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Lots of Malaysians in Panama Papers
More than 2,300 individuals or entities are found in Caribbean shell companies
At least 1,784
Malaysian individuals or master clients – including the Sultan of Johor
and the sons of three prime ministers – and another 517 offshore
entities are among the 215,000 names found in the Panama Papers, the
11.5 million documents taken from the Panamanian law firm of Mossack
Fonseca & Co.
The files were made public on April 3
by the International Consortium of Investigative Journalists, which
worked with more than 370 journalists from 76 countries for more than
two years to identify the individuals and companies with hidden
accounts. Mossack Fonseca, with branches in Miami, Zurich, Hong Kong and
more than 35 other countries, is considered one of the world’s top
creators of shell companies.
The release of the names, including
Russian President Vladimir Putin, the father of British Prime Minister
David Cameron, Argentine President Mauricio Macri and hundreds of other
notable figures including athletes and actors, has set off a storm
across the world, forcing the resignation of Iceland’s prime minister
and giving new impetus to legislation in the US requiring the beneficial
owners of shell companies to be named.
Mossack Fonseca Says No Laws Broken
A Mossack Fonseca spokesman has denied
any attempt to defraud, saying the law firm provides services that “are
widely available and commonly used worldwide. It is legal and common
for companies to establish commercial entities in different
jurisdictions for a variety of legitimate reasons, including conducting
cross-border mergers and acquisitions, bankruptcies, estate planning,
personal safety, restructuring and pooling of investment capital from
different jurisdictions in neutral legal and tax regimes that does not
benefit or disadvantage any one investor.”
The documents, according to the
Organized Crime and Corruption Project, cover nearly 40 years, from
1977 through the end of 2015, allowing a “never-before-seen view inside
the offshore world — providing a day-to-day, decade-by-decade look at
how dark money flows through the global financial system, breeding crime
and stripping national treasuries of tax revenues.”
The ICIJ project is careful to say
that ownership of an offshore company is no evidence that a crime has
been committed. However, the fact that 2,300 Malaysian individuals or
entities of various hues and aromas maintain accounts through Mossack
Fonseca is an indication of the massive capital outflows that have
plagued Malaysia for decades.
According to the Global Financial Integrity NGO, the country ranks fifth in the world,
behind such giants as China, Russia, India and Mexico, for illicit
capital flight. Nearly half a trillion US dollars – US$418.54 billion –
left the country between 2004 and 2013, the last year for which figures
have been recorded. Malaysia remained in fifth place for the entire
10-year period.
Outflows, which hit US$48 billion in
2013, are believed to have picked up as the country’s political
situation has deteriorated over the past two years. While central bank
reserves are healthy, they have been falling steadily for months, from
US$136 billion in July 2014 to US$95.63 billion today, equivalent to 6.8
months of imports, according to the World Bank.
And, while decisions to move money
overseas may not be illegal, they deprive the country itself of funds
for investment and development. Some of these outflows are likely to be
non-Malay flight capital – mostly Chinese – which prefers expensive but
seemingly secure assets in Australia, the US or even London to the
higher returns which ought to be available in younger, faster growing
Malaysia although post-colonial rhetoric aside, plenty of the Datuks,
Tuns and Tan Sris retain a love for London.
Among the Names
Some of the most notable names among
the individuals and entities are Kamaluddin Abdullah, head of Feldspar
Holdings and son of former Prime Minister Abdullah Ahmad Badawi; Mirzan
Mahathir, son of Mahathir Mohamad; and Mohamad Nazifuddin Mohamad Najib,
son of the current prime minister, Najib Razak. Mahathir’s
brother-in-law, Mohammed Hashim Mohammed Ali, the onetime head of
Malaysia’s military.
Others include Sultan Ibrahim Ismail
of Johor; Abdul Aziz bin Tawfiq Ayman, husband of Bank Negara Governor
Zeti Akhatar Aziz; Muhammad Muhammad Taib, former Rural and Regional
Development Minister and UMNO information chief, who since has joined
the opposition Parti Keadilan Rakyat; and Lim Kok Thay, the current
managing director of Genting Group; Abdul Halim Harun, former chief
executive of UMW Holdings, one of Malaysia’s biggest conglomerates;
Sharifuddin Hizan Zainal Abidin, former Group Managing Director of Felda
Holdings Bhd; and Khoo Kay Peng, one of Malaysia’s richest tycoons and
head of MUI Group.
The list also includes the late
Hussain Najadi, the founder of what was first known as Arab Malaysian
Bank, later Ambank, who was murdered under mysterious circumstances in
2013 after complaining, his son has charged, about corruption in the
United Malays National Organization. Police said he had been killed in a
land dispute. The late Tan Tiong Hock, the former Malaysian Chinese
Association secretary general, who died in 1985, is also on the list, which can be found here.
The flow of currency into the Panama
entities is hardly the only destination for money fleeing Malaysia. As
Asia Sentinel reported in 2013, estate agency Jones Lang & Wootton
reported that in 2012 Malaysians accounted for 17 percent of all buyers
of new top-of-the-line central London dwellings.
In other words almost as many
Malaysian are buying as Britons, who themselves accounted for only 19
percent of this market. Identifiable Malaysians figured as buyers of One
Hyde Park, the most expensive new building in London overlooking Hyde
Park and others probably lie behind the various anonymous offshore
companies which figure as owners of most of the owners of apartments
ranging in price from US$12 million to US$50 million.
Whether there will be political
fallout from the list in Malaysia is another question. The country has
been enduring what seems like an endless corruption scandal over the
state-backed 1Malaysia Development Bhd. for almost two years, plus an
unexplained US$681 million in Najib’s personal accounts that appeared in
2013 before most of it disappeared back out a few months later into the
branch of a Swiss bank in Singapore, then vanished for good. So far,
the prime minister appears bulletproof. He is likely to remain that way.
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