Columns

But where’s the proof that will stand up in court?

The sign board of Mossack Fonseca law firm in Panama City. Reuters

This week the world got its second instalment of the Panama Papers and Lanka received the names of 61 Lankans listed in that damning dossier. Immediately the call came from various quarters for stern action to be taken against the listed locals and Finance Minister Ravi Karunanayake promised that “each and every Sri Lankan” whose names were linked to the ‘Panama Papers’ and ‘Offshore Leaks’ would be investigated.

But who’s kidding whom?
Compiled and documented the Panama Papers may well have been by a group of journalists representing the International Consortium of Investigative Journalists (ICIJ) but as far as evidence goes to convict a named person for a possible criminal offence, is it worth the paper it is written on?

When the journalists decided to spill the beans and give the world the low down on the Who’s Who of Panama’s secret world of off shore accounts they achieved nothing more than shock the world, spur its outrage over the tax free super rich and move a few European ministers to call for tougher laws to see the end of off shore tax havens. Some optimistically demanded a register that would require all beneficial owners to record their beneficial interest in any off shore account.

The guarded secret was blown two years ago when an anonymous employee turned turncoat and leaked the entire global client data base of a Panamanian based law firm Mossack Fonseca which specialises in helping the world’s super rich hide their money. No one knows who the mole is, not even the journalists in the investigative team at the ICIJ. Known simply by a pseudonym John Doe, he or she first leaked the data to the German newspaper Süddeutsche Zeitung two years ago.

Thereafter, in the biggest media collaboration ever undertaken, it was investigated by the ICIJ for over a year. With 11.5 million leaked documents detailing financial and attorney-client information of more than 214,488 off shore companies, the Panama cache was promised to land and explode on the tables of the world’s rich and powerful. It did land but did it explode? Or did it turn out to be somewhat of a damp squib?

The first time Panama sent shudders throughout the world was when the earth literally cracked beneath her 15 million years ago. This geological phenomenon created the Isthmus of Darien and caused the formation of a narrow strip of land to separate the Atlantic from the Pacific Ocean. Due to the bend in the isthmus, it also became the only spot on earth where one could see the sun rise in the Pacific and set in the Atlantic. As far as the natural history of the world is concerned, the sudden formation of the isthmus, which in turn produced the Gulf Stream, is geologically significant.

The next time Panama sent waves of interest throughout the world was exactly 102 years ago when a 48 mile stretch of sod on the isthmus was cut to create the Panama Canal joining the Atlantic to the Pacific. In marine terms, this was akin to the mathematical discovery by Archimedes that the shortest distance between two points was a straight line or in the colloquial, as the crow flies; and the business and political decision turned out to be of great economic benefit.

Since then this former Spanish colony has weathered many a storm, even a US invasion in 1989 when the Americans arrested Panama’s de facto leader Noriega on drug charges but much water has flowed down its canal without spilling over to create a sensation that would hit the international newsstands.

If the geological phenomenon made the earth move for Panama 15 million years ago to create the isthmus and if the man made canal built on it had revolutionised regional shipping by being the gateway to the Pacific from the Atlantic 102 years ago, what exactly did the Panama Papers do when the story broke on April 3 but create a storm in a tea cup that made the world wonder what all the fuss was about after the frenzied excitement its much awaited publication stirred had fizzled out?

The fact that Panama played host to off shore companies was old hat in the first place. And setting up an offshore company is not in itself illegal. Neither is it evidence of any illegal conduct. All that the Panama Papers did was to reveal the names of the rich, the powerful and the famous who had striven to hide their money whether legally earned or ill gotten in untraceable accounts beyond the public gaze. The revelations only served to sate the curiosity of the masses and to refill the gossip grapevine with a few well-known names. The named, on the other hand, may well have been laughing all the way to their off shore banks to make another secret deposit, still confident that it will have to take more than an appearance on the ICIJ list to convict them in a court of law.

