The Panama Papers and Indonesia: What are the consequences?

By Michel Struharova 

The International Consortium of Investigative Journalists (ICIJ) consists of 107 media outlets, including the BBC, the Guardian, and Le Monde, and recently published a thorough analysis of data on 214,000 entities detailing how the Panamanian law firm, Mossack Fonseca, helped its clients anonymise company ownership and bank accounts, taking advantage of legal gaps in order to launder wealth.

Tempo, the only media outlet from Indonesia involved in ICIJ’s investigation, has already revealed the first findings of shell companies owned by Indonesians.

The initial insight of leaked confidential documents confirmed around 3,000 names of Indonesian companies and individuals, who might be involved in establishing offshore companies.

Prominent Indonesians implicated in the Panama papers

The Panama papers mention some well-known billionaires regularly featured in the Forbes list of the richest Indonesians, such as Garibaldi Thohir, President Director of Adaro Energy, Chairul Tanjung, former Economics Minister and chairman of CT Corp, who runs a diverse catalogue of businesses, and Anthoni Salim, the President of the Salim Group.

The gubernatorial candidate, Sandiago Uno, was found on the list as well, although Tempo pointed to the fact that documents do not refer to any certain proof of non-legal activities of his shell companies. Uno is planning to run in 2017 Jakarta’s election for governor, against the incumbent Basuki “Ahok” Tjahaja.

Moreover, the Panama papers have shown names of the people formerly connected with crimes such as scams, drugs, and tax evasion. The most resonate are Muhammad Riza Chalid, a prominent businessman in the oil trading, who was alleged to play a role in the Freeport shakedown scandal and Djoko Soegiarto Tjandra, fugitive and fraud convict for misusing Bank Indonesia Liquidity Support fund in the Bank Bali case.

Indonesia seeks hidden wealth

Indonesia has intensified its effort to hunt down hidden assets. The leaked data are the subject of an assessment of the government and the Corruption Eradication Commission (KPK).

As the KPK commissioner Laode Syarief implied, offshore accounts and firms are a global affair. The investigation itself is an arduous process facing several obstacles, therefore, international cooperation in legal enforcement is undeniably necessary.

The finance minister, Bambang Brodjonegoro, admitted to Tempo that “the value [of overseas holdings by Indonesians] is in the thousands of trillions of rupiah.” The government is currently preparing a new law to rein in its rich citizens to pull back their overseas assets. These tax evaders would obtain both amnesty and tax discounts.

In previous years, weak economic growth has afflicted the Indonesian government, which reflects the aim of creating a tax amnesty to recover tax revenue and balance the budget deficit.

Tax havens: an efficient system

The leak of 11.5 million documents has caused global turmoil and public outrage and what is the largest leak of confidential information in history. The severity of which surpasses the 2010 WikiLeaks and Edward Snowden’s revelation of unknown details of global surveillance in 2013.

The so-called “Panama Papers“ shed light on the veiled ownership and transactions within shell companies. The countries have no evidence on who is behind the companies. However, the school of red herrings and the connections they maintain. We are now seeing behind the walls of an efficient system that has been shielded by political authorities along with banks, whose help has made these questionable activities possible.

The challenge for governments across the world is to launch a comprehensive investigation on these names and to take reasonable action.