25 Jul 2006

Singapore none too fussy about the source of wealth in its financial sector

Michael Backman
July 26, 2006

You are an Indonesian businessman. You've bribed a state bank official to give you a $US200 million ($A265 million) loan without sufficient collateral, or a risk assessment, for a business venture you know won't get off the ground.

The authorities have found out and you're facing arrest. You need somewhere to go where authorities can't touch you. So where do you go? The answer is Singapore. Why? Because it is a half-hour flight from Jakarta, or 45 minutes by ferry from the Indonesian island of Batam, and, most importantly, it does not have an extradition treaty with Indonesia.

It is largely ethnically Chinese, just like many of Indonesia's white-collar criminals, if only because Indonesians of Chinese ancestry dominate that country's business sector.

Singapore finally agreed to negotiate an extradition treaty last year after years of Indonesia begging for one. The process has been ridiculously drawn out. At least six rounds of talks have been held. Indonesia is angry and feels that Singapore is being obstructionist. But why should Singapore be slow? Probably because it is a haven for Indonesian crooks on the run, and they bring their money with them. Billions of dollars in corruptly obtained funds have flowed into Singapore's property market and its banks.

It's a sensitive matter because financial services account for 22 per cent of Singapore's economy. You can imagine the situation from Jakarta's point of view. Singapore lectures Indonesia about the importance of the rule of law while giving its criminals a haven.

Despite the billions it gets from Indonesia, it gives back only a fraction in foreign assistance but then decries Indonesia for being insufficiently grateful.

Among the Indonesian crooks and suspects believed to be on the run in Singapore are Bambang Sutrisno and Adrian Kiki Ariawan, who were found guilty of embezzling the equivalent of $US162 million from Bank Surya; Sudjiono Timan, who was convicted of improperly diverting $US120 million from a state-owned investment company; Lidia Mochtar, who is wanted over the embezzlement of $US20 million from Bank Tamara; Agus Anwar, a suspect over $US214 million that's unaccounted for from Bank Pelita; and Pauline Maria Lumowa, who is wanted over $US184 million that's missing from Bank BNI. Others whose whereabouts are unknown are able to safely visit Singapore.

The US doesn't have an extradition treaty with Indonesia but co-operation by US officials saw the fugitive Indonesian David Nusa Wijaya, wanted in connection with embezzlement of about $US140 million, return to Indonesia from San Francisco earlier this year.

The US embassy in Jakarta said at the time: "The US Government understands that returning fugitives and stolen assets from abroad in corruption cases is a top law-enforcement priority in Indonesia."

Singapore argues that because its laws are based on English common law and Indonesian law is based on Dutch codes, the two systems are incompatible, making an extradition treaty difficult.

But that didn't stop India from signing such a treaty with the Philippines in 2004, or Australia from signing one with Indonesia. Fugitive Indonesian banker Hendra Rahardja, who embezzled almost $US300 million, was on the verge of being extradited from Australia in early 2003 when he died of cancer in Sydney. His funds in Australia were frozen and returned to Indonesia.

A corollary of Singapore's reluctance to sign an extradition treaty with Indonesia is its apparent lack of fussiness about the sources of the funds attracted to its banking sector.

Singaporean officials make all the right noises when it comes to monitoring illicit funds. But there is a perception that in practice Singapore is not fully meeting international expectations and obligations. One person involved in monitoring international money flows for a Western government told me last week that the results of Singapore's efforts to date were disappointing.

And a senior fund manager in the region had this to say: "Singapore has truly become the global centre for parking ill-gotten gains. The private banking teams are huge and in practice ask almost no questions (compared with the branches elsewhere, including Switzerland).

"An acquaintance of mine who made $US13 million through a corrupt deal (in Indonesia) was not asked about how he got the money despite obviously having a job that would not have allowed such amounts to have been accumulated. Russians, mainland Chinese and Indonesians are pouring money into Singapore. High-end property has risen 30-50 per cent in the last 18 months or so."

Singapore, he argues, is out of step internationally. He cites a recent case in which even a Swiss bank co-operated with the Indonesian Government in tracking down $US5.2 million in allegedly improper funds deposited by the former head of Bank Mandiri, Indonesia's largest state-owned bank.

