P.M. returns fire on "dirty money" claim

The Prime Minister, Tuilaepa Dr. Sailele Malielegaoi, has hit back at claims that his administration was reliant on laundering "dirty" money from offshore to boost its financial position. 

During his weekly programme on radio 2AP, the Prime Minister responded to criticism made by the former Head of State, his Highness Tui Atua Tupua Tamasese Efi, that Samoa was turning to “dirty money”.

In turn, Tuilaepa countered that when Samoa was under Tui Atua’s leadership in the 1980s, the country was poor and had itself turned to attracting foreign business as a means of promoting economic development. 

"There is no dirty money coming into Samoa," the Prime Minister said.

The Prime Minister said it was during Tui Atua’s time as a senior figure in Government that Samoa had opened its borders to foreign business. 

Last week in a press conference, the former Head of State attacked the country’s financial management, pointing to issues such as the $21 million loss incurred by the national carrier, Samoa Airways, last Financial Year. 

But on Saturday, Tuilaepa said that it was under Tui Atua’s administration that Value Added Goods and Services Tax (V.A.G.S.T.) legislation was introduced, which helped attract foreign businesses. 

Tuilaepa recalled serving in the Ministry of Finance under then Minister Fa’aso’otauloa Samu Saili during the administration of the then Prime Minister, Mata'afa Fiame Faumuina Mulinu'u II in 1973. 

He said he travelled with Fa’aso’otauloa to Fiji, Vanuatu, Papua New Guinea and Australia on a study tour seeking policy options for improving Samoa’s economic development. 

“But Vanuatu is where the information was largely based due to the determination of Saili to [attract] the type of businesses [who used] tax [havens] or offshore companies," Tuilaepa continued.

"He was very determined to develop Samoa. In those days, every week, Samu Saili's name would be on the newspaper, anticipating that he [wanted] to do this project and that. His brain was very active. And because I was with him on this mission I [understood] all of it."

While the mission did not immediately produce a policy change, Tuilaepa said more than 10 years later under the administration of Prime Minister Kolone Vaai and Deputy P.M. Tui Atua, Fa’aso’otauloa revisited the idea. 

Tuilaepa was at the time serving in the opposition under Tofilau Eti Alesana.

"During this time, 1986 and 1987 these [V.A.G.S.T.] bills were brought in from Vaai as P.M., his Deputy P.M. [Tui Atua] and Samu Saili [as Finance Minister] and proposed [a] tax haven [policy] for the sake of earning money for Samoa's development,” he said. 

Tuilaepa said a palagi (foreigner) adviser from Vanuatu was brought into Samoa at the time to assist with the development of the bill. 

The V.A.G.S.T. bill was passed initially only for hotel rooms, but with the intention to extend it to other goods and services, he added. 

The result, the Prime Minister said, was Samoa becoming a centre for offshore business. 

"But after the elections in 1988, their administration was eroded, and we came in to continue what they had done as I advised [the then Prime Minister] Tofilau that the bills [were] good,” he said

By 1992 the administration had then tabled the V.A.G.S.T. Bill, together with legislation which resulted in the establishment of the Samoa International Finance Authority (S.I.F.A.).

Tuilaepa said Tui Atua had forgotten that it was his administration that bore responsibility for the creation of the V.A.G.S.T. and criticised him for inciting criticism of Tofilau’s administration.

"[He conducted] a large protest, starting from 1994 [...and] signed petitions. It continued [through] 1997 and 1998.

"But V.A.G.S.T. is something they started, which is something we are continuing.

“This is what was getting us money to send our athletes overseas and what has helped our Government with our budget."

S.I.F.A., while a signatory to other international initiatives to prevent money laundering, remains blacklisted in the European Union (E.U.).  

As of February 27 this year, the E.U. list of “non-cooperative jurisdictions for tax purposes” included Samoa among a total of 13 states or territories.

The intention of the blacklist is to make it more difficult for companies within the E.U. to move money into Samoa.

Their blacklist was established in the wake of the largest-ever leak of documents about money laundering in 2016 (known as the Panama Papers), which listed 5000 shell companies as being registered in Samoa.

At the time, Tuilaepa defended Samoa, reportedly saying: “The Samoa International Finance Authority – which registers companies that do not actually come to Samoa – is very important for financing our youth at sport.”

The Prime Minister maintained his stance while arguing that the Authority was taking proactive steps to crack down on the flow of dirty or illegal money into Samoa. 

"This is the whole story about S.I.F.A., [which] is in place to stand against money laundering schemes because it is something the world has joined forces to go against,” Tuilaepa said. 

“And we are at the forefront of this movement."

The Prime Minister said he was surprised that Tui Atua made arguments about money laundering given his role in an administration that paved the way for an influx of foreign money into Samoa. 

"But it seems they are throwing around statements, forgetting that it is not something very nice but it is something that is very good; it is how we have been able to finance our sports," he said.