A Singapore-based offshore services provider has come under the spotlight amid leaked offshore data on the world's rich, famous and powerful people.
Just under two million documents - of the 11.9 million files in the dubbed Pandora papers - have emerged from inside Asiaciti Trust, founded by Australian accountant Graeme Briggs in 1978. According to the International Consortium of Investigative Journalists (ICIJ), the organisation that received these leaked documents, Asiaciti had made a fortune managing the vast wealth of the politically elite across the world.
Four years ago, ICIJ had also flagged Asiaciti in its investigation in relation to an earlier data leak branded the Paradise Papers. Then, it accused the entity of "managing millions for a carousel of millionaires and fraudsters".
Among its clients is the family of Serik Burkitbayev, a former aide to Kazakhstan president Nursultan Nazarbayev and head of Kazakhstan's state-owned oil and gas company. Burkitbayev was in March 2009 convicted of embezzling US$20 million, among other crimes, and sentenced to six years in prison, according to Kazakh news media.
The Pandora papers also sheds light on Asiaciti's dealings with prominent Russian businessmen Kirill Androsov, a former deputy chief of staff to Vladimir Putin; chairman of Russian bank Sberbank and former minister of economics Herman Gref; as well as Evgeny Novitsky, former president of Russia's largest publicly traded diversified holding company Sistema.
The documents showed that the Monetary Authority of Singapore (MAS) had taken issue with Asiaciti's handling of some transactions involving two of the Russians as examples of the business failing to properly corroborate the origins of its clients’ funds. According to MAS, the company failed to look into the background of "unusually large transactions with no obvious economic purpose", undertaken by "politically exposed persons" (PEPs).
MAS was referring to individuals entrusted with prominent public functions domestically, in a foreign country or in an international organisation. They may include heads of state, government leaders or senior executives of state-owned corporations.
The company's failures took place between 2007 and 2018 and were identified by the MAS in an inspection. However, the Pandora Papers data leak covers the time period from 1996 to 2019.
The firm later took remedial measures to address the deficiencies identified by MAS, including conducting a review of customer accounts and transactions, terminating several higher-risk trust accounts and filing suspicious transaction reports.
The use of offshore companies is not illegal or by itself evidence of wrongdoing, but news organisations in the consortium said such transactions could be used to hide wealth from tax collectors and other authorities.
An ICIJ report also showed that Asiaciti accepted Pakistani politician Moonis Elahi as a client despite having information that he was involved in several corrupt land development projects and had "set up a fake company, fraudulently obtained loans and sold land at inflated prices to government agencies".
Asiaciti's other notable clients unveiled by the leak include Qatar's former prime minister Hamad Jassim Al Thani, Brazilian politician Eduardo Cunha, who was sentenced to 15 years' jail in 2017 for corruption, tax evasion and money laundering, and Thirukumar Nadesan, a member of the Sri Lankan prime minister's family, who has been charged with misappropriating public funds and is yet to stand trial.
In July 2020, Singapore's MAS fined Asiaciti S$1.1 million for inadequate safeguards against money laundering and terrorism financing - including its failure to look into the background and purpose of “unusually large transactions with no obvious economic purpose”, undertaken by “politically exposed persons”.
Laws in Singapore require that management at professional firms approve any business done with "politically exposed persons", and for the firms to do their due diligence in establishing the source of these individuals' wealth and of the specific funds to be invested.
The latest Pandora papers cover Asiaciti's operations in Singapore, Hong Kong, Cook Islands, Nevis, New Zealand and Panama, involving 25 politicians. These documents span over two decades, from 1996 to 2019.
Asiaciti said that reports published by the ICIJ and its partners contain "numerous inaccuracies" and in many cases do not represent the context of a situation. It maintained that the business has a strong compliance programme, and each of its offices have passed third-party audits for practices to guard against money laundering and terrorism financing.
Asiaciti could be the tip of the iceberg. MAS has an onerous task to put things right – the “clean” image is being tarnished with scandals like Asiaciti and 1MDB. Authorities need to work together to recover lost sums and not depend on the FBI or DOJ to do so. Integrity is wholly lacking even if these actions are within the ambit of the law. Will Malaysian authorities follow-up on individuals named in the Pandora Papers?
References:
Singapore’s Asiaciti Trust under spotlight in Pandora papers offshore data leak, Kelly Ng, October 5, 2021 (https://www.businesstimes.com.sg)
MAS examining info from Pandora Papers about Asiaciti Trust, a S’pore-based firm mentioned in leak, Jolene Ang, Oct 6, 2021 (https://www.singaporelawwatch.sg)
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