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?

George Yeo: Many had "lost faith in the government"

As reported in the media, Mr George Yeo has pretty much acknowleged that last year's poor showing (relatively speaking) in the general elections, indicates that many people had lost faith in the government.

It is good to see that with the burden of the Ministerial post off his shoulders and the lack of a Parlimanetary seat, George Yeo is able to speak his mind and admit the reality on the ground. I wonder if the extent of the populuation's loss of faith has filtered through to the leadership.

I believe that the only reason why PAP did not suffer further losses in the last GE was because there were still a sizeable number that believed that change was possible from within the Party. It was clear from the Presidential Elections that many PAP voters had voted for Dr Tan Cheng Bock instead of Dr Tony Tan (the preferred PAP candidate). This was undeniably the soft option for voters wishing to express their discontent. They got their PAP government at the General Elections but they had the possibility of a non-endorsed and yet ex-PAP member (and old-school grassroots savy PAP MP) as an option for President. In one sense, a vote against Tony Tan by those that voted for the PAP at the GE was a clear message of the displeasure felt even by that segment of the population that had supported the PAP.

The extent of the displeasure is not limited to the 40% that voted for the opposition in the GE. I believe that the Presidential Elections last year constituted a form of an opinion poll on the loss of faith felt by Singaporeans. Yes, the 1,372,847 Singaporeans that did not vote for Tony Tan indicated in various shades that the current government needs to get its act together. That was effectively 64.8% of the electorate.

I appreciate George Yeo's suggestion that we have to set aside political differences and work together as a nation. I believe that these are the tentative signs of us maturing as a nation. There is still too much bitterness in the conversations carried out across party lines. A political history of repression of alternative voices has led to too much suspicion and lack of a willingness to listen (applicable to the ruling party and the opposition supporters). We need to recognise that it is perfectly fine to have strong political views and it is healthy to engage in virulent debate. In the midst of all that we must not forget that we are friends, family, Singaporeans.

My favourite Parliamentary speech made by LKY

The following speech made by MR Lee Kuan Yew on 21st September 1955 as an opposition member of Parliament was part of the Second Reading of the Preservation of Public Security Bill. The then Chief Minister, Mr David Marshall, had explained his reasons for supporting the new legislation permitting arbitrary arrest and detention when he had, not too long before, called for the repeal of the previous Emergency Regulations providing for arbitrary arrest and detention. After several short speeches by other MPs and also a passionate speech by PAP's Lim Chin Siong, Mr Lee Kuan Yew rose to speak on this issue.

One has to admire the skill and dexterity of this young opposition MP.

Amongst the justifications put forward by Mr David Marshall for the repressive legislation was the Hock Lee Bus riots. It is interesting that the post-independance PAP government has employed the Hock Lee bus riots as part of the national narrative justifying the uniquely repressive approach of our democracy. In the context of this, I thought that LKY's response to the Chief Minister's reference to Hock Lee bus riots was interesting.

The events of the 1950s and 1960s are unfortunately presented to us today as a particularly politicised history. I wonder what really transpired and wonder if we will ever get to know the real story.

Mr Lee Kuan Yew: Mr Speaker, Sir, it seems that this House wishes to deny the People's Action Party time to consider the Chief Minister's very calculated remarks. I never like to speak in haste and to regret things at some later date.

Since the House wishes me to meet the ferocious attack by the Chief Minister on the People's Action Party straightaway, may I first congratulate him? I have always been an admirer of his tactics in Court, for he is the supreme advocate of the strategy of attack when you are on the defensive. If there is one person in this Assembly who today feels a sense of guilt - if he is the sensitive and honest politician that I have always believed him to be - he must also feel a sense of shame, because he has not had the courage to put his powerful and persuasive arguments before the people who gave him the mandate to come to this House to repeal the Emergency Regulations.

One of the basic political tenets of democracy is that a Party is elected on its election platform. Of course, if one wishes to avoid the inconvenience of having to go back to the people after going back on an election pledge one could say, in a moment of flamboyance, "I would break a promise if it were in the interests of the country." To commit that heresy would make a mockery of democracy.

