offshore companies, business interests and the need for transparency

In April this year the International Consortium of Investigative Journalists (ICIJ) announced that they have in their possession a database of offshore firms.  I had blogged about this back then.  http://article14.blogspot.sg/2013/04/icijs-offshore-files-singapore-link.html?showComment=1365318770280 A Singapore entity (Portcullis Trustnet) setting up trust companies was thrown up as a link by the ICIJ.  Portcullis has officially taken the position that its operations are perfectly legitimate and that no laws have been infringed. 

To be fair there are legitimate usages for offshore companies and one has to proceed carefully to avoid jumping to conclusions.  In June this year, ICIJ released their database and made it available in a searchable format online.  http://www.publicintegrity.org/2013/06/14/12833/icij-releases-offshore-leaks-database-revealing-names-behind-secret-companies

The link for the database is here:
http://offshoreleaks.icij.org/

Before I proceed further, here is a disclaimer by ICIJ:
"There are legitimate uses for offshore companies and trusts.  We do not intend to suggest or imply that any persons, companies or other entities included in the ICIJ Offshore Leaks Database have broken the law or otherwise acted improperly."

There will be a tendency by many to assume that offshore firms are used for the purpose of money laundering and tax evasion.  Whilst there is a possibility of such abuse, the truth is that the bulk of the companies are legitimate businesses using offshore firms for perfectly legitimate purposes. 

For the fun of it I decided to run a few local personalities' names through the database.  A random selection of our politicians (PAP and opposition) didn't throw up any information.  I tried some local law firms' names and a number of firms cropped up in the database.  It is likely that some of these lawyers were acting as nominees for their clients or that they were assisting in the setting up of offshore firms for these clients.  Whilst I was searching law firms' names, I decided to start keying in individual lawyers' names.  That was when I decided to try Mr K. Shanmugam's name. 

This is what I got:

He had been a shareholder and director of Ever Fortune Management Limited from 10 October 2005 and the company became dormant in Nov 2008.  The search reveals that there was another shareholder, Yao Mina, (not Yao Ming...  although that is what I thought I saw  :-)  )  who was the sole shareholder and director from 24 Jan 2005.  This person's directorship ended on 10 October 2005 although he continued as a shareholder.  It is entirely possible that Mr Shanmugam's position is no more than just as a nominee director. 

Before any wild speculation starts parading around the internet, let me be clear on this.  The fact that he had shares in or directorship in an offshore entity does not in any way lead to the conclusion of any wrongdoing.  Firstly, he could have occupied the role of a nominee.  Secondly, he could have been running a legitimate business and using a BVI company could have just been a case of tax structuring (which is perfectly legal). 

The point that I wish to raise is entirely different.  We have a situation of our politicians having business interests.  This, in itself, is not wrong and we do not expect our politicians to drop all business activities simply because they are now political office holders.  But, it would certainly be good if there is some regular and transparant reporting of commercial interests by all Parliamentarians.

In the UK, Parliamentarians are required to report their financial interests in the Register of Members' Interests.  This is now uploaded on the Parliament website and any person can freely browse through to see the kind of financial interests that politicians have.  http://www.publications.parliament.uk/pa/cm/cmregmem.htm

Back in Singapore, every now and then we get surprising revelations about business interests.  In December 2012, the discovery of the existence of a "PAP owned" company was shocking to many.  (In reality, the ownership of AIM was by an ex-PAP MP and not the PAP itself.)  More recently, in the height of the furore over the haze, there was an unfounded allegation of financial interests on the part of a Minister in a company that may have been involved in the slash-and-burn farming in Indonesia.  http://www.channelnewsasia.com/news/singapore/shanmugam-clears-air-over/727594.html

I believe that it is about time that all elected representatives are made to commit themselves to making full and frank disclosure about all their financial interests so that citizens will have a clearer picture.  Secrecy & opacity, unfortunately, fuels speculation.  The following is from the introduction to the UK Register of Members interest and it sets out the purpose behind such disclosure:

"The purpose of the Register is to encourage transparency, and through transparency, accountability. It is "to provide information of any pecuniary interest or other material benefit which a Member receives which might reasonably be thought by others to influence his or her actions, speeches or votes in Parliament, or actions taken in the capacity of a Member of Parliament"."

