Singapore, squeaky clean? It’s a SIN CITY …
Written by CPI
We are reproducing a commentary on the role of Singapore as a haven for illicit financial flows, including from Malaysia, by Singapore-born Tan Wah Piow who is currently practising law in London.
Tan fled Singapore in 1976 after being jailed for eight months for ‘rioting’ while he was a student leader campaigning for democracy and social justice, and sought political asylum in the UK.
His citizenship was revoked by the Singapore government in 1987. The commentary below was first published in the Temasek Review Emeritus.
By Tan Wah Piow
Singapore is “the jurisdiction of choice by people like us”. This boast by rogue lawyer Alvin Chong of Sarawak, caught on video by journalists from London-based Global Witness posing as investors interested in land deals, has gone viral.
The “people like us” presumably includes the minions and their corrupt politicians in Asia, as well as tax dodgers, and criminals who erstwhile had sheltered their ill-gotten wealth in Switzerland.
The stealth video exposes not just the rampant corruption in Sarawak, it also highlights how virgin forests are stolen from the people, and the arrogant contempt for the indigenous people by the perpetrators of such crimes. Viewers are universally shocked by the revelations.
Singapore, being the “jurisdiction of choice” where the corrupt deal would be executed, is implicated, not just by association – but by providing the legal framework which made such crimes possible.
So extraordinary is the expose that the video caricature of this rogue lawyer gleefully boasting about his corrupt exploits will become the defining image of corruption, deforestation, and the role of Singapore as the Sin City “of choice” for the likes of Alvin Chong.
This video has devastating consequences to those in power in Sarawak and indeed, the whole of Malaysia. It has also attracted worldwide attention, especially amongst the burgeoning environmental lobbies, and green movements and every organization in the West campaigning for transparency in financial transactions. Anti-tax evasion NGOs will now take a keen critical interest in Singapore as a financial centre.
The imagery of idyllic innocent tropical rain forests of Sarawak being traded for the glitzy cityscapes of Singapore is such a powerful contrast that Singapore Inc will now become an object environmentalists and anti-capitalists campaigners love to hate. This certainly is not the image of the global city that the people in Singapore cherish.
For this unfortunate consequence, the Singapore government has a great deal to answer for. Alvin Chong no doubt merely articulated what everyone suspects for a long time. But coming from the horse’s mouth stung Singapore Inc where it hurts because it needs to maintain the semblance of respectability in the international stage, especially before the IMF, Europe and USA. Such expose potentially could scare away lucrative foreign funds and super rich depositors if they become worried of the stigma of banking in Singapore.
It is also an unfortunate coincidence that in the same week as the expose was released, London Guardian newspaper carried a report of the resignation of French budget minister over his alleged secret account in Singapore from funds he was said to have hastily transferred from Switzerland. As noted in a Reuters report last year, “as cash-strapped Western governments increase their efforts to improve tax collection and Swiss banks are forced to open up their books, Singapore is facing renewed accusations that some of the funds flowing in may be illicit.”
Clearly, if the illicit money from Sarawak did find its way into Singapore as Alvin Chong confessed, the MAS (Monetary Authority of Singapore) would have to account to international bodies such as the IMF as to how it could happen despite its claim of having put in place anti-money laundering procedures. This could have serious ramifications to the integrity of the banking and finance industry of Singapore which provides more than 120,000 (5.5% of overall employment) jobs in over 700 financial institutions, accounting for more than 11% of Singapore’s GDP (2010 figures).
For an expose of such seriousness, the official Singapore response is certainly lackluster. The Ministry of Finance press statement denied that it did ever fail to cooperate with the Malaysian tax authorities when matters of tax evasion were raised.
The Ministry of Finance, however, kept a deafening silence on the central issue of whether illicit corrupt money had found its way into Singapore. Their failure to make any attempt to contact Global Witness to edit out any aspects of the video which are damaging to Singapore’s reputation is unusual.
The normally thin-skin Singapore government and their ministers had for decades indulged in libel suits against their critics in the Singapore courts. Suddenly the Singapore Inc officialdom has grown the hide of a rhino. The MOF and the MAS could, for example, seek an injunction in London court against Global Witness if Singapore’s reputation is tarnished by the insinuation in the stealth video. That will guarantee it an international platform and opportunity to protest its innocence.
Unfortunately, the likelihood of the Singapore government doing anything against Global Witness in London is realistically slim for obvious reason, yet the failure to defend its “honour” remains a lacuna.
The dear leaders in Singapore are aware that as a member of the international community, and the IMF, combating money laundering is, in the words of Min Zhu, the deputy managing director of the IMF, not only a “moral imperative, but also an economic need.”.
The laundering of corrupt funds from the Suhartos, Marcos, Chinese, Indians, Thais, Burmese etc benefits the few in Singapore, and lend comfort to the corrupt. But in the long term, Singapore is inadvertently helping to sow the seeds of social revolutions in those countries as taxes and funds from corruption, which could otherwise be deployed to pay for health, education and industrial developments in the respective countries, find their way into the bank coffers in Singapore.
As a tax haven, it transforms illicit cash into respectable capital. In the process, the local economies where the illicit funds originate, are drained dry, environment destroyed, and people impoverished. This is the reason behind the IMF economic argument to combat money laundering. It is therefore the height of hypocrisy for politicians to, on the one hand, decry the political and social instability in the region; while at the same time, be happy to act as the conduit for such proceeds of crime.
In the changing international mood and intolerance towards laundering of illicit money, Singapore’s quest to replace Switzerland is therefore regressive. Singapore is already on the radar of the American Human Rights Watch which accused it of laundering billions of dollars of Burma’s state gas revenues hidden from national accounts. [HRW 2011]
If Singapore’s future success as a global finance center depends on its ability to attract funds of questionable provenance, then at best, it could only take pride in transforming the little red dot into Sin City. That could be tremendously lucrative for Singapore Inc, but not necessary for Singapore. The trillions may be in the coffers of Singapore banks, but to the losers in the region, the island state is merely “handling stolen goods”.
I am sure the over 120,000 Singaporeans in the banking and financial services, and the corporate lawyers have the intellect to restructure Singapore as a progressive financial centre without having to bid for illicit funds. Other than paying lip service, the current government lacks the moral commitment, courage and political vision for a new world order whereby the economies of the region could be free of distortion and stagnation caused by corruption and tax evasions.
The Sarawak expose poses a challenge to Singaporeans to rethink the Sin City model.