Panama Papers and weary regulators in Thailand

The Anti-Money Laundering Office (AMLO) all of a sudden has a tightrope to walk following reports of Thai connections in the leak that is rocking the world.

The names of 16 Thais have been found listed among the huge trove of documents revealing individuals and entities from countries around the globe who set up secret offshore accounts. Thai authorities’ response to the revelation has been too cautious for my liking. Acting AMLO chief Police Colonel Seehanart Prayoonrat wondered if the 16 confirmed individuals had committed any wrongdoing while Deputy Prime Minister Wissanu Krea-ngam suggested some might even have legitimate reasons for parking the funds abroad.

I’m no financial genius so please forgive the naivety of my question to Seehanart and Wissanu: What could be legitimate reasons for moving enormous funds out of Thailand to shell companies offshore?

There’s a big difference between saying, “there could have been legitimate reasons” and actually giving full and detailed explanations of those reasons. Please educate me on why it might be “legitimate” to hide my money from the Thai government. Please look the Thai public in the eye and say it’s all right for me to move Bt1 billion to a secret account overseas so that I can pay the less tax for what I actually have, for what I have done, and for what I plan to do.

Everyone wants to pay less tax, myself included. But it’s one thing to “not want to pay”, and another to go as far as the Cayman Islands to actually avoid paying it. Amid all the preaching about equality, justice and democracy, can anyone tell me how it is equal, just and democratic for the wealthiest few to sneak funds out of the country and pay less tax while the poor folks have to pay in full?

One phrase that keeps popping up after the expos้ of offshore finances is, “It might be unethical, but it’s not necessarily illegal.” The problem with that is it suggests exploiting loopholes is okay. Again, the loopholes are expensive to open and out of reach of the vast majority. If an office worker or farmer could exploit the same loopholes, the apology over legality might sound more acceptable. But as things stand, a more accurate statement would be, “It might not be illegal, but it is unjust, unequal and undemocratic.”

A “Panama Papers for dummies” video clip ends with an interesting comment: “These tax havens are usually small countries that could be persuaded to clean up their act, but so far political leaders in big countries haven’t wanted to make them do it.” It depicts authorities in tax havens as lazy people who do nothing but collect fees in exchange for keeping financial secrets.

I’d like to add something here. It’s not just that the political leaders in the bigger countries don’t want to make them do it. They are afraid to make them do it.

Though the tax havens are small countries, they guard gigantic secrets. The Panama Papers have already set political leaders around the planet reeling, with in-depth investigation barely begun. My point is that there’s virtually no way to make the tax havens clean up their acts, and the accounts’ owners should consider themselves lucky they aren’t being targeted for blackmail just yet. The entry of blackmailers could take this scandal to a whole new level.

The makers of the clip could have done better, though. While it does allude to “legitimate” reasons for stashing money in offshore accounts, the explanation of “privacy” is vague. In the world of business, “privacy” might be necessary for a planned offensive you don’t want your competitors to know about, but there are not many legitimate “private” investment plans that call for shell companies to be set up in other parts of the world.

If the 16 Thais named were investing legitimately, where and what were their investment destinations? Did they actually invest? If not, why? In the process, did they pay less tax to the Thai government than they would have if their money had been parked in Thailand? If the answer is yes, is that acceptable?

AMLO made the headlines for the wrong reasons nearly a decade and a half ago when it came under scrutiny for investigating “anti-government” journalists. The organisation was quite active back then, demanding bank information and personal details. I was never sure exactly how much money was involved, but I’m certain it’s a heck of a lot less than the cash mountains hidden among the Panama Papers.

The dictionary definition of money laundering is, “The concealment of the origins of illegally obtained money, typically by means of transfers involving foreign banks or legitimate businesses.” AMLO’s task, this time round, might look straightforward at first glance, but the line between ethical and legal behaviour might not be that easy to tread.