Pacific implications in Panama Papers scandal don't surprise

Transcript

A security analyst says leaked documents showing several Pacific Island countries to be tax havens have come as little surprise.

Millions of documents from a boutique Panamanian law firm Mossack Fonseca -- now known as the Panama Papers -- have revealed the firm's involvement in setting up shell companies in offshore jurisdictions, which has allowed the world's richest people to avoid paying taxes.

The documents have implicated a number of Pacific Island countries, including New Zealand, Samoa, Niue and Vanuatu.

Paul Buchanan, a New Zealand-based security analyst, told Leilani Momoisea the revelations are not surprising.

PAUL BUCHANAN: There has been a long time concern that the South Pacific was being used for money laundering and other unsavoury financial activities, so this would be par for the course. It follows a general concern with the fact that, in the Pacific Island states, but to include New Zealand, there is very loose regulatory regime. Not only in the financial sector, but in other sectors as well. For example, the creation of shell companies, as opposed to legitimate businesses, is very much a concern throughout the South Western Pacific. So it is specific to, the countries in question, yet it is part of a more general problem with the lack of regulation on financial transactions and other forms of commerce. And that's bound to continue because there is no efforts on the part of the Pacific Island forum or the member states to tighten up that regulatory regime.

LEILANI MOMOISEA: This is obviously an economic  benefit though to Pacific countries? Or do you think it's just to government officials? Are nations benefitting out of this?

PB: I think there's very little trickle down to the common people of the countries in question. I think the material benefits for allowing the loose regulatory regime that allows offshore firms and individuals to set up trusts and shell companies and the like, goes exclusively to the government officials responsible for financial oversight in the countries in question. But we have to be very clear, it does no good to blame the smaller Pacific Island states when countries like New Zealand are also caught up in the Panama Papers revelations, so it starts at the top.

LM: Was there anything else you thought was important to add at all?

PB: All I'd say is, that this also is symptomatic of the general problem about the sale of tokens of sovereignty. Be it flags of convenience, be it in the issuance of passports, the Pacific Island community is known as a place that people can obtain things that otherwise would be very difficult to obtain, and tokens of sovereignty are important because they offer shelter under nationalities, under foreign nationalities, for people who do not want to do legitimate transactions in our home countries. So I think that this is yet more proof that the lack of regulations in the South Pacific is now coming back to haunt it.

LM: I guess that's the message to governments, is they need to tighten up on their regulation.

PB: Well, it's also a message to regional forums, such as the Pacific Island forum, that if the governments don't want to do it themselves because the people in government benefit materially from allowing these things to occur, then it's up to the regional organisations to impose some sort of tighter controls, to include enforcement sanctions in order for these countries to comply. Because the Pacific Islands Forum is quite a divided regional organisation, that doesn't appear likely any time soon.

Meanwhile Samoa's government has come to the defence of its financial regulations.

In a statement on Monday night, Samoa's government said ten licenced trustee companies, including Mossack Fonseca, currently operated under its international financial centre.

It said the practice was legal, and common, and that Samoa prided itself on leading efforts to ensure the conduct of businesses was regulated and supervised in compliance with international standards.