Thai names in Panama Papers likely to be kept secret

By Zofia Reych

As enquiries into offshore investments are being carried out across the globe following the release of Mossack Fonseca’s confidential data, Thai authorities remain tight-lipped. Unsurprisingly perhaps, the official investigations are being carried out in secret, and under worsening censorship. The media cannot afford to comment on these cases.

It may emerge that the government is missing out on millions of baht in tax revenues, undermining the as yet unachieved promise made by General Prayut’s military administration of a 2.8% growth rate. However, this may come into collision with powerful, private individuals who have a vested interest in maintaining their secrecy and keeping hold of their money. With the economy stumbling, this conflict of interests might turn out to be another factor that threatens to destabilise Thailand’s military junta.

The so called Panama Papers consist of 45 years’ worth of data from a Panama-based, international law firm, Mossack Fonseca, specialising in offshore investment and tax efficiency for corporate clients. The documents were passed on to Süddeutsche Zeitung journalists by an unknown source in the beginning of 2015. They have been analysed by The International Consortium of Investigative Journalists (ICIJ), and the first report was released in early April 2016.

The names of 16 Thai citizens are reportedly included in the documentation. Thailand’s Anti-Money Laundering Office (AMLO) has undertaken an investigation with the assistance of the ICIJ and a network of international intelligence. AMLO’s secretary-general, Seehanat Prayoonrat, urged the public not to jump to conclusions while preliminary checks are carried out. Both Minister of Justice General Paiboon Koomchaya and Deputy Prime Minister General Wissanu Krea-ngam stressed that setting up offshore companies and parking funds abroad is not against the law. Nonetheless, the authorities are working to explain the circumstances of Thai involvement with Mossack Fonseca, and the Office of the Auditor General called on the Revenue Department to review tax records in connection with the leaked documents.

Although not all offshore funds parking is necessarily malicious and might be carried out as means of ensuring business confidentiality, it is telling that in 2015, “as much as 25% of Thailand’s total outward foreign direct investment (OFDI) stock went to the three main tax haven destinations of the British Virgin Islands (BVI), the Cayman Islands, and Mauritius.”

“This trend is not new, as the amount has averaged more than 20% annually over the past decade”, as pointed out by Pavida Pananond, Associate Professor of International Business at Thammasat Business School, Thammasat University.

The Panama Papers’ revelations are not much of a surprise in the context of an earlier scandal known as Offshore Leaks. The 2013 report, also compiled by ICIJ, was heavy in Southeast Asian names, including 600 Thai nationals with proven stakes in companies set up in the Cayman Islands and similar tax havens. Prominent figures such as Nalinee Taveesin, Isara Vongkusolkit, Bannawit Kengrien, Banyong Pongpanich, and others, were among those listed. Allegedly, many names reappear in Panama Papers.

Although the authorities issued no official statements to confirm the identities of the individuals in question, some figures involved in the recent leak have made statements in order to justify their financial dealings.

Boonkiet Chokwatana of ICC International admitted overseas investment as part of Sahabat Group’s expansion but denied tax avoidance allegations. Bannawit maintains he never invested abroad, while Songkran Issara of Charn Issara Development, and banking tycoon Chanchai Srichaphan both dismissed the Panamanian documents as baseless. Banyong Pongpanich posted a message on social media earlier this month, stating he didn’t know of Mossack Fonseca’s existence until the leak. Singer Yuenyong Opakul accounted for his name being listed in the documents to a joint venture with an overseas energy drinks producer which has since lapsed. He denied any connection with Mossack Fonseca.

Indeed, many of the investments made by private individuals may well be for morally legitimate purposes, but without an open investigation it seems unlikely that the Thai people will ever get to know the whole picture.

Furthermore, the official enquiry into offshore investment could verify those statements but even if Thailand were to hold tax evaders liable, the AMLO might adopt a Chinese model of dealing with the issue. According to Xinhua News Agency, so far this year China has already punished five and half thousand officials for corruption. . However, their names remain withheld from the public. In General Paiboon Koomchaya’s words, the “enquiry should be done in secrecy” to protect the privacy of the individuals in question. If and when the investigation produces results, the information might remain classified.

The government is likely to incorporate the Panama Papers narrative in anti-corruption publicity. “If they are really guilty, we will put many people in prison”, stated General Prayut, putting faith in the AMLO investigation. However, AMLO’s motives and methods became the focus of international attention in 2002 when they allegedly misused their power to pursue anti-government journalists. It is difficult to predict to what degree the investigation will be carried out justly this time.

A full list of companies included in the documents is due for release by ICIJ next month. Unfortunately, complex subsidiary systems and manifold cross share-holding practices are likely to obscure actual ownership of assets in Thailand. Even in the unlikely event of an official anti-money laundering crusade, naming those deliberately evading tax may prove impossible. And with the junta facing increasing internal criticism, we have yet to see if the Panama Papers’ will indeed turn into a full-fledged witch hunt.