Robbing the masses - it's not just money
Updated: Oct 11
The global release of The Pandora Papers in October 2021, mirroring the 2016 release of The Panama Papers shows us that little has really changed in the world of international finance, money laundering, and the criminally unethical behaviour of the rich and powerful. It's all the more significant given the 2019 paradigm shift brought on by the converging global pandemic and climate change threat.
Opinions of experts, like Adam Hunt (below) and ordinary people are not too far apart when it comes to passing judgment on those for whom corruption and extortion are part of their power play.
The following appeared in The New Zealand Herald (7 October 2021), under the title
"The Pandora Papers and silver-tongued evasion"
Adam Hunt established the strategic intelligence functions of Inland Revenue [NZ] and the FMA. He founded New Zealand's leading anti-money-laundering service provider, and is a member of the panel of experts of the IMF working with developing nations, and is a member of the board of Transparency New Zealand.
Although Mr Hunt writes from the New Zealand perspective, what he says here applies equally well to other jurisdictions. His views are all the more important and relevant given the global reach and significance of The Pandora Papers.
The rich as pigs in a trough
"As the Pandora Papers has shown, and the Panama Papers showed us five years ago, the world of white-collar crime is riddled with language designed to soften the impact of the crimes alleged to be involved. We talk of evasion, laundering, layering, havens and Smurfs - all words that hide the impact of behaviours that hurt real people.
In most cases, it's hard to avoid the opinion that the people who decide to abuse offshore financial practices are thieves at best, and sometimes much worse.
Our tools for dealing with these problems spread across many laws and treaties. That fragmentation is not entirely an accident. The industries that thrive on these practices adopt strategies of big tobacco, oil and pharma, creating a confusopoly to divide and conquer, pitting nations against one another.
Tax evasion is code for stealing from our community. It's like robbing the KidsCan charity box on the counter of a cafe - it's not clear who the theft is against, but we know who suffers in the end. Supporting money launderers can be even worse, assisting slavers and child pornographers, those who prey on the weak and defenceless.
There are genuine reasons for some of the techniques involved and only some of the people who use these techniques abuse them and are devoid of ethics. In the same way that encryption enables free speech, there is an ideological argument that helping, say , a business-person get their profits into a jurisdiction where they won't be stolen by a corrupt government justifies the entire industry. But who gets to decide what is acceptable?
At the moment that judgment is largely made by the lawyers, accountants and banks. And they are just ordinary people with school fees to pay.
The other problem is practicality. What can we, as a nation [NZ], really do about what I have come to believe is abuse of our laws from overseas? Internationally, we are regarded as having a massive hole in our tax system; our almost unique lack of a capital gains tax - justified as too hard to administer, despite every other developed nation seeming to manage to do so. Remember those who said the digital services tax couldn't be enforced [in NZ]? Here we are collecting millions in revenue from it.
We often see the same argument applied to money laundering, that there is no point in passing laws that are easy to ignore; they don't have any effect; we are too small to have an influence, we should wait for the international consensus and move with them. The cynicism ignores that someone has to show leadership. There is nothing wrong with a principled stand; the absence of a silver bullet does not justify inaction. We still have a reputation for going our own way and leadership. Why not in this area?
The Financial Action Task Force has recommended NZ beefs up visibility of who controls companies and trusts: Let's do it. We could pass a Modern Day Slavery law. We should implement the recommendations of the 2016 inquiry into foreign trusts and close the hybrid loophole that enables them to avoid paying taxes anywhere. Perhaps most importantly it is time to look again at the industry that supports these practices.
Globalisation has democratised access to the concealment of wealth: What used to be the tool of royalty and upper classes has become accessible to the masses. Once a problem is allowed to get too big, systems lose integrity, and that includes democracy. "Everyone does it" becomes a self-fulfilling statement.
It's my firm belief the corruption and extortion behind dirty money often facilitate terrible environmental and social crimes.
People of the developing world rely on us to speak for them but we must keep our own house in order, for hypocrisy is the fastest way to lose the high ground.
That means sorting out the fragmentation in our regime for tackling financial crime, increasing transparency of trusts on-shore and off, and stepping up our regional leadership, even if it means annoying trading and security partners. It also means letting politicians know we want them to stand up to the industries that create these problems. Having these foundations empowers the caring majority of business and government leaders to take a stand and to the right thing."
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Meanwhile in Hong Kong...
For Hong Kongers amongst our readers, the two names that popped up in media reports pertaining to the SAR [I think Hong Kong can still be referred to in that way though it no longer has the promised autonomy that might have made it 'special'] may not have been a surprise.
It's harder than ever these days to unmask people of interest!
Specifically, Leung Chun-ying, or CY Leung as he is more widely known, says he did not claim to be earning shares in a Japanese company while still working as a Chinese executive. Tung Chee-hwa, a billionaire, is said to have started a maritime industry after retirement.
