July 22, 2012
RM893 billion siphoned out of Malaysia
by Clara Chooi @http://www.themalaysianinsider.com
A colossal RM893 billion was siphoned out of Malaysia’s economy into tax havens abroad between 1970 and 2010, a London-based research has revealed, placing the country among the top 20 nation in the developing world labelled as “losers” of capital flight.
The sum is more than triple that of Malaysia’s national debt total, which amounted to RM257.2 billion in 2011, according to previous media reports.
In the study commissioned by Tax Justice Network (TJN), a London-based organisation of professionals including economists and tax consultants, Malaysia is now ranked 12th on the list, two rungs above Singapore’s RM533 billion outflow and three below Indonesia’s RM1 trillion.
According to researcher James Henry in UK’s The Guardian today, the “offshore economy” is large enough to leave a major impact on the estimates of inequality of wealth and income in any nation, as well as the estimates of national income and debt ratios.
“Most importantly ― [it would] have very significant negative impacts on the domestic tax bases of ‘source’ countries,” Henry was quoted as saying in the daily.
The former chief economist at consultancy McKinsey, in preparing the research report titled “The Price of Offshore Revisited” for TJN, had perused data from the Bank of International Settlements (BIS), the International Monetary Fund (IMF) and private sector analysts to conclude that over the past four decades, an alarming estimate of RM66 trillion or possibly RM100 trillion has flooded out of their home countries across the globe to seep into “the cracks of the financial system”.
According to The Guardian, this was even larger than the size of the entire American economy. The paper noted that the sheer scale of hidden assets abroad by those seeking to evade taxes suggests that the official Gini coefficient of a country suffering from capital flight would not reflect a true picture.
“Standard measures of inequality, which tend to rely on surveys of household income or wealth in individual countries, radically underestimate the true gap between rich and poor,” The Guardian reported.
TJN member John Christensen told the daily that this meant that inequality was likely to be “much, much worse” than official statistics have shown.
“But politicians are still relying on trickle-down to transfer wealth to poorer people.This new data shows the exact opposite has happened: For three decades, extraordinary wealth has been cascading into the offshore accounts of a tiny number of super-rich,” he was quoted as saying.
In December last year, US-based watchdog Global Financial Integrity reported that Malaysia had lost RM150 billion through capital flight in 2009 alone, the fourth highest in the developing world.
The watchdog also found that Malaysia had lost a total of US$338 billion 
(RM1.08 trillion) over the first decade of the century while RM930 billion had left the country between 2000 and 2008, growing to RM218 billion per year from an initial RM71 billion in that period.
The federal opposition has long railed against the ruling Barisan Nasional (BN) over its alleged fiscal irresponsibility, claiming its relentless spending and massive illicit capital outflow would soon plunge the country into a debt crisis.
Any news that the Special Branch is checking whether PAS and DAP are involving in the siphoning of funds into overseas tax haven. Or PAS and DAP sending illicit money into the accounts of Jemaah Islamiah and into former CPM members’ bank accounts in Southern Thailand ??
Special Branch is now more interested in the Opposition parties threatening the security of the nation instead of REAL EXTERNAL THREATS by foreign agents!!! Just ask Asst Director Sofian Maki-nude-din.
Dato, closer to home… very much closed…Now, we heard issues related to loans being sold off that may breach certain regulation – thing is it is not being highlighted and focused properly..
Now, amidst all of this observation, i stumble on a very disturbing trend occurring within the young middle class workers (something that is recent,a new trend) – “personal loans”
So, what is special about it that I am suddenly drawn into it. Well, for one it occurs within the middle class and young workers (i.e. those degree holders). The other thing, most of them undertake this exercise to refinance their debt. Wow, that to me is surprising since if we inspect closer, one would find that the driving factor actually is the inability to meet schedule payments, hence this is basically an exercise to buy time (it is not even a short term solution). What makes it more perplexing is the number of people in the 30s age bracket.