Attention is now being turned to China. Singapore is working hard at making itself more attractive to Chinese mainlanders, be they tourists or individuals, with funds to park. Singaporean Government representatives are trawling through China, promoting Singapore over Hong Kong as a safe destination for funds and property investment. Direct flights are being established with regional centres across China. Casinos are being set up. There has even been an influx of mainland Chinese prostitutes into Singapore's quasi-legal sex industry. And there's no extradition treaty, or little chance of one.

Of course, Singapore will argue that it takes money laundering seriously and has all types of detection methods in place. But that is not the point. It's what happens in practice that counts. After all, even Chinese laundries can have window dressing.


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michaelbackman@yahoo.com

www.michaelbackman.com




9 comments:

soci said...

My first thought was that many reading this article will probably think its a good thing, something about the free movement of funds etc..

Michael Backman really seems to have it in for Singapore. I wonder if he writes about anything else?

Anonymous said...

he is like a disappointed suiter right now - he thought SG was really opening up, and was disillusioned with the way the election went

AnAxeToGrind said...

Beckman had a run-in with the Singapore authority some time back and seems to be picking on Singapore ever since.

The article is like a laundry list of his pet peeves against Singapore. What has Chinese prostitutes got to do with money laundering?

Matilah_Singapura said...
This comment has been removed by a blog administrator.
Matilah_Singapura said...

Beckman is an author and he sells alot of books. He also writes columns for Oz newspapers.

"Bad news" does indeed sell better than good news. In the realm of the global political economy, there is no shortage of "injustices" and "unfairness", which apparently offends the sensibilities of many a human being—mostly the folks who have nothing better to do than to complain about every single "injustice" they get wind of.

Corruption in corrupt states plays an important market function. Without the ability to BRIBE public officials, it is hard to earn a buck in these TURD WURLED CUNTRIES

These Hobbsian nightmares have institutionalised poverty created by corrupt ruling classes in bed with thugs who presume to be "capitalists", feeding mysticism and bullshit to the people and using violence when the attempts at deception fail.

Therefore the budding global entrepreneur is left will little choice but to BRIBE the govt at every turn, simply to get the govt OFF THE BACKS of the profit-driven globalists, so that they, the entrepreneurs can "do their thing" and serve the market—for profit of course. As a "bonus" the locals get work, at "low" pay when compared to developed cuntries, but GOOD MONEY compared to living out of scrap heaps, pickpockting and child prostitution.

Folks like Becky cloistered in these comfy offices and homes in the leafy suburbs have the luxury of expatiating wonderful tales on how the world "OUGHT TO be".

...and our man Bex makes a darn good living from it.

Actually when you think about it, it is pretty easy to earn a living CASTING STONES at others! ;-)

Exploited Singaporean said...

Yes, if we in Singapore wants to be a first world country with 'high morals' or at least 'walk the talk', instead of preaching to other countries we should enforce the long awaited extradition treaty.

How can a few opportunists - (some Indonesian corrupt businessman) take advantage of their fellow citizens - millions who are still below the poverty belt.

Now, the Singapore govt has removed quitely the anti-speculation laws - where any property sold within 3 years of purchase - are subject to capital gains tax.

Why was it removed without much explanation ?

Aren't we encouraging more money laundering ?


Who are main beneficiaries ?

The speculators are the ones who jacked up the prices to dizzy heights and caused the 'cost of living' to go up, and create a vicious cyle.

No wonder the income gap between the rich and the poor is increasing in Singapore.

Who benefits ? Bankers, lawyers, money launderers, criminals who want to park their ill-gotten money outside their country, etc...

I wonder whether the govt will release statistics of the PRs who bought properties in the 90s, sold them at a huge profit (after selling them to Singaporeans or others) and migrate to a 3rd country (usually US, Australia) within a few years.

We have heard of these facts so many times through personal experiences and through friends, bankers, civil servants, etc...
and even from Indonesian friends.

We can then judge whether we have been taken for a ride by selfish opportunists who actually have nothing for our country.

Isn't this (spiral increases of property due to the above and other reasons), amongst many other causes makes us one of the saddest people in Asia ?

Then why blame our youth and other Singaporeans for thinking of migrating. Here, they 'walk the talk' by migrating.