The whole attack that the Chief Minister has skilfully directed does not explain why, if he honestly and sincerely believes that he is right in changing his mind, he should not take the people into his confidence, and put these facts before them. Let him ask for a mandate for this most important of all the Labour Front's election platforms - a mandate for the Emergency Regulations to be attired, not in a policeman's uniform, but in the Chief Minister's bush jacket.

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Everyone knows that the Public Security Bill is but an alias for the Emergency Regulations. There are some modifications and some amendments. For example, from a Review Committee to an Appeal Tribunal; from one Judge with a panel of laymen, to three Judges; from a Judge who could only recommend, to three Judges who could order. But none of these things can explain away the fact that what the Labour Front is seeking to do today is something quite contrary to what they told the people they were going to do. That is the most serious political mistake that any political Party can make in this part of the world. There is one thing which we must prize above everything else. If we condemn the Communists for being hypocrites, for being thugs, for being rogues who intimidate other people, then let us be honest Democrats. Let us face the world and face the music, if we find out that we have made a mistake, as the Chief Minister has said he has.

If I were a good actor like the Hon. the Chief Minister, I could feign surprise and righteous indignation at this blatant attempt by his colleagues and himself to cloud this very important constitutional principle by launching into a tirade against Members of my Party, and reciting a slanted account of the now familiar events of the Hock Lee riots and the general strike. If I were David Marshall, Sir, which I am not, I would have thought that the honest thing to do would have been to go back to the people and say, "When we drafted this election platform, I was away learning Socialism in England. My colleagues in Singapore, even more political innocents than myself, were trying to outbid the People's Action Party. They wrote in their platform that they would repeal the whole of the Emergency Regulations when the People's Action Party, with care, circumspection and deliberation, said they would repeal the Emergency Regulations which provide for arrest and detention without trial, freedom of speech, freedom of assembly and freedom of publication." If the Chief Minister today accurately represents the feelings, the temper and the views of the people, then, no doubt, he

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and his colleagues would be returned with greater strength and greater confidence. They would have a mandate to go through with this legislation; and I and my Party, if we were also returned by our constituents, would have less reason to doubt the political integrity, if not the sagacity, of the hon. Members on the other side of the House.

Not long ago, the Chief Minister himself let one of the biggest cats out of the political bag when, in a moment of anger and bitterness, he recounted how a colonial Governor tried to inveigle him into a conspiracy to cheat the people. The colonial Governor invited him to repeal the Emergency Regulations. Then they, the colonial government, would re-impose them under the Governor's reserved powers. The Chief Minister, his sense of decency rebelling at this indecent suggestion, said he would not cheat the world in such a way as to make it believe that he was an honest democrat, and the Governor was - if I may quote the words of another publication which we have all received this morning, a memorandum which the Chief Minister has referred to in slighting terms - "the vicious and repugnant" instrument of oppression.

But we are now being asked to elevate rules and orders under the Emergency Regulations, from the lowly status of Emergency Regulations to the resplendent status of being part of the normal law of the land. The reason advanced is that this is necessary to combat Communist terrorism and subversion. Sir, no one denies that there is Communist terrorism or subversion. When any "ism", be it Communism or Fascism, resorts to violence or terror, it must be resisted. But we are at the same time being asked to believe in democracy. We say we believe in democracy because it is a more liberal and a more civilised way of life. We say we dislike Communism because, under that form of government, they have arbitrary powers of arrest and detention without trial. They have, what we fortunately so far have not got here, arbitrary powers of physical liquidation without trial. So we are told that the democratic way of life is far superior. Yet, for

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over eight years now the British and their friends have gradually worked themselves into a frame of mind when, in the name of democracy, they can introduce every rule and every order which is a complete denial of the basic tenets and beliefs of democracy. That I think is the greatest psychological defeat suffered by the British in this battle between the two fanaticisms - Communism and anti-Communism. We, in this part of the world, I think, could profitably avoid being implicated in this clash of fanaticisms, for as long as it is possible. There are other people in Asia, far more knowledgeable in these matters than colonial officials like the Chief Secretary, who believe in dynamic neutralism -

The Chief Minister: The countries in Asia have not got this law.

Mr Speaker: Order, please.

Mr Lee Kuan Yew: Sir, when the Indian Government in 1950 passed their Act, they had a mandate from the people - and that is a great difference.

The Chief Minister: Ha!

Mr Lee Kuan Yew: Is it not?

