5 July, 2022


Sri Lanka, Panama Papers & Secret Bank Accounts Of World Leaders 

By Sarath Wijesinghe

Sarath Wijesinghe

Sarath Wijesinghe

Panama is a tiny Nation with the population of 3.9 million and GDP of $ 47 / 47.3 Billon. It is a Republic in Central America gained Independence from Spain and Colombia to be a Republic. With the backing from USA she gained independence in 1908 after the controversial Panama Canal was built on the USA assistance and the army. It has been an undeveloped abundant fishing village with the capital as Panama City. It is the largest economy in Central America with human development ranking at 5th in Central America. It has become famous again with the revelations published by a consortium of investigative journalists ( ICIJ), on hidden assets invested in Offshore Companies, leaving Iceland’s Prime Minister Ducks, as one of the victims and casualties amongst others. FIFA Leaders, Putin’s Men, Cameron’s family members, Fitzgibbon who supposed to have ruined Azerbaijan, Top Chinese Leaders, Top USA personal and ballooners, Politicians, Spanish Ministers, are the names among the documents published known as “Leaked documents” accused to be parties of major transections on investments, money laundering, savings to avoid tax and other payments in their respective jurisdictions paying low taxes and maintain low profile. Panama became famous as one of the leading and prosperous offshore centres in the world with large and influential clients. Some Sri Lankan Names are also in the list published by the investigative journalists.

Offshore Companies Worldwide

Offshore companies are a part of the world banking system to invest with low taxes and away from respective local jurisdictions. Money invested could be legal and illegal. Funds raised from outside sources and local earnings with international connections in large sums have been invested in Tax Havens worldwide primarily to be in a low profile in own country and pay less or no taxes on the amounts’ invested. This is a common and frequently and openly used mechanism utilized by many countries in the world to be profiteering out of the funds belongs to others. It is an uncertain moot issue on the legality of the Offshore Companies and investments recognized by the governments. Australia, Bahamas, Bahaman, Barbados, Bermuda, Belgium, Brazil, Canada, France, Germany, India, Iceland, Isle of Man, Israel, Italy , Japan, Malaysia, Maldives Islands, Netherlands, Panama, Philippines, Russia, Singapore, Switzerland, UAE, USA, are some countries maintaining Offshore financial Centres legally indicating that it is a part of the game to attract investments of assets outside jurisdiction. Then what is the matter for ICIJ to investigate on the investors who are free to invest even small amounts mealy opening an account via email with identified or unidentified accounts. According to Wall Street Journal 60 US companies have $ 166 billion and 40% benefited from US Tax systems. USA is concessions and worried about money being pumping out of the country and have made strict guidelines for investments and even denouncing citizenship to be a citizen of a tax haven. USA Citizen to denounce citizenship to be a citizen of a Tax Haven have to forgo a major part of his wealth to the Government which discourages changing citizenship but proving this is a system legally accepted and practised in the united States. According to IMF sources $.9 Trillian in invested in Caribbean, $1 Trillian in Asia, $2.7 Trillion in London, USA and Japan,$ 2 Trillian in USA, Bahrain, Bahamas, Bermuda, Netherlander and Panama diluting the excitements of the issue as unusual and illegal. Though some cases have been initiated and pending we do not hear of any convictions so far.

Why Offshore

Offshore companies find funds, Assist and advice partners in changing law and mode of investments, Maintain low profile and secrecy, confidentiality with reliability, for the funds invested. It provides low or nil inherency tax, income tax, low rates of interest, or nil, safety and a peace of mind that the funds are save in good hands. It is set up and established by the vision of the visionary leader or/and influenced and utilized by major players. For example Panama was groomed and brought to this position by USA assistance politically and otherwise. Dubai, Singapore, Malaysia, and Barbados reached this position with the vision and visionary of Leaders who masterminded the success with forward thinking and dedication. Dubai once a fish market was brought to what it is today by the exploitation of the strategic situation in the Ares and improving service sector to international standards. With only 4% oil – unlike oil rich Abu Dhabi Dubai has transformed to be Hub for Tourism, Industry, Travel, Port, Aviation, Industry, and Investment and even in Education. Israel a tiny land of 1/1000 the of the Globe with no water 70 years ago is one of the most powerful Nations guiding Major nations on Hi Tec and Agriculture based on the innovations and exploitation of the human resources by visions and visionaries such and Ben Georgian – the Father of Israel who masterminded the success of the Nation to be what it is today. Singapore is another classic example of a vision and visionary of Lee U Kwan and Dr Mahathir of Malaysia. Therefore Offshore is a concept exploited by the visionary of the Nation depending on the political, economic and geographical situation ideally suits for small islands and Nations. Why not Sri Lanka?