Stop and sent back criminals to their home country, first. They are WORSE than the occasional drug traffickers. (I am not saying that the traffickers are not bad, either). Economic crimes cause more damage to the country.

See how the banks in Indonesia collapsed and how some of the crooks bought them back at a much lower costs !

See how these people kept their money in US $ outside Indonesia, and during the financial crisis, their hoades of money is many times the vakue in Ruppiah. They were never loyal to their own country. They did not keep and invest their money in the land they profited from.

(how I know this ? I have many fellow Indonesian Chinese friends who tell me these anecdotes and why their fellow citizens there are unhappy with them).

Now they make use of our country !

Let's stop kidding for ourselves.

Matilah_Singapura said...

Exploited Singaporean said...

>"Aren't we encouraging more money laundering ?"<

I hope so :-) Being able to have an unimpeded passage for one's money is part of being FREE.

Yes, there are people who will "exploit" the system, but for the most part offshore banking and the great finacial services S'pore and HK have to offer allow people to protect their wealth from greedy states who impose "legalised theft" (taxation) excessively, and scammers who are all out to SUE wealthy people.

>"Now they make use of our country !" <

NO, "they" don't.

"They" are customers. i.e. They voluntarily choose various financial services in Singapore — just like any other customer chooses to spend his money voluntarily, to purchase any other good or service the market has to offer, so that some "need" of that customer can be fulfilled.

It's pointless complaining about "government corruption". The very idea of the state itself, is a corruption.

And to my knowledge, there has yet to be a government in history which never had corruption of some kind.

Anonymous said...

I think it is the double standard that was the issue in the above.
:-)

Our country is good for that ?
If a country has signed the anti-money laundering deal with other countries, she must adhere to it.

There have been so much news about money laundering after Sept 11 2001; and the steps taken by our govt to stem this. Correctly.

Would we do the same foot-dragging when dealing with the West on money laundering or for other matters ?

In this instance (Indonesia), unless the author has other countries in mind too, there appears to be foot dragging (delays) as reported in the press.

Of course, Indonesia itself is no angel, and NO country is corruption free, to be realistic (as pointed by the above) as long there are humans like us around. :-)

lee hsien tau said...

Risking Death and Dismemberment: Court Date with Destiny


Summons to an accused person

Dated this 4th day of July, 2006 (funny it wasn't stuck on the door until more than 2 weeks later)

Case ID: SC-019929-06
Charge No: TC-007025-2006

Criminal Procedure Code (Cap 68) Section 158-160

Charge:

You, KOH CHONG KIANG (NRIC No S1471858C), the leesee of Apartment Block 536 Upper Cross Street #11-245 Singapore 050536, are charged that you have failed to pay the outstanding conservancy and service charges for the months of December 2003 to September 2005 (actually, Dec 2003 to date) of $529.00 (actually, the number seemed to have gone up and down) due and owing to the Town Council of Jalan Besar within 14 days from the date of service on you of a written demand dated 10 March 2006 and that you have thereby committed an offence under Section 39(7) of the Town Councils Act (Cap 329A) and punishable under the said Section thereof.

You are hereby required to appear on the 3rd day of August, 2006 at 6.00pm in person before the Subordinate Court No. CT 26N at Singapore and you are hereby warned that if you shall, without just excuse, neglect or refuse to appear on the said date, a Warrant may be issued to compel your attendance.


1) There's only enough balance in my CPF to service the mortgage for 2 more months.
2) The utilities bill has been outstanding for more than 6 months.
3) Not taking into account other non-recoverable debt owing to Singtel, Starhub and M1.
4) Telling the MP Low Meng See in 3 visits but seeing his face only once, just before the election - so I was surprised to learn that somebody was privileged to sock MP Seng Hang Thong in the face - but not getting the message through, only to find him off the radar screen after the election.
5) Is it an offence to be poor and jobless?

At the time I'm due to appear in court, Dr Chee Soon Juan and Ms Chee Siok Chin's application
to challenge the constitutionality of the summary judgment for the very simple reason that it does not allow for a trial to take place, the Courts scheduled the application to be heard not only on the same day but at the same time as the summary judgment - 3 August 2006 at 10 am, would be known.