The Chief Minister: A colony cannot legislate against rape and murder! Only the free countries can!

Mr Speaker: Mr Chief Minister, order, please.

Mr Lee Kuan Yew: The Chief Minister has a colourful inclination towards colourful metaphors. We are not saying one should not legislate against rape and murder. In fact, the Chief Minister would have the support of the People's Action Party if he decided to bring further penalties against rape and murder, if it were found to be too prevalent in this part of the world. But -

The Chief Minister: Not for public security!

Mr Lee Kuan Yew: - But, Mr Speaker, Sir, what the Chief Minister does not realise is that an independent

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government, which has the freedom to decide its own destiny, has the right, through its elected representatives, to choose any way of life - any rule of law under which they should live. But in a Colony where the circumstances are different, where the people have never been given the power and their elected representatives the right to decide their own destiny, I say it is morally wrong to do what the Chief Minister now seeks to do. What he is seeking to do in the name of democracy is to curtail a fundamental liberty and the most fundamental of them all - freedom from arrest and punishment without having violated a specific provision of the law and being convicted for it. Of course, the Chief Minister could quibble and say, "After all, it is not punishment; it is not imprisonment; it is detention under the most benign and kind conditions." But no man should be deprived of his liberty. It may be that such a liberal way of life does not and cannot exist in conditions in South-East Asia. But if that is so, then let the Chief Minister at least have the courage to go back to the people and tell them so, and seek a mandate to do what he wants to do. I am sure he will understand that it is better done that way now than deferred for three years.

The most important observation which the Chief Minister has allowed to drop from his lips is that, after eight years of the Emergency, we are faced with a problem as grave and as acute as when it began. It is the most conclusive proof that the Emergency Regulations are not the answer either to Communist terrorism or Communist subversion. The Emergency Regulations have not destroyed Communism, but it may well destroy democracy. It has not completely frightened the Communists, but it may act as a dampening restraint on the nationalists. Of course the Chief Minister has not given his assurance to me personally that I would not suffer under these Regulations - but we all believe, at least we all should believe, that as long as his Government

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is in control, conscientiously, scrupulously, and honestly working these rules and regulations, no one will be penalised or made to suffer who does not deserve to be penalised or made to suffer. But he has not said what would happen if, in fact, these special powers were not used with the same scrupulous care and regard for human values as they are -

The Chief Minister: Three Judges!

Mr Lee Kuan Yew: Three Judges! Great play has been made of three Judges! But I should have thought that purely counting by numbers it does not get us very far! One good judge is as good as three. If you have one good judge and you put in two bad ones, I should have thought you would have lowered the mean average! But what does it all prove? It only proves that three Judges can order a man's release against the wishes of the Governor. It is an advance, I am not denying that. It is better than what it was before, when one Judge could not order but could only recommend a man's release. There will be three Judges who sit and receive evidence in the absence of the person against whom the evidence is being given, and in the absence of his counsel. I think the Chief Minister will be the first to admit that it does not, in any way, approximate to the protection which a trial by confrontation -

The Chief Minister: Never pretend to!

Mr Lee Kuan Yew: I am not saying the Chief Minister pretended, Sir. The Chief Minister pretended a lot of things this morning, but I am not accusing him of this. I am pointing out to him now that it nowhere approximates to the same protection which he, as a criminal advocate, must know is of vital importance.

If, after eight years of these Regulations, we are faced with the same conditions - and we are now asked to be more realistic and incorporate these Regulations in a more permanent form for another three years - we wonder whether it is because the Chief Minister and his colleagues expect the danger to exist for another three years, or that only the Bill will exist for another three

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years. If the Bill is designed against Communist subversion, and will be maintained so long as Communist subversion is present, then I say this Bill will outlive this Legislature and many Legislatures to come, for Communism is not a passing fashion or a passing craze. It is and it has become the way of life of nearly half of Asia and a large part of Europe and we must understand the basic causes of it -

An hon. Member: Fight it!

Mr Lee Kuan Yew: Before you fight it, you must understand what you are fighting. It is no use saying that they are evil men out to wreck, out to create chaos, out to stir up disorder, or out to make the poor worker suffer, when you do not understand, or attempt to understand, why it is that they, and they alone, can work this passion: first, for freedom; second, for their own political beliefs.

The Chief Minister: They do not win such allies!

