Burma tycoon Tay Za denounces US sanctions

Flamboyant Myanmar tycoon Tay Za Monday denounced US sanctions against his airline and other firms which he said would only hurt the people of the impoverished nation of Southeast Asia. US President George W. Bush last month ordered sanctions against seven companies with ties to Myanmar's ruling junta.

Tay Za's Air Bagan was among seven firms blacklisted to pile more pressure on the regime after its bloody suppression of pro-democracy protests in September which left 13 dead and thousands locked up. "I hereby condemn the sanctions which were recklessly imposed and only hurt the people of Myanmar," Tay Za told officials, staff and businessmen in a speech for celebrations to mark Air Bagan's third anniversary.

"The sanctions are misguided and unfair. Air Bagan Ltd is a legally constituted company with funds earned through 100 percent legitimate means," he said. "No government officials or party outside Htoo Group of companies owns any shares in Air Bagan."

The charismatic tycoon, who was said to be close to members of the ruling junta, also denied he was the son-in-law of one of the ruling generals. "There had been allegations that I am the son-in-law of one of the senior members of the state. It is totally untrue and I categorically and utterly refute these allegations," he said.

He also said his airline was not involved in any criminal activities. "The capital of Air Bagan is not related in any way with such business as drug trafficking, arms sales and money laundering but comes from the earnings of Htoo Group of companies through our legitimate business," he said.

Tay Za however admitted that the airline was facing problems because of the sanctions. "Air Bagan Ltd ... is facing a myriad of problems because of wrongful sanctions imposed by the US administration. Due to restrictions on banking facilities, Air Bagan is encountering operational difficulties," he said.

"Under the circumstances, Air Bagan's Singapore flights have been suspended." Air Bagan had announced from November 4 it would suspend its Singapore service, which was only launched in September.

"It is apparent that the US sanctions will mainly impact on the working population," he said, adding that they would affect the 14,000 employees of Htoo Group companies and Air Bagan. "We shall tackle the sanctions by fair and rightful means, carry on with our second five-year plan and forge ahead in the private sector for the economic development of Myanmar together with the state," he said.

Myanmar-watchers say Tay Za, 43, is also involved in tourism, infrastructure projects, mobile telephone services and was involved in the government's purchase of helicopters from Russia.

The article was obtained from MSN News

Bank Secrecy Law, Money Laundering and Tax Evasions

One of the greatest advantages of having an offshore bank account in Singapore is its bank secrecy law because the chance of anyone knowing you have got a huge sum of money which you really want to hide for any reason is pretty low. And I am not saying Singapore is definitely a money laundering centre but who is to say that Singapore will not become one in the future?

According to the Bloomberg article on the rapid growth of Asia’s millionaires, it was reported that Asia had 2.3 million millionaires last year, an increase of 8.2%. Singapore millionaires rose 22.4% to 48,500 while in US, a 10% increase to 2.5 million.

Naturally, it is not difficult to assume that some of these world’s riches might be dealing in money laundering activities to amass their wealth while some would attempt to avoid massive taxes levied on their assets and earnings. In the case of the latter, if you were a millionaire who does not want to pay extra taxes on your income, what would you do? I would certainly hide my money in places with low levels of transparency to avoid scrutiny by government authorities in my home country. Illegal activities like these are not something new to this world:

“Historically, bank secrecy laws have served an important political function. Germany, because of its past dealings with dictatorships, traditionally resisted relaxation of bank secrecy laws, contending those laws were essential to its citizens as a safeguard against political dictatorship. Germany recently embraced banking information exchange, noting that secrecy laws are no longer protecting citizens against dictatorships but are being used by international drug dealers and money launderers to hide criminal enterprises.” – Tax Prophet

So since Singapore will not be changing its tough banking secrecy laws despite calls from the European Union for more transparency as reported in Reuters, how prepared are our monetary authorities, MAS and tax authorities, IRAS to curb any form of organised crime like money laundering and tax evasion activities as a result of the secrecy laws? Now that we are building casinos in Singapore, it is even more critical that we look into the degree of casino compliance with the reporting requirements. From what I know, there has yet been any auditing standards on casinos, for example.

More information on Bank Secrecy Laws of Singapore can be found here.
More information on how money laundering works can be found here.

Burmese Sanction Unnecessary?

CNN's interview with PM Lee was aired on Friday evening but I was unhappy with PM Lee's answers to the questions on whether Singapore is a money laundering centre for members of Burmese junta and on whether Singapore should have more concrete actions other than just issuing statements. I will quote the interview reported by Reuters and Channelnewsasia.

If you have read through the whole article on both news providers, you might notice quotes by PM Lee like "dirty money and money laundering" were not published in the CNA article. I feel it might be an intentional effort by our news provider to prevent Singaporeans from questioning the government on this aspect probably because recently Singapore has had some hard time with Indonesia and the international media on the allegations of corrupt Indonesians running off to Singapore and parking their illegal money into our banks because of Singapore's strict bank secrecy laws which could make it convenient for money laundering activities to take place.

"Secondly, if you want to have sanctions, it cannot just be Singapore or even ASEAN, but all of the countries in the world have to do that, and that includes the Western countries, investors in Myanmar and its neighbours like China with big stake in Myanmar."

It is, of course, wonderful if all countries with economic ties with the regime could come together and agree on a trade sanction. Although calling for a total trade sanction against Burma may indeed be counter-productive, PM Lee does not seem to understand that, in the current situation, the junta leaders and their cronies seemed to be benefitting themselves more rather than benefitting the general population. Why, then should these countries continue to enrich the Burma dictators and help them to strengthen their grip on power? Cripple the military government by restricting exports of critical supplies (such as arms and telecommunication devices) necessary for the survival of their army and their stranglehold on the Burmese society. So it is wrong for PM Lee to say trade sanctions are useless but he should, instead, initiate talks with China and India for more real actions as suggested.

And I wonder if he would still say the same thing if there were Singaporeans killed during the crackdown? Is he still going to ignore the atrocities by the junta?