Myanmar allegations highlight Singapore bank secrecy

September 17, 2009
Singapore Democrats

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Martin Abbugao
AFP

Allegations that Myanmar’s junta is stashing billions of dollars in Singapore have thrown a spotlight on banking secrecy in the city-state, which strongly denies being a haven for hot money.

US-based human rights group EarthRights International says that energy majors Total and Chevron are propping up the sanctions-hit Myanmar military regime with profits from a gas project totalling nearly five billion dollars.

Total and Chevron have rejected the charge and two Singapore banks named in the ERI report as the repositories for most of the money — the Oversea-Chinese Banking Corp. (OCBC) and DBS — have dismissed it as false and baseless.

In a written reply to media queries on the Myanmar funds, the Monetary Authority of Singapore (MAS) said it requires financial institutions to have tough controls in place to fight money laundering and financing of terrorism.

“This includes procedures to identify and know their customers, and to monitor and report any suspicious transactions,” it said.

Singapore is also amending its tax laws in cooperation with industrialised nations that are pursuing citizens who deposit their money in overseas banks.

But Transparency International, which like many other corruption monitors ranks Singapore highly for its clean and efficient government, said the city-state should promote greater transparency in its financial system.

“As long as no one wants to know where the money is coming from, it will be easy to hide money on which taxes should have been paid, but most importantly, money that should have been invested in a given country or programme,” a spokesperson for the Berlin-based group told AFP.

Wealthy Asians regard Singapore as the Switzerland of Asia, a rock-solid financial centre where savings can be kept safely and discreetly. But critics say some of the money comes from unsavoury sources.

Officials in neighbouring Indonesia are trying to recover tens of millions of dollars allegedly stashed in Singapore during the rule of the late dictator Suharto.

And rival Philippine groups are suing to gain control over more than 25 million US dollars that formerly belonged to the family of the late dictator Ferdinand Marcos and is currently frozen in an offshore bank in Singapore.

“It has been documented time and again that corrupt individuals — be they politicians, business executives or wealthy citizens — have used countries like Singapore as safe havens to stash their ill-gotten funds,” the Transparency spokesperson said.

There is growing pressure meanwhile on international banks to help governments recover taxes on assets kept overseas by their citizens.

Swiss banking giant UBS recently forged a landmark deal with Washington to reveal the names of some 4,450 American clients suspected of hiding assets from US tax authorities.

That broke the cherished code of secrecy that underpins the super-rich European nation’s banking system.

Earlier this year, the Organisation for Economic Cooperation and Development included Singapore on a list of countries that have not yet fully implemented standards on the exchange of tax data needed to pursue suspected evaders.

Singapore’s government promised to amend its laws and negotiate new tax treaties to implement standards set by the OECD, the Paris-based club of industrial nations.

The government submitted a bill in parliament on Monday aimed at improving how the island shares information with countries with which it has agreements to prevent double taxation.

In 2007, the last year for when official figures are available, assets under management in Singapore totalled 814 billion US dollars, up 32 percent from 2006. About 86 percent is from foreign sources.

The MAS, Singapore’s de facto central bank, insists that investors including institutional and professional fund managers have sound reasons for parking their money here.

“Singapore’s growth and development as a wealth management centre is underpinned by high standards of financial regulation and strict supervision,” it said after UBS announced its deal with the US government.

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