It is a time bomb – and to make it more merrier, we’ve got bankers being involved with devious skim pak man telo. A personal loan offer with a supposedly low rate is given with the intention that you take it and put it in say ASB where your return is based on historical data will be greater than the ‘low interest rate’….. So end of the day, you will get profit –
my message is ” hogwash” – don’t be fooled (“riba”), why? Simple, you and the bank are on a ‘sign berdarah’ supposedly low rate (its black & white)…. but…. you and ASB is not on a sign berdarah dividend rate (it is an assumption since it is based on historical data, there is no black & white to say that ASB is bound to give that kind of dividend next year or any years).. Now, talk about taking advantage…
So in this holy month, stay safe (hehe, try to stay away from riba as much as possible… ) note: we are on auto-pilot for quite over a decade now (the current personal handling finance portfolio happens to be the PM and HE also happens to be acting Women leader..)
It is time Malays wake up. The handouts they get at most are mere trickles. These are their hard earned money that is being siphoned out; and it is their children and their children’s children that would be forced to bear the cost of massive debts. UMNO today is not the same UMNO it was in Tunku’s time, that their parents fought for and toiled so they could have a better life.
The country is at a cross roads, a watershed moment that may not come again for another 100 years.
Sad to know RM893 billion siphoned out of Malaysia. We need to have officers from MACC who are good at figures to settle cases involved with large amount .
A colossal $893 BILLION? RM 1 Trillion? where the hell are the moneys? Do you know how many children would have benefited with that amount? If thats not enough fo rus , then what will make every one wake up especially the malays?
Lessons from Syria:
http://www.bbc.co.uk/news/business-18901624
As the flames of rebellion lick ever closer to Syria’s embattled President Bashar al-Assad, the noose of economic sanctions grows steadily tighter on him and his regime.
After 16 rounds of sanctions, starting in May 2011, the European Union has now proscribed a total of 129 individuals and 49 companies, seeking to freeze their assets wherever it can find them.
In the UK, some £100m ($157m) of Syrian regime assets, mostly cash held in bank accounts, has been frozen over the last 14 months.
On Wednesday, the US Treasury Department announced new measures against 29 members of the Assad regime, including four ministers and the governor of the central bank, as it sought to harmonise its sanctions list with that of the EU.
They can use some of the most complex structures to conceal and move their assets”
“The Assad family has been controlling Syria for more than 30 years,” Syria’s most senior defector to date, the former ambassador Nawaf Fares, told the BBC in Qatar this week.
“They are in control of security, the economy, and all the other resources, and they have misappropriated lots of the resources of the Syrian people.
“I am convinced that the Assad family owns countless assets. Syria is a very rich country – it has gas, petrol and other resources, and the family has been looting the country for decades.”
Syrian kleptrocracy
The Assad family may have been in power since 1970, but the man of most interest to asset trackers is Rami Makhlouf, cousin of the president with close links to the military and security networks and perhaps the richest man in Syria.
His sprawling business empire is said to control up to 60% of the Syrian economy.
“You have got to think of Syria as a kleptocracy,” says a British financial investigator who asked not to be named, “where the state hands out licences to its friends and close relatives.”
Rami Makhlouf, cousin of the president with close links to the military and security networks and perhaps the richest man in Syria.
Global assets
The millions that have been frozen in the UK make up just a fraction of the regime’s estimated global wealth, according to Iain Willis, head of research at the London-based business intelligence firm Alaco.
“In terms of realisable assets, it’s likely to be in the region of $1-$1.5bn (£600m-£900m),” he says, “held across the wider family, not just Assad himself, but by the extended family, by second cousins, uncles, business partners and their advisors.
“The likely location for those funds to be held is probably via places like Russia, maybe Dubai, Lebanon, Morocco, even Hong Kong, but the assets themselves are likely to be worldwide.”
‘Flee clauses’
Finding a proscribed regime’s assets is not easy. They tend to be hidden behind complex layers using different names and brass-plate addresses in remote offshore tax havens.
“People in this sort of position… have access to some of the best advice,” says Mr Willis.
“They can use some of the most complex structures to conceal and move their assets that include things like shell companies held often through trusts, held via lawyers.
“Even using some of the more obscure techniques of offshore asset management, they may have access to companies and corporations that include ‘flee clauses’ that mean that the company is automatically closed and re-domiciled the moment the first question is asked about the existence of the company.”
Complex links
Locating a regime’s assets is only the beginning. A link then has to be proved with the proscribed regime’s individuals.
Ambrose Carey, one of the directors at the business intelligence firm Alaco, recalls hunting for Saddam Hussein’s assets back in the 1990s.