For the question is where’s the proof, that will stand up in court? The Panama Papers comprise illegally obtained information relating to attorney-client confidentiality and confidential banking and financial dealings. Illegally obtained evidence is generally inadmissible in court but even if it was allowed, will that alone suffice to nail the guilty?

Don’t forget that in any criminal case it is the prosecution that has to prove its case and it has to do it beyond reasonable doubt. In the face of a blank denial by anyone so named as having an offshore Panama account, the prosecution will have to get confirmation from the facilitating firm Fonseca that the named person indeed has an offshore account. Thereafter confirmation will have to be obtained from the relevant banks as to the existence of the named person’s account and to the amount of money held in that account. To make matters worse many of these accounts are in fictitious names and for the payment of US$ 17,500 per year, Mossack Fonseca will even provide a fictitious beneficiary to front the account, thus ensuring absolute anonymity to the actual owner of the account.

Will either party, Mossack Fonseca or the bank, volunteer that information? It will be worse than extracting feathers from tortoises. Consider a recent blurb of Fonseca’s promotional presentation: “Secure your wealth with an 82-year-old proven, virtually 100% courtroom-proof structure. This fascinating structure has managed to evade the slickest attorneys’ tricks and protect the wealth of individuals worldwide for the last eight decades.”

The recent Dubai experience — when a Lankan legal team went to the Emirates and sought court sanction to force a Dubai bank to reveal details of an account allegedly held by a Rajapaksa family member; and the refusal by the court to do so on the ground that the veil of Dubai’s banking secrecy could only be lifted if there was proof of conviction of that person in Lanka in relation to the monies stashed in the account — should make the local ‘crackdown’ force hold their verbal guns instead of firing from their mouths at random and raising public hopes that those corrupt will receive their just deserts in court soon.

In a typical point scoring exercise to demonstrate the Government’s steadfastness to upholding the principle that all are equal before the law and that investigation into possible criminal conduct will be done without fear or favour, the State Minister for Finance, Lakshman Yapa Abeywardana, stated on Tuesday, “The Sri Lankan government will not protect anyone involved in foreign exchange scams revealed by Panama Papers. President Maithripala Sirisena will never intervene to save anyone involved no matter whatever their status”.

Calling a special media conference to announce this hallowed gem of Yahapalanaya, Minister Yapa said, ‘Foreign exchange that belong to Sri Lanka cannot be siphoned off on any ground and it is an offence. In Sri Lanka, there are very clear laws in connection with offences related to foreign exchange frauds. These laws will be implemented in connection with the culprits and still more details are to be revealed on this issue.”

True, the laws are there, no doubt, but the problem is: where is the evidence? Would it not have been far better if the State Finance Minister had explained the enormous difficulty the Government’s investigative arm would face in gathering the required proof from the tangled web of international offshore financial operations which have been specifically designed and legally protected to shield the account holders from the reach of governments?

Would it not have been more meaningful if the minister had warned the people not to expect the FCID to come up roses given the adverse ground situation, rather than give a discourse on the impartiality of the present Government and extend a gratuitous character certificate to President Sirisena as one who will never intervene to save anyone from the due process?

In contrast to this, the Justice Minister Wijeyadasa Rajapakshe — whose close personal friend, arms dealer and boss of Avant Garde Nissanka Senadhipathi was also named in the Panama Papers this week as having an offshore account and with whom Wijeyadasa Rajapakshe and family shared a stretched limousine holiday in the Californian sunshine doing the MGM studios and Disneyland circuit in style a few years back — made no bones about the situation. President’s Counsel Rajapakshe’s position was that “One could operate offshore accounts legally.”

That is correct, provided of course if disclosure has been made in accordance with the Inland Revenue Act and it had not been used for tax evasion, or if the account holder had not violated the Money Laundering Act or the Exchange Control Act. According to the Justice Minister the existing laws in the country were sufficient to deal with such persons.

But what if the person named in the Panama Papers denies point blank that he has an offshore account. As stated earlier, it is for the prosecution to prove that he is the person so named? It is not for the named person to produce evidence to prove that he is not the person so named in a leaked document illegally obtained purporting to contain the database of a private company in Panama. What then?

