Editorial

The world was shaken up this week with the leaks of the ‘Panama Papers’ exposing the financial shenanigans of world leaders, past and present. They showed how such leaders of men, women and nations and their business side-kicks hid their embezzled wealth in tax havens around the world and thereby avoided paying taxes in their respective countries. They enjoyed the good life with their monies stacked in offshore banks, some using shell companies with front-men as the account holders, while their fellow countrymen and women were asked to pay their taxes.

This was an instance of cross-border journalism taken to a new level. A ‘whistleblower’ first providing a German newspaper with the original leak; the newspaper then contacting the New York-based International Consortium of Investigative Journalists (ICIJ) for assistance, and after two years of research by a team of as many as 400 journalists worldwide poring over an incredible 11.5 million internal documents and 2.6 terabytes of data spanning 40 years, more data than the Wikileaks that exposed US diplomatic messages, the Snowden Intelligence files, the Luxembourg tax files and the HSBC files combined — came up with these astounding revelations.

It was a stupendous achievement in journalism – a new version of Watergate – and a great embarrassment to political leaders worldwide. It has blown the lid off hidden wealth and corruption in countries across the globe even though some of these companies and accounts are legitimate ones.

Heads have already begun to roll, while others are fighting with their backs to the wall. The Prime Minister of Iceland has already thrown in the towel as the leaks showed his wife to have hidden undeclared wealth in an offshore company avoiding taxes in her country. Iceland faced a major economic slump a few years ago and Icelanders were sent reeling into economic recession –and this is what their political leaders were up to. The British Prime Minister is in an embarrassing situation with evidence that his rich father operated an offshore company for 30 years without paying taxes in the UK and the PM was a direct beneficiary as a share-holder. The Russian President is accused of having such overseas accounts through a business oligarch and the Pakistan PM is answering questions about his children’s offshore accounts. The President of Ukraine has been named. In China, the official word is “no comment” to questions about its own leadership, the emirs of several Gulf states are on the list, and the list continues to unfold.

The question in this country is; are any Sri Lankans on the list? Whether that is the case is yet to surface. This week websites erroneously ran a list of Sri Lankans named by the ICIJ. This list was not from the ‘Panama Papers’. Panama is a notorious tax haven very much under the influence of the US. Those in the shipping industry are familiar with the fact that the Panama flag is used on vessels that have no nationality. Sri Lankans are likely to have invested their monies in the tax havens of Europe (Gibraltar, Virgin Islands, Luxembourg), West Asia (Dubai) and Hong Kong, not so much in the Caribbean or Latin American countries.

The latest revelations have shown a dis-connect between the rulers of many countries and the people – even in western democracies, and a growing resentment and frustration against the political and business elites by the ordinary citizen; the gulf between the political set and the ordinary members of society has indeed widened.

The news of politicians and businessmen spiriting out money and parking them in shell companies or offshore banks is not an entirely new phenomena. Sri Lanka’s police have investigated cases that have ended up as far as a ‘B’ Report, but it has not proceeded further. Sri Lankan courts were not long ago briefed of a case involving a businessman who ran a web of companies and was found guilty by the Supreme Court of Gibraltar of holding US$ 200 million (Rs. 3,000 million) in an account illegally. Even though Presidents past and present have been informed of such transactions nothing has been done to bring to book the persons involved, nor to see that the country got the monies back. Why? Because these businessmen are too entrenched with the political leaders of Sri Lanka – and vice versa – from all sides of the political divide – paragons of virtue otherwise, who just cannot buck the ‘system’; political leaders who are the recipients of the largesse of a part of this undeclared wealth, by way of what is euphemistically called ‘party donations’ or ‘political contributions’.

These businessmen are fond of boasting how the country’s political leadership is in their pockets and already the new Government is beginning to face accusations that it is old hooch in new bottles; it is ‘business as usual’.
It has something to do with the country’s political system; in fact, it is the ugly side of democracy and elections and electioneering. Politicians need money for politicking and the country has no in-built mechanisms to control the purchase of politicians. It is a well-known fact that the biggest bribe-takers in this country are the mainstream political parties.

Years ago, S.W.R.D. Bandaranaike speaking in the State Council supporting a resolution brought to impeach six councillors for bribe-taking said that only the small man is sent to “ravenous wolves” for bribes while everything is done to protect the influential. More recently, President J.R. Jayewardene sacked a fairly innocent MP from Hewaheta for getting involved with a gold smuggler. A more powerful minister was also sacked for interfering in a tender, only to be brought back as the Speaker. Nowadays, politicians protect themselves from investigations by jumping to the governing party that is looking for a majority in Parliament and corrupt businessmen are insulated from prosecution by insuring themselves by hiring powerful politicians and making ‘party donations’.

Even if the ‘Panama Papers’ disclose the names of Sri Lankan political and business hot-shots, it will only be of titillating news value to the public. The mud will not stick for long and a public anaesthetised to such happenings will not be in for too great a shock.

In the wake of the ‘Panama Papers’, the US President referred to tax evasion (illegal) – and tax avoidance (legal but unethical) as being a major issue for his country’s economy. How much more then in economically developing countries like Sri Lanka.
In the face of all that is going on, when well-known business leaders are holding advisory positions in Government ministries – and only past administrations rogues who do not have entre’e to the current political leadership are being hounded, it is justifiable for people to ask why there are sacred cows still roaming free. That is why Bribery Commissions and FCIDs all put together are fast losing their credibility as effective anti-graft vehicles.

When this newspaper revealed a previous ICIJ investigation into Sri Lankans with Swiss bank accounts in violation of the Banking Act, the Money Laundering Act and all the Central Bank and Inland Revenue laws, Government leaders conferred on what to do – how to at least bring the money back – and decided – to do nothing.

But the ‘Panama Papers’ was a moral victory for investigative journalism the world over. In our increasingly digital world, a pen-drive is enough to obtain gigabytes of hidden information about hidden wealth. And at least that ought to be an element of a deterrent to the world’s political and business leaders creaming the fat off the land of their birth.