What exactly is money laundering?

1183 Hits

author picture

Gatoaitele Savea Sano Malifa

Much has been said around the world about Samoa’s involvement in the controversial Mossack Fonseca money laundering scandal, and yet for some reason Prime Minister Tuilaepa Sailele Malielegaoi does not know anything about it.

That was what he told reporters during a press conference in Apia on 10 April 2016; he said he had no knowledge that Samoa’s High Commission in Australia was involved with Mossack Fonseca.

“I don’t understand it,” he said. “I need to know the context.”

So let’s tell him. Let’s try to make him understand. 

On 4 April 2016, the headline on the front page of The Guardian, in the United Kingdom, screamed: “Samoa diplomat was used to help Mossack Fonseca create shell companies!” 

Just underneath the headline, paper reported: “Panama papers show documents were sent from a law firm to Samoa’s High Commission in Australia, which then couriered them onwards.”

The Guardian went on to reveal: “That law firm assists its clients in setting up offshore shell companies in countries commonly linked to tax avoidance such as the British Virgin Islands and the Seychelles. 

“A shell company is an entity that is usually created for business transactions but has limited assets and offers low visibility of the activities it undertakes.”

Said The Guardian: “Documents on Mossack Fonseca were obtained by the German newspaper Süddeutsche Zeitung and shared by the International Consortium of Investigative Journalists with the Guardian and other media outlets.

“The files show that Mossack Fonseca’s Samoan office appears to have been using the Samoan high commission in Canberra, about 4,500km away, to assist it in forwarding documents for the creation of shell companies to other countries, such as the United Arab Emirates and Uruguay.

“The Samoan high commissioner initially said in a statement she was not aware of any instances where documents had been received from Mossack Fonseca for legalization, but later clarified and said some documents had been forwarded for processing only to foreign authorities.”

Now why not remove all doubt by reading the rest of The Guardian’s story right here?

What’s quite baffling though is that what is known as “(Samoa’s) Money Laundering Act …”, is nothing new in this country.

Come to think of it, this country’s previous Money Minister, Faumuina Tiatia Liuga, would know all about it.

He was so committed to seeing the bill become into law somehow he got himself on the front page of the Samoa Observer under the headline that said: “Money laundering worries rejected.”

Underneath the headline a quote attributed to Faumuina read: “There are no billions invested here to finance terrorism, so there is almost zero risk.” 

He added: “We can’t even afford a rocket with the money that’s being invested (through S.I.F.A) here.” 

Faumuina was speaking in Parliament during the second reading of the Trusts Bill 2014. 

S.I.F.A., by the way, is short for Samoa International Finance Authority, which primary role was to make money for the government.

It would be the government’s financial institution in charge of its “money laundering” activities, of which Faumuina was to be the prime mover and custodian.

As it turned out though, the Leader of the Opposition, Palusalue Fa’apo II, objected, saying he was not happy with the way the bill being rushed through. 

He was concerned that since “money laundering” was involved, he felt that caution should be exercised.

So he took the floor and asked: “Mr. Speaker, why are we rushing it? You know what happens when things are rushed. When it comes to money….”

Which was when Speaker La’auli Leuatea Polataivao cut in saying, with sarcasm peppering his voice:  “There is no need to worry. We have a money laundering act and part of that includes big washing machines to wash people and such if they enter the country.”

And then reminding that “the Head of State has already signed the bill since it is urgent,” Mr Speaker urged Palusalue to let it go.

He said: “It means our vehicle cannot reverse now. Time and tide do not wait for us.

“We are not the only country where these investors will go, if we are late tomorrow, other countries will catch them. We need to be quick.”

And then he told the Leader of the Opposition that the world would surely know that “Samoa is the most secure country in the world.”

Faumuina concurred, stood up, and told Parliament: “This law was not rushed. It has taken a long time to prepare.”

He said “representatives from a law firm in Asia” contributed; they came to Samoa and held a workshop in Savai’i. 

Faumuina said he and Prime Minister Tuilaepa attended that workshop where “this law was discussed.”

Later, “the law was given to the Attorney General who (also) worked with a lawyer from Britain in an effort to compile this bill.”

That explanation though was not good enough for Palusalue who demanded to know the names of people who were likely to invest when the law was passed.

In response, Faumuina said this was not possible. He said investors needed to be shown the incentives being offered first. 

Still Palusalue was not satisfied. He said he was tired of laws that were tabled but they meant nothing.

 “We even had a law about the establishment of a Stock Exchange,” he said. “Up until now there is nothing?”

In response, Faumuina said there was a law called U.T.O.S.; it stands for Unit Trust of Samoa.

“U.T.O.S exists,” Faumuina said. “S.I.F.A is investing in U.T.O.S. That’s the domestic arm of the stock exchange.”

In the end, the Trusts Bill 2014 was passed into law, Samoa’s Money Laundering scheme was born, and Faumuina was delighted.

He said: “Our aim is to benefit from what’s happening in Europe and the Atlantic Ocean, because a lot of people who invested there through such trusts have left.

 “With this law,” he explained, “we are looking at markets in China, Taiwan, Singapore, Hong Kong, South Africa and the Middle East.

“That’s why this law has been drafted, using all languages so we can get a share of the markets beyond Asia, and other regions such as the Middle East, South America, as well as some of our people who would like to invest their money in trusts like this.”

Faumuina said the idea was for the government to lure “millionaires” over to use international financial services offered by Samoa through S.I.F.A.

 “We want to offer better incentives than the ones being offered by other financial centers, so that the rich can come to Samoa to use our services, earning the country money, thus creating more jobs.”

Fantastic!

What he did not know – or perhaps he knew but he would not say – was that “money laundering is the process whereby the proceeds of crime are transformed into ostensibly legitimate money or other assets,” Wikipedia explains. 

“It is said that the term ‘money laundering’ was coined from the practice of the American mafia who, at one time, channeled the cash proceeds of crime through laundrettes to legitimize the cash. 

Still, the idea that Prime Minister Tuilaepa, during all that time,  did not understand was money laundering was, is pretty amazing. 

“I don’t understand it,” he said. “I need to know the context.”

Now that’s something to think seriously about.

© Samoa Observer 2016

Developed by Samoa Observer in Apia