“It was generally known that Saddam Hussein was a major investor in a French publishing group. Indeed his estate was valued at something like $100m.
“But actually proving the link was extremely difficult.You had a company called Montana registered in Panama, but domiciled at a lawyer’s office in Geneva, before ultimately connecting with a Saddam front man, but never ultimately to Saddam himself.”
Russian shelter
And there is another hurdle.
When sanctions are not applied universally through United Nations Security Council resolutions, there will always be a legitimate bolthole for a regime’s funds.
With Colonel Gaddafi of Libya last year it was easy, say asset trackers.
The Libyan state had some £12bn of assets in the UK, which could be quickly frozen under UN sanctions.
But Syria’s regime, although sanctioned by the European Union and the US Treasury, is not subject to the same global measures.
Banks in the Middle East have reportedly come under increasing pressure from Washington to give up their Syrian regime assets.
But according to some investigators, the Assad family secured much of their fortune some time ago in a place beyond the reach of the EU and the US – namely Russia.
now I know how the children of the politicans get to live their rich and famous lifestyles whilst our M’sian poor struggle.
MACC officers can’t count beyond the ten fingers on his hands so how do you expect them to comprehend RM 893,000,000,000. To them 0 is kosong, nothing, zero, zilch so what’s the problem. They are contended with just a few hundred thousands. Just see their latest arrest of one of their own for how much? Just a few hundred thousand.
“…then what will make every one wake up especially the malays?…” – Kathy
Nothing… Malays were addicted to sleeping pills fed by UMNO since 1957. They need major cleansing… But I doubt it can be done in this coming GE. The sleeping pills are too attractive to the kampung pakciks and makciks.
RM893 billion trickled out and what did they do? They went after a political assistant and threw him down the stairs for RM2,400!
And what’s this latest “Investment” on the Battersea power plant, by our Government ( not sure whose money, is it EPF + others ?) IF it is not to siphon out more money in ordr to recoup on what PM has made hand-outs for the GE 13 campaign ?
Very funny, its done hush=hush without any transparency at all. Public should be informed if Feasibility study was carried out, if the venture could be profitable or not ? How about Cash-flow projections and the Financial Forecasts….etc ?
Jangan lah buat senyap-senyap dalam ” gelap ” nanti meraba-raba…pulak
No wonder we had a defict budget for the last 46 years to finance this massive outflow. Every day new members are born into the Putrajaya class and we, therefore, need immediate quantitative monetary and fiscal policies to curb this out flow. Otherwise the wealth of this nation will not be enough for our greed.
On the Middle East thier problem will continue so long as US poilcy is to make the Middle East a safe place for Israel to do what it wants to do. Over the decades the Middle East has seen all knids of internal political problems. Take Lebanon, Beirut was onces described as the Paris of the Middle East in the late 70s. Egypt, Jordan, Iraq, Iran, and now Syria are all part of the the grand design of the US to keep the region unstable to give time for Israel to strengthen its position. The leaders in the region are yet to wake up to this reality.
RM893 billions siphoned out??? It would certainly take a number of workers and their whole life time to be able to finish counting that sum of money!!! These rich people or the powerful people who are siphoning out the money must be considered traitors of the country and be put behind bars.
The issue is should action be taken against them. Have these people been paying thieir dues to the income tax department ?. Were these black money.
What has Bank Negara got to say to these RM893 billion? When parents send money to their children overseas for tuition fees they have to fill a special remittence form. So there must be records of this RM893 billion-the persons who sophoned and where there finally ended up. Can we have more information please? Can some one enlighten us?
BNM belongs to UMNO!
Wonder why Singapore $ shoot up so much? Is it due to much more dirty money flowing into Singapore as GE13 gets nearer. It’s the same when Singapore received a lot of RMs during the 1997-1998 crisis.
Global Financial Integrity and the World Trade Organization indicated that political leaders are known to siphoned off money using charitable foundation, state or national investment arms, large multinational companies (by deceptive underpricing of export), banks with foreign branches, right under the nose of its people, with the commercial as well as the central banks closing one of their eyes. These same institutions can be found in our country, but who is monitoring them?. BN? .When BN is no more around, its high time some investigation is done on these institutions.