Samoa defends its offshore industry, points to ‘key levers’ in bigger countries

Somoa Money

The financial regulator of Samoa, a Pacific nation implicated in the Pandora papers as a tax haven for wealthy individuals, has defended the country’s involvement in the offshore industry and pointed the finger at “larger economies” such as the UK and Singapore for their role in it.

“Samoa is a proud, law-abiding country that has suffered much due to its harsh colonial past and diabolical challenges that it now faces, such as climate change. Both calamities were brought on to us by larger countries that continue to enjoy much respect,” said Tuifaasisina Sieni Tualega-Voorwinden, the chief executive officer of the Samoa International Finance Authority.

Pandora papers: biggest ever leak of offshore data exposes financial secrets of rich and powerful
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Samoa, a country of about 200,000 people in the central Pacific, about halfway between Australia and Hawaii, was a German colony from 1899 to 1915, then was ruled by Britain and New Zealand until it became independent in 1962.

Samoa’s involvement in the offshore industry was highlighted by the Pandora papers, which contained leaks of documents from Asiaciti, a company run by Australian businessman Graeme Briggs that offered access to superannuation schemes and creditor-controlled companies in Samoa, which enabled wealthy foreign clients to use legal loopholes to minimise or avoid tax.

In an email obtained in the leak, reported by the ABC, Asiaciti boasted that Briggs, who was Samoa’s honorary consul in Singapore for 25 years until 2016, had been responsible for “setting up of the structure and legislation of the Samoa offshore finance centre”. In another email, a Samoan regulator said Briggs was the “grandfather” of the offshore industry in the country.

Tuifaasisina disputed this, saying that Samoa’s offshore centre legislation was enacted in 1988 with the assistance of a UK consultant, after examining the legislations of other established offshore finance centres at the time and consulting with industry.

“We have not been able to ascertain exactly what Mr Briggs’ involvement was during that process,” she said. “Hence, Mr Briggs cannot be considered the main architect of Samoa’s offshore centre rules.”

Documents in the leak revealed that Briggs advertised Samoa as “an alternative to the British Virgin Islands and other Caribbean jurisdictions” for investors looking at offshore options.

“To fully understand this matter, you have got to appreciate the role of larger economies in offshore structures,” Tuifaasisina said. “The key levers of the offshore industry are located in bigger countries such as many of those mentioned in the leak itself – Singapore, UK etc. For example, the leak highlighted the role that London’s advisory industry plays in the offshore industry.

“Samoa has a robust and challenging economy similar to other small island states. We face the same challenges as any other Pacific Island country. Should the question really be pointed to the larger countries that view the industry as [an] integral part of their own economies?”

Asiaciti has said in response to the Guardian’s reporting on the Pandora papers that it has a “strong compliance program” and that it has worked diligently to comply with regulations as they changed over the decades.

“Compliance is core to our business and we have adapted our company to meet the changing requirements,” it said. “No compliance program is infallible, and when an issue is identified, we take necessary steps with regard to the client engagement and make the appropriate notifications to regulatory agencies.”

In a leaked letter in 1993 from Briggs to another Australian businessman, Vanda Gould, reported by the ABC, Briggs said of the Samoan super fund that while contributions to it were subject to Australian income tax, in reality this tax did not have to be paid because the Australian Tax Office (ATO) “has no jurisdiction to collect this tax [because] Western Samoa has no taxation treaty with Australia”.

Tuifaasisina said the fault for this laid with Australia.

“The real issue in 1993 was the inability of Australian tax legislation to fully impose tax on foreign income of its tax residents. We understand that the Australian tax legislation has undergone considerable changes which may have now remedied the situation.”

The ATO has previously made public statements about data leaks revealing details of offshore holdings, making clear it is “not illegal to have an offshore business structure” and that “there are many legitimate reasons for doing so”.

Tuifaasisina also pointed to the fact that Australia and Samoa now have a tax exchange agreement in place, which allows each country to request and obtain information from the other. She added that Samoa was “a country that adheres to the rule of law”, “is now an active participant in international tax information exchanges” and that “if cooperation is legally necessary and appropriate, then Samoa will act accordingly”.

“Samoa is a properly regulated jurisdiction meeting FATF [Financial Action Task Force] requirements and has been rated largely compliant by the OECD Global Forum on transparency in the exchange of information for tax purposes.”

Samoa received its rating of “largely compliant” from the OECD in 2019.

In 2015, FAFT found that “Samoa faces a range of ML [money laundering] risks – primarily relating to its international (offshore) sector” and was only partially compliant on a range of measures. In a follow-up report in 2018, FAFT found that while Samoa had made significant progress on a number of measures, and no longer fell into the category of requiring “enhanced follow-up (expedited)”, it still met the criteria for “enhanced follow-up” by the FAFT.

Samoa’s prime minister did not respond to requests for comment.

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