Unmasked! The shifty pair, Leung on the left this time, Tung on the right
CY Leung was Hong Kong’s leader between 2012 and 2017, while Tung was the city’s first official after Hong Kong surrendered China in 1997. He remained in charge until 2005.
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Not wishing to add fuel to any potential run C Y Leung may have in mind for a go at re-taking the role of Chief Executive (CE) currently held by Carrie Lam, I wonder how serious CCP is about rooting out corruption, conflicts of interest, or unethical behaviour of those in office. Of course the standards of decency and honesty held in communist China have been found frequently not to match those held in the west .
CY Leung, unlike another former HK CE found guilty of bribery while in office, has had accusing fingers pointing at him before, but has managed to keep his name 'clean'. It has not helped his reputation, however, for being vindictive, 'a wolf', or an attack dog for Beijing in his current job as vice-chairman of China’s top advisory body, the Chinese People’s Political Consultative Conference.
Diminishing Accountability, Corruption, and C.Y. Leung (Oxford Human Rights Hub)
Justice chief defends decision to drop CY Leung-UGL case (Economic Journal Insight)
According to Wikipedia:
In October 2014, investigative reporters from the Australian newspaper The Age, owned by Fairfax Media, revealed details of an agreement Leung had signed on 2 December 2011, which entitled him to payment of GB£4 million from UGL in exchange for his supporting the acquisition of DTZ group assets by UGL, for not competing with UGL/DTZ and making himself available to provide advisory services for a period of two years from that date.
The Age newspaper report stated that "the payments were made in two installments, in 2012 and 2013, after he became Hong Kong's top official'' but were not declared on Leung's register of interests. The payments relate to a deal in which UGL bought DTZ Holdings (the insolvent property services firm he was associated with), whose prospects depended on his network of managers and clients in Hong Kong and mainland China. Australian media also revealed that on the same day Leung signed the agreement, China's state-owned Tianjin Innovation Financial Investment Company had made a bid that valued DTZ at GBP100 million more than the bid by UGL, but that this more valuable bid was rejected by the DTZ board, which included Leung, and not released to shareholders.
In December 2012, nine months after winning the Hong Kong Chief Executive election, Leung received the first tranche from UGL.
Following the Fairfax Media revelations of this agreement and the rejected competitive bid, many more questioned Leung's integrity in the "secret transaction" signed a few days before his election, expressing concerns of potential conflicts of interest and fraudulent preference. Prosecutors from Hong Kong's Independent Commission Against Corruption started investigations into this scandal, as did authorities in Australia.
The abrupt and unprecedented sacking of Rebecca Li Bo-lan, a 30-year veteran graft-buster and the first female head of the ICAC investigative unit appointed in June 2015, fueled suspicions of Leung's attempts to impede investigation.
But is THAT UGL case related to THIS Pandora allegation?
Well, yes and no.
Some would say that where there's smoke there's fire!
Others merely attack politicians because they have the right to do so, and because those in authority so unwittingly make themselves such an obvious target for criticism.
What is most interesting, and noted by many in Hong Kong after the latest news burst out of the Pandora Box globally, was that in the city itself, the news was somehow muted in mainstream media. Other sources claimed Leung was a liar, or alleged that he sold shares for HK$2.3 million and used offshore accounts to dodge taxes.
On social media Leung quibbled about how he had not broken laws by putting assets into trusts, and that he did not exercise any decisive right over them. Basically, he responded as so many others ensnared in the Pandora Papers' findings have, showing that respective governments have neglected to legislate and police shady financial transactions, enabling the deceitful and unethical to take advantage of tax havens, and rob countless citizens and businesses. As Adam Hunt says above, CY Leung has stolen from the community - from the people of Hong Kong.
Unlike the theft from the public purse taking place through nefarious big ticket spending that mostly benefits mainland business, Leung's financial fiddling is all about his own personal gain.
Leung has not just taken money from the people, he contributes VERY SOLIDLY to our failing faith in politicians - to our distrust of government and its systems that are meant to serve us. He has stolen something perhaps less tangible than piles of cash, but more treasured by generations of HKers. Besides his exploitative tactics, Leung has aided CCP, is complicit in the denial of basic freedoms in HK.
Back in 2014, when sociopath Leung became CE, his supporters believed he would improve the lot of ordinary people in a city that has one of the world's widest wealth gaps. They were wrong.
"He wanted to present himself as someone from the grassroots, not linked to the tycoons... but people have been terribly disappointed," says Joseph Cheng, a professor of political science at City University of Hong Kong. (CNN)
Leung also failed to make progress on the universal suffrage that was promised to the city under the terms of its 1997 handover to China, and that so rankled HKers that tens of thousands of them took the streets in 2014, fomenting the umbrella movement and then later protests in 2019.
HKers have known all along where to point the finger of blame, and in reality the Pandora Papers hardly tells us anything surprising.