Mr Lee Kuan Yew: They do not what?

Mr Speaker: Order, please.

Mr Lee Kuan Yew: It is a significant point, and the Chief Minister should think more of it: that nowhere in SouthEast Asia is Communism more successful than in colonial Indo-China and colonial Malaya. I am not saying that India, Burma, Pakistan and Indonesia have not got their own Communist problems. Communism, as I understand it, and not only from textbooks, is a product of social and economic frustration and discontent. When you have this social and economic discontent and it is exacerbated by the irritants of colonial control, then you have a situation growing into cancerous proportions. I am not suggesting that if we are free tomorrow of the eminent members of the civil and legal services who sit with us here as of right under the constitution, we should be free from all our troubles. But I do say that we have a much better chance of resolving the internal social and economic discontent than we ever can have now. To me, Sir, it is an act of faith. If it does not work, then

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what can work? Violent military suppression of Communism? It has little chance of succeeding. It might succeed in South America because it is so far away and it is such a different world, where dictators come and go. But Asia in revolt, Asia on the march, is a very different proposition.

The Chief Minister, with his flair for colourful metaphor, will appreciate this when I say that the problem of Communist subversion and terrorism has become a cancer in our body politic. These Emergency Regulations at best can only be barbiturates. They numb the pain. They lull one into a sense of security, into an illusion that perhaps, after all, the thing that causes the pain is not there. But I myself would prefer a bold cure. I would take one bold step to freedom. Then I say we have a fighting chance to resolve our own social and economic problems when they are reduced to the proportions which they naturally assume in any part of the world, for anywhere social and economic discontent inevitably leads to industrial and social unrest.

I would say that such a free government, speaking for the people, deciding its destiny absolutely and unreservedly, could drastically repeal those parts of the Emergency Regulations which militate against the fundamental rights of human beings anywhere in the world. This would not lead to Communism if such a step were accompanied by an equally bold and drastic economic and social reform. To shrug and doubt is to admit defeat. You may stifle political discontent, but it will come out at some subsequent date in a much more virulent form. If we take our chance now, I say Malaya can succeed as an independent and free democracy.

The Emergency as a violent struggle is very probably going through a decline, and a new phase of bitter political struggle is opening up. If we do not relax these Emergency Regulations with a relaxing of this violence, then we are admitting to ourselves that we are irrevocably wedded to what I am sure the Chief Minister will agree is a totalitarian method of government.

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An hon. Member: Nonsense!

Mr Lee Kuan Yew: "Nonsense", Sir, covers up a lot of ignorance of many, many things. If it is not totalitarian to arrest a man and detain him when you cannot charge him with any offence against any written law - if that is not what we have always cried out against in Fascist States - then what is it? I am sure the Minister for Communications will be the first to say that that is what is wrong with Communist States. Then what is done in the name of democracy is right. When it is done in some other name, it is wrong. But these are fundamental beliefs. They may or may not work in Asia, that no one can say. But one can say this:one must have the courage to make it work, to try it; for if it cannot work, then the alternative is one of constant suppression the end of which no one knows.

I believe that for seven years now we have developed an Emergency mentality. Many people believe that the only way to keep down any form of agitation, which anybody may have exploited for their own personal or political ends, is by the use of repressive laws, more policemen, and more arrests. But this has been proved false after seven years. I hate to think that after another three or four years, or whenever it may be when the Chief Minister decides to go back to the people, that it is again to be proved false. It is such a futile answer to the Communist challenge. If we are to survive as a free democracy, then we must be prepared, in principle, to concede to our enemies - even those who do not subscribe to our views - as much constitutional right as you concede yourself. My plea - to quote from sonic-one in another context - is that the time has come in Malaya for an agonising reappraisal of strategy and strength. To go on blindly in the hope that somehow or the other suppression can prevent latent social, economic and political discontents from manifesting themselves and disrupting the structure of society is a piece of folly to which my Party does not subscribe.

I ask the Chief Minister, before he launches into another furious tirade

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against me and my Party, to think of the political implications it has, first, on himself and his Party, and, second, on Singapore and Malaya. My Party believes, passionately, that the only solution is a hard one, where a great deal of social adjustments may have to be suffered in order that a more stable and a just society could emerge in the non-Communist world in South-East Asia.