Curb money laundering


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  • Monday, 02 Mar 2015

FOR most Malaysians, Sarawak and Sabah represent the archetype of the consummate Malaysian society for their celebrated harmony in both ethnic and religious diversity.

However, there is also one unflattering perception of these two states among other Malaysians, i.e. that they are home to some of the most corrupt. Last week, talk surfaced again (perhaps in tandem with the Prime Minister’s visit) that the state is rife with corrupt politicians and businessmen peddling their ill-gotten gains in dubious land transactions and timber extraction.

But before we get all defensive and dish out a dossier of denials, let’s first ask why such perceptions surfaced in the first place.

It’s obviously because some people here have a lot more money and assets than what they claim to have amassed.

The logic is simple. If I claim to get paid a normal amount but live in a palatial mansion, fly around in private jets or drive a car used to ferry heads of state, then there can only be two possibilities.

Either I have problems with my arithmetic. Or I have not been entirely honest with what I claim to have been paid!

Yes, we are familiar with the cliché that one must not just be clean but also seen to be clean, especially for those involved in the business of “serving” the rakyat.

But when elected reps live way beyond their means, there will obviously be suspicions as to where all that extra money came from.

To put it bluntly, the suspicion of money laundering will be at the back of most people’s heads, no matter how much the unfortunate politician tries to convince them that he or she (but mostly he!) had collected all that money from years of unspent school allowances in his personal piggy bank!

Now, having an obscene amount of money is not a crime, even for politicians. But when public money is involved, people need proof of legal enterprise.

The problem is that some politicians love to pretend that the money they got from their government to disburse to the rakyat is actually their own money.

This is why some of them insist on grand welcomes and grand garlands in soppy photo shoots whenever they disburse government grants – before telling people to be “grateful” for all that aid received while dancing the poco poco.

But I digress.

Since politicians are supposed to uphold the public trust, the onus remains on them to come clean and prove that their immense wealth didn’t originate from dubious sources.

The problem with money laundering is that it is so hard to detect. Some mask their dubious funds by breaking it into smaller bearer instruments before parking them in offshore financial institutions with upgraded banking secrecies.

I recall a former state government biggie who went Down Under after doing it (forgive the bad pun) – at least as far as his political career was concerned.

Another method of camouflaging funds is to park it in a cash-intensive business claimed as legitimate earnings, for instance service businesses where it’s difficult to detect discrepancies between cost and revenue, like car wash joints and parking lots.

Some have a hand in the massage business (sorry, bad pun again!).

Then there are the multiple directorships in shell companies and other corporate vehicles which conceal money, all to peddle those real estate scams where the rich guys purchase land and manipulate their selling prices before topping up the difference with dubious proceeds.

The most incorrigible may even park large sums of money in offshore tax havens before shipping them back as FDIs to exempt themselves from local taxation.

A less conspicuous variant of money laundering would be to transfer cash to a law firm as fees before cancelling the retainers. The dirty money is then remitted and surprise, surprise, matches the sum received from lawyers as proceeds of litigation.

While money laundering may have not reached epidemic proportions in Sarawak just yet, the state government must nip it in the bud, since the shadowy nature of money laundering itself makes the crime extremely difficult to prosecute.

Still, we have to be sure because perceptions alone cannot imply fact. We mustn’t be driven on accusatory rhetoric or ill-guided activism without objectively comprehending the scale of the problem and its associated effects on our financial integrity.

What the state government can do is perhaps to form a dedicated department under the purview of the Finance Minister to curb money-laundering activities.

The unit must function as an avenue for people to report suspicious people (not just the politicians) who appear to have more money that they can account for through legal transaction.

It’s perhaps also apt to introduce a state registry listing specific ownership of company equities in order to foster greater transparency.

Basically, this provides a legal structure to responsible financial reporting, instead of the usual “declare thy assets” challenges thrown about by politicians every now and then (usually to their political enemies!).

Financial institutions must also be compelled to identify and report all suspicions transactions, be it in logging, land transfers or real estate purchases, with civil fines to punish non-compliance.

I’d like to end by personally congratulating Tan Sri Adenan Satem for an excellent job done since assuming the office of Chief Minister last year. May Sarawak continue to not only enjoy the excellent reputation of racial and religious harmony but also one of financial integrity and economic credibility.


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