I hope to see the development of such a disclosure mechanism in Singapore. Our Parliamentary disclosure requirement is found in S.32 of the Parliament (Privileges, Immunities & Powers) Act (Cap 217).

“32. A Member shall not in or before Parliament or any committee take part in the discussion of any matter in which he has a direct personal pecuniary interest without disclosing the extent of that interest and shall not in any circumstances vote upon any such matter.”

In the Standing Orders of Parliament, there is a provision for the procedure when there is an issue of financial interests:

"65. – (1) Apart from the provisions of law requiring a Member to disclose the extent of any direct pecuniary interest, a Member shall not vote on any subject in which he has a direct personal pecuniary interest.
(2) A motion to disallow a Member’s vote on this ground shall be made only as soon as the numbers of the Members voting on the question shall have been declared."
http://www.parliament.gov.sg/sites/default/files/Standing%20Orders%20%282010%29.pdf

It is clear that MPs cannot vote and cannot engage in discussion on an issue where they have some financial interest.  But, how do we as citizens ascertain for ourselves what those financial interests are?
I have been searching the Parliament website to see if there is any publicly available information on the financial interests of MPs.  I can't find anything.   The Register of Members' Interests in UK is a publicly available document and anyone with internet access can easily view it at the Parliament website.  I hope that we could have something similar.

In the immediate aftermath of the 2011 general elections, the Prime Minister issued an advisory to his fellow PAP MPs entitled "Rules of Prudence". http://sg.news.yahoo.com/blogs/singaporescene/pap-mps-told-rules-prudence-014542117.html

There is a direction in there to the PAP MPs to disclose Directorships to the Party Whip:

"Please inform the Whip of all the Directorships that you hold, and of the director's fees or benefits in kind e.g. stock options, which you receive.  Include the name of the company, the position(s) held, the date of first appointment and the current Chairman of the Board.......  by the end of January for the preceding calendar year..."

Can we now have public disclosure of all MPs' financial interests and make it easily and freely accessible online?

That Facebook post by Minister Shanmugam

After a series of incidents involving racist comments being circulated on the internet, I would have least expected the Law Minister to enter into the fray to share a racist email that he received from a resident.  It was also somewhat uncharacteristic of a PAP politician to point out a negative aspect of race relations in Singapore instead of emphasizing the positive aspects.

Perhaps, he was genuinely taken aback by the email (considering its racist content and considering Shanmugam is himself an Indian) and the audacity of the resident to threaten to vote against the PAP over this issue.  So taken aback that he couldn't help but post the comment on Facebook. 

Perhaps, he was subtly using this incident to build a narrative of how it is wrong for the government to formulate policy on the basis of popular views on the ground or on the basis of every individual complaint.  This incident is definitely a stark example of what politicians should not pander to.  A racist resident that has problems with his neighbours and demands that something be done about the neighbours, failing which he'd vote against the PAP.  No right minded citizen would consider that a Minister or MP should pander to such demands of a citizen. 

I attended a Singapore Legal Forum on Saturday, 18 August 2012.  There was a closed door discussion with the Law Minister and the request that was made was that none of the matters discussed that day should be reported outside.  So, I am not going to set out the issues verbatim.  But, one impression that the Minister sought to convey through an array of information and through some 'softball' questions thrown at him was about the need to avoid populist policy making.  Should the government feel so threatened by voter backlash that it resorts to populist policies?  Or should it be responsible and do the 'right' thing?

Presented in that fashion, the answer is a no-brainer.  Unreasonable, irrational and irresponsible demands of the majority of the electorate should not be the basis on which policies are formulated.  Policies ought to be formulated on the basis of what is for the greater good of Singaporean society. 

This example of racist comments by a resident coupled with a threat of using the vote fits into the overall narrative of irresponsible voter demands and the response of a responsible government.  Perhaps, the Law Minister was sharing this email as part of the overall narrative.  Eventually, that narrative would help to convince the 'rational' amongst us as to the merits of some of the unpopular PAP policies.  The subtle messaging is that 'unpopular' = 'rational and responsible' and 'popular' = 'irrational and irresponsible'.