Sri Lankan and Legal Situation on the issue in the public domain today and Way Out

Publication of the Panama papers has opened the Pandora’s Box with speculations and accusations on bribery corruption, money laundering, and illegal deals and transections by Sri Lankans. It is undisputed that bribery and corruption is the main enemy of the Nation spread as air with no checks balances and control. Advent of mega developments especially on infrastructure with IMF assistance and major economic players such as newly rich world financial leader New Business China, circulation of money has increased tremendously among Sri Lankans with lot of undeclared funds to hide and invest outside. At the same time there are Expatriate Sri Lankans who has legitimate earnings to be invested outside Sri Lanka due to uncertain and volatile economic situation changing for the worst day by day with devaluation of the currency. Sri Lanka needs a vision and a visionary to be exploited our geographic location in the main Sea Route that passes thousands of ships close to Sri Lanka, with ideal climatic conditions trained and educated labour, one of the most beautiful location and places of historical and aetiological interest, Forest, Wild life, different climatic conditions with change of few hours, Excellent infrastructure, Internal Harbours / Airports, and political stability after eradication of terrorism that engulfed the country for three decades, and a new economic and invest climate keeping pace with the world trends and realities keeping a balance on all areas. SI Lanka may be an ideal candidate to be an offshore centre having credited an excellent and steady banking sector undeterred when the entire Banking system crumbled including UK and west, during the dark days for banks- may be due to the application stringent rules and practices of the Sri Lankan Banking Sector.

Necessity for a Dialog and a Study on the Subject

It is undisputed that this is a matter to be studied aiming to be utilised within the framework of the legal parameter. Sri Lanka is strategically geographical and politically place and situated and what is lacking and needed is a vision and a visionary for the implementation we have to find dedicated and competent leadership with the distance and guidance of professionals and concerned citizens to lead. In order to meet the need a discussion/workshop is organized at the Auditorium of the Organization of professionals on the topic “ SRI LANKA AS A HUB OF INTERNATIONAL TRADE AND INVESTMENT” with speakers including (a) a former Deputy Governor of the Sri Lankan Central Bank and leading academic, (b) an International Lawyer and one time adviser to UN and Caribbean Countries on Offshore matters and a former Ambassador,(c) A retired Supreme Court Judge and an renewed Academic who has mastered the subject, (d) A lading Economist heading one of the leading Institutions on international and south Asian economic activities, and a retired world renewed economist from UN specialised on monitory matters will be among speakers at the event organized by West End Law Associates at the Auditorium of the Association with Organization of Professionals Association on 1st July 2016, from 6.00 pm to 8.00 pm. Entrance will be Free of charge and the event will be conducted both in Sinhala and English. Academics, economists, students and concerned citizens welcome to participate. Contact numbers for free entrance 0779529797/0777880166/2421752/30100064/0759030447

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Latest comments

  • 8

    Panama is no more a fishing village. Now they called it the Singapore of Latin America. They are using the Panama Canal’s income and it’s strategic location to built up a roaring country. Shipping and marine, shipping registry related businesses, offshore banking and finance, insurance, and tourism are bringing in boat of load money to this country. Recently, it’s on a property boom as well, the Americans, Canadians and Europeans are pouring money at rate into properties. To bring more investments into the real estate market they are offering easy second home residencies for foreigners.

    Offshore banking and finance is not a dirty word, only a small portion of it is used by the dirty and shady money. All legitimate businesses use it for legitimate purposes. Many countries in the developed world heavily tax their companies when they bring in their foreign earnings into the country, these are perfect legally earned and declared money, so long as it’s stay outside no tax, hence, they park it in Offshores.

    The value of the Offshore banking of Cayman Island is USD.2 Trillion. In Malaysia Labaun Island is a totally free financial area under the supervision of the Bank Nagara – the central bank , and anyone from any part of the world who has money could open a bank account there, and park his or her money, no question asked.

    Why, Sri Lanka wouldn’t use these things to earn money for the country instead of begging all over the world. Further it generate high paying jobs as well.

  • 7

    Overseas accounts are opened mainly due to two reasons.

    1 to avoid paying taxes
    2 to avoid getting caught to exchange control restrictions

    Sri Lankanas have opened accounts overseas due to ancient exchange control restrictions in the country. Almost every trader in Pettah has an account in Singapore and every top professional and businessman has an account overseas. This is unavoidable under present circumstances.

    Governor of the CBSL stated last week that he has put on hold almost 200 applications received for overseas investments due to our depleting reserves position. Imagine the position of an exporter who has earned foreign currency by exports but is unable to open a new factory in Bangladesh or Africa due to govt restrictions. An exporter has no choice but open an account in Singapore, Dubai, HKG or any other tax heaven to keep some his funds to carry on his business and to expand his business. We are becoming uncompetitive in apparels and there is no choice other than opening plants overseas. All large players have done this over the last 5 years.

    Infact the number estimated is around 10,000 accounts + in Singapore alone for Sri Lankans.

    Happy to note that govt is looking at abolishing exchange controls in the future when the reserve position improves.

    This is needed as of yesterday.

  • 2

    Jagath Fernando,
    Yes many Sri lankans have accounts in Singapore. Perhaps LKY was a visionary of the highest order. He knew we were going to be rogue country and allowed SLs to come freely. Whenever a rogue politico is caught and spend few weeks in remand, he is released by a very kind magistrate to get treatment for his grand mother in Singapore. When he returns everything is hunky-dory. Can we rely on our system when the finance minister using his powers release 400 luxury vehicles without charging tax properly. Can we rely on a PM who appoints people to investigate bond scams when investigator himself says he knows only James Bond. We needs trust worthy people to do these kind of things. Till then please do not dream.
    Has any businessman who got money transferred through central bank for overseas investment ever brought even a tiny fraction of their income back home?.

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