More evidence on Singapore as money-laundering hub

Singapore none too fussy about the source of wealth in its financial sector

Michael Backman

Tha Age

(Posted on

The US embassy in Jakarta said at the time: “The US Government understands that returning fugitives and stolen assets from abroad in corruption cases is a top law-enforcement priority in Indonesia.”

Singapore argues that because its laws are based on English common law and Indonesian law is based on Dutch codes, the two systems are incompatible, making an extradition treaty difficult.

But that didn’t stop India from signing such a treaty with the Philippines in 2004, or Australia from signing one with Indonesia. Fugitive Indonesian banker Hendra Rahardja, who embezzled almost $US300 million, was on the verge of being extradited from Australia in early 2003 when he died of cancer in Sydney. His funds in Australia were frozen and returned to Indonesia.

A corollary of Singapore’s reluctance to sign an extradition treaty with Indonesia is its apparent lack of fussiness about the sources of the funds attracted to its banking sector.

Singaporean officials make all the right noises when it comes to monitoring illicit funds. But there is a perception that in practice Singapore is not fully meeting international expectations and obligations. One person involved in monitoring international money flows for a Western government told me last week that the results of Singapore’s efforts to date were disappointing.

And a senior fund manager in the region had this to say: “Singapore has truly become the global centre for parking ill-gotten gains. The private banking teams are huge and in practice ask almost no questions (compared with the branches elsewhere, including Switzerland).

“An acquaintance of mine who made $US13 million through a corrupt deal (in Indonesia) was not asked about how he got the money despite obviously having a job that would not have allowed such amounts to have been accumulated. Russians, mainland Chinese and Indonesians are pouring money into Singapore. High-end property has risen 30-50 per cent in the last 18 months or so.”

Singapore, he argues, is out of step internationally. He cites a recent case in which even a Swiss bank co-operated with the Indonesian Government in tracking down $US5.2 million in allegedly improper funds deposited by the former head of Bank Mandiri, Indonesia’s largest state-owned bank.

Attention is now being turned to China. Singapore is working hard at making itself more attractive to Chinese mainlanders, be they tourists or individuals, with funds to park. Singaporean Government representatives are trawling through China, promoting Singapore over Hong Kong as a safe destination for funds and property investment. Direct flights are being established with regional centres across China. Casinos are being set up. There has even been an influx of mainland Chinese prostitutes into Singapore’s quasi-legal sex industry. And there’s no extradition treaty, or little chance of one.

Of course, Singapore will argue that it takes money laundering seriously and has all types of detection methods in place. But that is not the point. It’s what happens in practice that counts. After all, even Chinese laundries can have window dressing.

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