Perhaps, I am reading too much into all of this.  Perhaps, the man was just (understandably) taken aback by the fact that some resident had the gall to send a racist email like that to him (and a few weeks after receiving the email he decided to post about it on Facebook).

"I received a complaint from one of my residents, a few weeks ago. He is Singaporean. He was upset that he had to "tolerate" his Indian neighbours. The resident protested at having to "smell thier Indian sweaty smell and unwashed bodies". He described the Indian family as living in squalor and complained about their poor social status. He then listed other Indians whom he found unpleasant - th...e Indian man smoking in the lift, the Indian woman with her dog, and his daughter's Indian neighbour who walks around in a sarong, and said that he didn't want his grandson growing up looking at Indian men in sarong.


The complaint about smoking in the lift is understandable.

The rest of the complaints taken together however, are quite disturbing. The resident actually sent me an email setting this out. The resident appears to see his neighbour's race as being the problem and the overt prejudice is quite troubling. Most Singaporeans would not agree with his perspective. We need to make sure that things stay positive between people of different races."

After some comments posted on his facebook page, the Minister made a clarification in a follow-up post:

"A number of ppl have asked for more details on my post on gentleman who complained to me about Indians. He is an elderly person ( I refer to his grandchildren in th post ). He is born n bred here. I blv all th ppl he is complaining about are also Sporeans. He sent th complaint via email. some have asked or implied - whether he is referring to me , dont think so (!) . Have helped him previously, so he started off his email by thanking me for th previous help. He ended off his email by telling me that if the problems are not taken care of, he will know which way to vote in th next elections."

Of course, all of this is still part of the overall messaging that we get from the PAP about the fragile state of race relations in Singapore and how we can descend into chaos at any point in time if we do not stay vigilant. 

My take on racism in Singapore is as follows:
1) racial stereotyping is pretty common in Singapore and all races are guilty of doing this
2) racist jokes and comments are common enough and many members of the minority communities have learned how to live with them even if it might hurt now and then
3) there are instances where racism has played a part in employment and promotion issues
4) on the whole, most Singaporeans are able to tolerate each others' habits and practices although we may not be a genuine melting pot.
5) on a personal level many Singaporeans are able to identify with each other as Singaporeans regardless of our race (and hence the obvious distinction drawn by many between foreigners and Singaporeans even if the foreigners might be of the same race). 
6) our state of race relations doesn't place us in a fragile state. 

These days I have stopped reacting angrily to racist remarks and I must say that the comments highlighted by the Law Minister did not instigate any emotional response in me.  Strange.  As I age, I must be turning less and less human.  :-)

In March, I wrote about my reaction to the comment by Shimun Lai. http://article14.blogspot.sg/2012/03/shimun-lai-whats-her-crime.html
There may be some difference between what Shimun Lai commented and what this resident has emailed.  But, in essence, I don't feel threatened by such views or comments. 
There are enough right-thinking individuals in this society and such comments are not going to undermine us.

I can see where you are coming from Mr Shanmugam

My suspicion is that there is a general consensus or at least a majority view in the Cabinet that homosexuality is a non-issue. Clearly, as a matter of policy they keep asserting that s.377A would not be enforced. This indicates, probably, a Cabinet view that what happens in private between consenting adults is of no concern for the state. If, indeed, this was the predominant perspective of the Cabinet, then why did they still insist in Parliament that the law should be retained?

I have a rough idea as to what might have motivated the current posture. Like many average heterosexual individuals in Singapore, I expect that Parliamentarians as well as the Cabinet members by a majority are neither here nor there on homosexuality. Many are not homophobes. Many would have no difficulty communicating or mingling with a homosexual colleague, friend or relative. But, being heterosexual, they don’t understand the marginalisation of a segment of the population on account of sexual orientation. That s.377A stands as law and that it would not be enforced appears to many to be a sufficiently pragmatic approach to deal with the situation.

