COLOMBO: Cash-strapped Sri Lanka announced on Sunday (May 1) it was setting up a special panel to chase after nationals likely to figure in the “Panama Papers,” a trove of leaked documents on global tax evasion.
The government, which came to power in January last year on a promise to clean up corruption, has accused former president Mahinda Rajapakse and his family of siphoning off billions of dollars during his decade in power, a charge he has denied.
The new administration has also been weighed down by huge foreign loans taken out by the Rajapakse regime. Colombo last week secured an IMF bailout of US$1.5 billion to head off a balance of payments crisis.
Finance Minister Ravi Karunanayake said Colombo would investigate “each and every Sri Lankan” whose names were likely to come up when the Panama Papers became publicly available on May 9.
He accused the former government of failing to look into 46 Sri Lankans whose names came up in a 2013 probe known as the Offshore Leaks, by the International Consortium of Investigative Journalists (ICIJ) which is also behind the Panama Papers.
“Our panel will look into names that will come up in the Panama Papers as well as those already named in the Offshore Leaks,” Karunanayake told reporters in Colombo.
The Panama Papers have become a global scandal, sparking investigations and resignations.
About 11.5 million leaked documents, from the Panamanian law firm Mossack Fonseca, revealed the large-scale use of offshore entities to conceal assets from tax authorities.
Panama Papers: What is relevant to Sri Lanka
ECONOMYNEXT – Panama Papers will be available on the Internet from 11.30 p.m. on May 9, 2016.
1) So far, the documents are available only to some 370 journalists from over 40 news organisations going through the documents. After May 9, anyone should be able to access the information. The website of the International Coalition of Investigative Journalists (ICIJ) can be accessed here: https://panamapapers.icij.org/
2) The information that will be publicly available will relate only to those who used the services of the law firm, Mossack Fonseca. This law firm offered what it believed was “absolute secrecy” to its clients in incorporating offshore operations in tax havens. But with the hack into their computer system, the biggest on record so far, clients of Mossack Fonseca no longer enjoy privacy. The leaked records date back 40 years.
3) Names of some 46 Sri Lankans released by the ICIJ in 2013 are not linked to the Panama Papers. It is from another investigation known as “Off Shore Leaks.” This database includes entities incorporated in 10 offshore jurisdictions: the British Virgin Islands, the Cayman Islands, the Cook Islands, Singapore, Hong Kong, Samoa, Seychelles, Mauritius, Labuan and Malaysia. The information comes from two offshore service firms: Singapore-based Portcullis TrustNet and British Virgin Islands-based Commonwealth Trust Limited (CTL). OffShore Leaks dates back 30 years from 2010.
4) Data the unidentified hackers stole from Mossack Fonseca, Singapore-based Portcullis TrustNet and British Virgin Islands-based Commonwealth Trust Limited (CTL) will be brought under one database shortly.
5) There are legitimate uses for offshore companies and trusts. The ICIJ does not suggest or imply that any persons, companies or other entities included in the Offshore Leaks database or the Panama Papers have broken the law or acted improperly. However, individuals and companies mentioned in the papers may have a lot of explaining to do. In the case of the Sri Lankans, they will have to explain to the Inland Revenue Department and the Central Bank how they set up such operations. Sri Lankan law allows nationals to set up offshore operations, but it must be declared to the Inland Revenue Department and the Exchange Control department of the Central Bank. If not, they will be liable for prosecution under the Inland Revenue Act, exchange control laws and anti-money laundering legislation.
6) Sri Lankan Vidya Amarapala resigned in mid-April as advisor to Minister Patali Champika Ranawaka after local newspapers erroneously linked his name to the Panama Papers. His name actually came up in April 2013 in OffShore Leaks as a person linked to a company in Singapore. He has denied any wrongdoing, but has resigned from his official position pending an investigation demanded by Minister Ranawaka. Amarapala was a chairman of the Ceylon Electricity Board when Minister Ranawaka was in charge of the subject. (COLOMBO, May 1, 2016)