggest offshore law firm, Mossack Fonseca.

They indicate that weaknesses in New Zealand business ownership structures are being exploited, says the TINZ statement.

According to the International Consortium of Investigative Journalists (ICIJ), which analysed the document trove, Mossack Fonseca’s services have been used to “facilitate massive money laundering, tax avoidance and criminal activity, including drugs and arms dealing”.

NZ named 60,000 times
New Zealand is named by the ICIJ as a “tax haven” used by Mossack Fonseca.

According to reports, New Zealand is mentioned more than 60,000 times in the documents.

The 2013 NIS analysed good business practice and then looked at the causes and the extent of possible corruption.

It noted that the creation of a new company in New Zealand is simple, low cost and can be completed in 30 minutes online.

This is a positive competitive advantage designed to attract good business to our shores, says the TINZ statement.

Related to this current tax haven scandal, the NIS also reported that there is:

• no requirement for permission to register or operate a private company in New Zealand, opening the door to criminal behaviour
• a lack of requirement for companies to identify their beneficial owners
• no trust registry and weak controls on trusts, allowing them to hide beneficial owners, bank accounts and other property which in many cases is not held in New Zealand.

Repeated warnings
“We have repeatedly warned that these factors are being exploited by overseas interests. They are setting up shell companies and trusts for those involved in corrupt and illegal activities, including tax evasion and money laundering,” says Snively.

“The recent amendment to the Companies Act 1993, while strengthening requirements to have a New Zealand director, fails to require companies to identify all their beneficial owners”.

She says trusts in New Zealand often do not come to the attention of tax authorities or law enforcement agencies because there is no transparent mechanism for reporting them.

They have no presence in measurements of funds held in New Zealand and are often hidden in solicitors’ trust accounts.

“The picture of New Zealand that emerges from the Panama Papers is another huge blow to its reputation as one of the least corrupt countries in the world,” says Snively.

“New Zealand’s trade – essential to our prosperity and the well being of our country’s residents – relies on our reputation for integrity.

“Immediate and substantial action must be taken by the government to demonstrate world leadership in restricting the flow of ill-gotten funds and assets”.

• The Panama Papers
• The full investigation
• PMC director speaks out on Panama Papers

By Alastair Wanklyn in Tokyo

It’s the shadowy world of secret international finance and tax avoidance.

“What we’re looking at here is really a parallel universe.”

This ABC Four Corners investigation will reveal how the rich and powerful exploit the system.

“What this really says is a lot about the system itself and how broke the system is and how crazy the whole thing is.”

Four Corners’ reporter Marian Wilkinson follows the money trail and it’s worth trillions of dollars.

“I was on their immigration stop list. But we’ve gotten in.”

— Marian Wilkinson, reporter

Confidential documents from the notorious Panamanian law firm Mossack Fonseca was made public on Sunday, exposing a vast web of offshore shell companies used by members of the global elite to evade taxes, hoard money, and skirt economic sanctions.

The Panama Papers: Secrets of the super rich, reported by Marian Wilkinson and presented by Sarah Ferguson, goes to air on tonight, April 4, at 8.30pm EST.

It is replayed tomorrow, April 5, at 10.00am and Wednesday 6th at 11pm. It can also be seen on ABC News 24 on Saturday at 8.00pm, ABC iview and at abc.net.au/4corners.

Al Jazeera reports:

A huge leak of 11.5 million documents from a Panama law firm reveals how the world’s rich hide their money, according to Germany’s Sueddeutsche Zeitung newspaper.

The newspaper on Sunday reported Mossack Fonseca, one of the world’s most secretive offshore law firms, said it had operated with impunity for decades in its efforts to help clients launder money and avoid tax.

The clients include current and former world leaders, politicians and celebrities.

“Over a year ago, an anonymous source contacted the Süddeutsche Zeitung and submitted encrypted internal documents from Mossack Fonseca, a Panamanian law firm that sells anonymous offshore companies around the world,” the newspaper report said. “These shell firms enable their owners to cover up their business dealings, no matter how shady.”

The documents, dubbed the Panama Papers, were obtained by the Munich-based daily newspaper. It shared them with the Washington-based International Consortium of Investigative Journalists (ICIJ) and other international news outlets. In total, some 107 media outlets in 78 countries investigated the data.

Largest data leak
“2.6 terabytes of data, 11.5 millions documents, and 214,000 shell companies: The Panama Papers are the largest data leak journalists have ever worked with,” Sueddeutsche tweeted on Sunday.

The documents link at least 12 current and former heads of state and 143 other politicians to illicit financial transactions.

Some 140 offshore companies are named in the documents are connected to politicians or public officials and their families.

The most widely circulated revelations from the Panama Papers shed light on the financial transactions that have contributed to the wealth of members of several world leaders’ inner circles.

Though the files appear to show how Mossack Fonseca – the world’s fourth largest offshore firm – helped clients launder money and evade tax, the company says it has never been accused of any wrongdoing.

#PanamaPapers

• Panama Papers probed – China limits access to news
• ABC Four Corners – The Panama Papers
• The Panama Papers: Massive leak reveals the global elite’s secret cash havens – Vice News
• Panama papers: How the rich hide their money – New Zealand Herald
• What are the Panama Papers: The biggest leak in history