The argument is: Don’t worry la. We are not homophobes. We won’t persecute you. We won’t enforce the law. Since you have that assurance from us, you need not worry about the presence of s.377A.

So, why is it that Parliament would not repeal this law? Why is it that the Cabinet would not persuade Parliament to effect a repeal? I can only imagine that in the overall interest of maintaining societal harmony and in the face of vocal positions adopted by anti-gay, pro-‘family’ interest groups, the government has erred on the side of caution by retaining s.377A on the statute books. However, since they are not too impressed with the rationale behind the criminalisation of such conduct, they have repeatedly given assurances that the law would not be enforced.

Mr Shanmugam, I understand where you are coming from. You do not think it is right to punish consenting adults for their private sexual activities. However, you think that there is a conservative segment of the population that has a sense of moral outrage vis a vis homosexual tendencies. So, the solution is: Leave the law as it is. We did not make that law anyway. We will just refrain from using it.

After the recent Delhi High Court decision on s.377 of the Indian Penal Code, Mr Shanmugam has been quoted in the Straits Times:

“We won't change the law, but how that is interpreted is up to the courts, It is not our position to tell the courts what to do."

Now, that is a useful way to attempt a rethink on s.377A. Perhaps a ‘reading down’ of s.377A is in order. Our courts could interpret s.377A in a way that would not render it unconstitutional. Note that s.377A only makes the commission (etc) of an act of gross indecency an offence. The ordinary sexual activity involving two males could be interpreted by the courts as not being acts of gross indecency.

The Penal Code:
s.377A. Any male person who, in public or private, commits, or abets the commission of, or procures or attempts to procure the commission by any male person of, any act of gross indecency with another male person, shall be punished with imprisonment for a term which may extend to 2 years.

The Constitution:
Article 12. —(1) All persons are equal before the law and entitled to the equal protection of the law.

On that note of judicial interpretation as the way to go, I feel it would be appropriate for me to quote from the judgment in the case of Naz Foundation v Government of NCT of Delhi and others (2009):

‘The judiciary is constituted as the ultimate interpreter of the Constitution and to it is assigned the delicate task of determining what is the extent and scope of the power conferred on each branch of government, what are the limits on the exercise of such power under the Constitution and whether any action of any branch transgresses such limits. The role of the judiciary is to protect the fundamental rights. A modern democracy while based on the principle of majority rule implicitly recognises the need to protect the fundamental rights of those who may dissent or deviate from the majoritarian view. It is the job of the judiciary to balance the principles ensuring that the government on the basis of number does not override fundamental rights. After the enunciation of the basic structure doctrine, full judicial review is an integral part of the constitutional scheme. To quote the words of Krishna Iyer, J: “The compulsion of constitutional humanism and the assumption of full faith in life and liberty cannot be so futile or fragmentary that any transient legislative majority in tantrums against any minority by three quick readings of a Bill with the requisite quorum, can prescribe any unreasonable modality and thereby sterilise the grandiloquent mandate.”

Section 377A is a law, a decorative piece or a potential political tool?

The High Court in Delhi has interpreted s.377 of the Indian Penal Code as not criminalising consensual homosexual relations between adults for to criminalise such conduct would be unconstitutional. To put things in perspective, Singapore had already repealed s.377 in 2007. However, we do have s.377A:

Any male person who, in public or private, commits, or abets the commission of, or procures or attempts to procure the commission by any male person of, any act of gross indecency with another male person, shall be punished with imprisonment for a term which may extend to 2 years.

What is our government's response to the Indian Court's decision?

“We have the law. We say it won’t be enforced. Is it totally clear? We, sometimes in these things, have to accept a bit of messiness.” - Mr K. Shanmugam, Minister of Law, 2nd Minister of Home Affairs.

Boy do I have a problem with that statement! The Law Minister is making a case for messiness in the law. Is it acceptable to have some messiness in the law?

The hallmark of the rule of law is the control of wide or discretionary power. Whenever the state is given power over citizens, that power must be regulated by law. Where the state has discretion in the use of power, that discretion must be regulated by law. Thus, in many areas of the exercise of authority, the Executive is required to operate within the boundaries prescribed by the Constitution and by Acts of Parliament. Where the Executive is permitted discretion in the application of particular policies, our system allows for judicial review of such discretion. In this way, we seek to control abuse of power by subjecting all power to law.