The Government faces a typical Catch 22 situation, does it not?
To get a conviction in a Lankan court that a person has been named in the Panama Papers as having an undisclosed offshore account and that it has been used to evade taxes, or launder money or violate the Exchange Control Act, it will be necessary to first obtain evidence of the actual existence of the account and details of the amounts. Without official confirmation from Mossack Fonseca as to the actual existence of the account and confirmation from the bank details of that account, no conviction will be possible.

But the banks, as with the case of the Dubai bank where a Rajapaksa billion is alleged to have been stashed, are protected by offshore banking secrecy laws and can only be forced to disclose that information to the Lankan authorities if the person so named in the Panama Papers has been already convicted of an offence in relation to that account.

Thus it can be seen that nothing short of a voluntary confession from the alleged owner of the secret account would a conviction be possible. Silence of the defendant is not evidence of guilt and thus it can be seen that the best course of action for anyone is to zip the lips, stay mum, even play dead or simply do a Duminda de Silva and say, “ sorry, can’t remember a thing”. Note, even a fish gets caught only because it opens its mouth, it is said.

Thus all those 61 Lankans named in the second instalment of the Panama Papers as having offshore accounts have nothing to fret. Though government high ups and ministers may make a song and dance about their determination to bring them to the bar of justice, though they may prattle about the might of existing Lankan laws to convict them and though they trumpet the boast of there being no sacred cows in the Yahapalanaya government, all 61 of Lanka’s new exclusive elite can sleep in peace for even if they are guilty of any criminal conduct, the long arm of the law is too short to reach them. Thus they can strut around the cocktail circuit bathed in the envy of their less fortunate fellowmen and be fawned over as suave tycoons loaded beyond measure, with millions of dollars sitting pretty in off shore accounts.

The only people who have got affected by the revelations are the politicians. Ever sensitive to public opinion and the negative impact the taint of being named in the Panama Papers will have on their chances of getting reelected to office by the enlightened voters, some have been quick to admit their transgression and answered their accusers without resorting to silence or denials. British Prime Minister Cameron is one who rushed to produce documents to prove he had inherited it from his late father and that he had sold his shares in that off-shore company five years ago and that all taxes due to the British Government had then been duly paid.

No Lankan politician has so far been named. But if one had been named, it is unlikely that he or she would even bother to reply, except to proudly declare that he is the innocent victim of political vengeance. Given the mentality of the Lankan electorate, it would be considered a welcome bonus point to gather more votes at a future election. No such luck though for Iceland’s prime minister who resigned last month shortly after it was revealed that he and his wife had bought millions of dollars worth of Iceland bonds through their off shore company.

Even Russia’s Putin stepped in to defend his close political colleagues who were named in the Panama Papers and, in a TV show, did a Wimal Weerawansa. He dismissed the accusation that they were involved in a 2 billion US dollar operation as an ‘international conspiracy, orchestrated by the Americans and spy agencies to destabilize Russia and the dossier offered no proof of corruption.”

For the rest and especially for those innocents, whilst they can deny their guilt they can also never prove their innocence. For Mossack Fonseca will never release their official list. The firm will not confirm either way. Thus the innocents will have to treat this unasked new status symbol as a diamond crusted cross they will have to carry on the stairway to heaven for the remainder of their mortal life.

Having no other recourse to prove their innocence they will have to do what Justice Minister Wijeyadasa Rajapakshe’s close friend, international arms dealing Avant Garde boss Senadhipathi thought fit to do this week to prove his innocence. To clear his good name he was strained to issue a statement through his lawyers denying the claim that he had money stashed in a Panama off shore account and promising that, if anyone one found a single dollar in a Panama account, ‘he would gladly donate the monies to the person who finds it’ as a reward.

Oh, dear. What a load of trouble and pain of mind John Doe, the anonymous mole who wittingly let the cat out of the bag, had let fall upon the heads of the guiltless; and burdened them, for no sin of their own, with the wages of innocence.