We have a slightly different problem when there is a law that criminalises a certain conduct. The state is now authorised to prosecute an individual for the commission of an offence as deemed by that law. Where such authority exists, the expectation of the citizenry is that the law be applied consistently and efficiently. With regard to much of our criminal laws we have earned the reputation of consistent and efficient application. What then becomes of a law that is not enforced? Does it cease to be law by its disuse? Does it gradually fail to have any legal status by the very fact of its long term non-application? The answer is an emphatic No! A law is a law so long as it fulfils the criteria of validity within a legal system. If it is found in a statute, by the requirements of legal validity in Singapore, we would regard it as a law. This is without regard to whether it has become comatose.

So, what is the problem if there is a law that criminalises a certain conduct and that law has gone into a state of disuse but is nevertheless considered to be a law? It is possible for someone to assert from a practical standpoint: ‘Look. That is the law. We haven’t been enforcing it right? We won’t enforce it in the future. So, there is nothing to worry about. The law is a bit untidy. But, that is just going to be an abstract issue of academic importance. You won’t get charged for this offence. We are sincere about it.’ It is easy to be enticed by this supposed distinction between the practical and the theoretical.

I firmly believe that there is a practical reason for removing a law that the Executive and the Legislature regard as one that should not be enforced. If a law that the state has chosen not to enforce is retained, it becomes a tool in the hands of a future Executive that seeks to abuse power. In relation to s.377A of the Penal Code this is the problem. It is clear from statements made by some of our ministers as well as some Parliamentarians that there is no collective interest on the part of our State to enforce s.377A. They have made repeated assurances that they would not enforce the provision. This includes the latest assurance by the Law Minister: “We have the law. We say it will not be enforced. Is it totally clear?” To be fair, I have no reason to doubt Mr K Shanmugam’s sincerity when he asserted that. In fact, there appears to be a certain impatience in the phraseology revealing the sincerity that the Minister has with regard to the non-enforcement of s.377A. I do not take issue with the sincerity of our government on this issue. I do believe that they would not enforce s.377A against consenting adults carrying out the act in private. Whilst I do not believe s.377A would be enforced, I do believe that it exists as a powerful tool if the state is minded to abuse power. We are all familiar with Anwar Ibrahim’s predicament in Malaysia. We should be aware of the fact that abuse of power through the use of archaic law is not merely a theoretical possibility but has in many jurisdictions been a painful reality.

We cannot pretend that we would be immune to such potential abuse of power. Imagine a scenario where a vocal critic is silenced through the application of s.377A. For example, the author of the Yawning Bread blog is, on an objective assessment, a vocal critic of the government. However, his criticisms are neither seditious nor defamatory. They are within the ambit of lawfully permitted speech. Nevertheless, if the state so desires, it could deploy s.377A against the author. Such potential for arbitrary use of power through the deployment of a law in a state of disuse is not just a theoretical possibility but also a practical problem when it materialises.

If the state sees justification in the criminalisation of a conduct, then that law must be enforced. If the state sees no justification for the enforcement of that particular law, then the state obviously does not believe in any justification for the criminalisation of that conduct proscribed by that law. In such a situation, when the law is in fact eventually enforced on an ad-hoc basis, it becomes a discretionary application of the law. The exercise of discretion by the Execeutive is always a worry when that discretion is unregulated. If the state is going to enforce s.377A on the basis of pure discretion, the law is susceptible to political abuse.

My view is that since the state appears not to believe in the need to enforce s.377A, that provision ought to be removed in order to prevent any future abuse of power. (For apologists of the status quo, imagine this: Dr Chee Soon Juan becomes the Prime Minister in 2030 and decides to have Mr K Shanmugam charged under s.377A using false allegations of engaging in homosexual acts with a former member of his staff. – I don’t intend to cast aspersions on the character of either Dr Chee or Mr Shanmugam by using this example. I have chosen to use this example so that the danger of leaving an unused law on the statute book can be driven home)