http://www.icij.org/offshore/billionaires-among-thousands-indonesians-found-secret-offshore-documents
Billionaires Among Thousands of Indonesians Found in Secret Offshore Documents By Nicky Hager April 9, 2013, 8:15 pm Names in the offshore records include billionaires linked to former Indonesian dictator Suharto (left) and the son of former president B. J. Habibie (right). Photo: AP Key Findings a.. Government officials and their families and associates in Azerbaijan, Russia, Canada, Pakistan, the Philippines, Thailand, Mongolia and other countries have embraced the use of covert companies and bank accounts. b.. The mega-rich use complex offshore structures to own mansions, yachts, art masterpieces and other assets, gaining tax advantages and anonymity not available to average people. c.. Many of the world’s top’s banks – including UBS, Clariden and Deutsche Bank – have aggressively worked to provide their customers with secrecy-cloaked companies in the British Virgin Islands and other offshore hideaways. d.. A well-paid industry of accountants, middlemen and other operatives has helped offshore patrons shroud their identities and business interests, providing shelter in many cases to money laundering or other misconduct. e.. Ponzi schemers and other large-scale fraudsters routinely use offshore havens to pull off their shell games and move their ill-gotten gains. Owners of corporations registered in tax havens include some linked to regime of the late dictator, Suharto. Nine of Indonesia’s 11 richest families have found shelter in tropical tax havens, holding ownership of more than 190 offshore trusts and companies, secret records obtained by the International Consortium of Investigative Journalists show. The nine families, worth an estimated $36 billion among them, are at the top of a wealthy class that dominates Indonesia’s politics and economy. Six were closely tied to the late dictator Suharto, who helped a special circle of Indonesians grow rich during his 31-year rule by granting economic fiefdoms to family and friends. The billionaires are among nearly 2,500 Indonesians found in the files of Singapore-headquartered offshore services provider Portcullis TrustNet, which ICIJ has been analyzing and began reporting on last week. Although there is no evidence in the files of illegality by any of the nine families, they are part of a wider Indonesian economy riddled with secret offshore companies and resources draining away to offshore bank accounts. Danang Wirdaus of Indonesian Corruption Watch said that after Indonesia's 1998 financial crisis many Indonesian tycoons moved to Singapore and Hong Kong. "Offshore companies were essential because they are not Indonesian companies any more," he said. However he said that for other very rich Indonesians as well, "whenever their companies become bigger and bigger, they can use offshore companies to reduce their tax and increase profits." On its website, the Indonesian tax authority says that taxpayers and companies resident in Indonesia are subject to taxation on their worldwide income. This includes in tax havens. It says there are special tax forms to declare transactions occurring in tax havens. In December 2012 the Washington-based research organization Global Financial Integrity estimated that Indonesia had lost over $10 billion in “illicit financial outflows,” including tax evasion, each year between 2001 and 2010. This placed it 9th out of 150 developing countries for the quantity of money disappearing into offshore tax havens. These outflows of “dirty money” deprive nations of investments in healthcare, education and infrastructure, GFI said in a statement. However there are also legitimate uses for offshore companies. Service providers like TrustNet allow companies and individuals to do business, diversify their investments and forge alliances across political borders. They also help individuals who live in multiple countries to manage their affairs. The files analyzed by ICIJ show how wealthy Indonesians have embraced the anonymity offered by the offshore world. The Riady family, for instance, owners of the conglomerate Lippo Group, had at least 11 offshore companies and trusts, records obtained by ICIJ show. But TrustNet cautiously refers to the Lippo companies in internal correspondence as “Client A”. Company records explain that “the client does not want to be seen dealing offshore.” Their agent Gary Phair instructed the TrustNet staff to “delete any reference to ‘C/- [care of] Lippo Group’” from all contact addresses in Client A records. Phair also asked that his own name not to be used in issuing invoices: “Please do not mention Gary Phair’s name,” the TrustNet staff wrote. “We are to refer to him in an invoice as either ‘the company representative’ or ‘your representative.’ ” The tiny Cook Islands in the South Pacific have been a preferred destination for many Riady family offshore entities, from 1989 until at least 2009, the files indicate. The Riadys and Lippo were at the center of a foreign political cash scandal during American President Bill Clinton’s 1996 reelection campaign, with the company admitting dozens of violations of U.S. campaign law and the family’s scion, James Riady, pleading guilty to fraud and paying an $8.6 million fine. A spokeswoman for Stephen Riady, James’ brother, declined to discuss the family's offshore entities. She said there was “nothing illegal or improper in protecting the privacy of one’s own information” and no adverse implication should be drawn from the group doing so. Some Riady (“Lippo”) group companies were publicly listed companies, so information regarding them was publicly available. “Other companies in the group are privately owned, so information concerning these companies is private and will only be disclosed to the appropriate regulatory authorities, as and when required by law.” Phair also declined comment, citing “strict obligations of confidentiality to my clients and former clients regarding their business affairs.” One of Indonesia’s big tobacco families also used the Cook Islands. On May 18, 2005, Philip Morris International completed the purchase of 97 percent of the shares of the Sampoerna tobacco company. It paid the Sampoerna family, Indonesia’s 10th richest, $2 billion for their minority stake. Two weeks later, on May 31, TrustNet established an offshore trust called Strong Castle Trust in the Cook Islands. Sulistiani Sampoerna is listed in the TrustNet files as “trust settlor”, possibly indicating it was her money the trust was to hold. She did not respond to a request for comment. Two other Indonesian tobacco billionaires, Susilo Wonowidjojo and Peter Sondakh, also have multiple offshore companies. Eka Tjipta Widjaja Four more of Indonesia’s very richest are known for their role in clearing vast areas of tropical rainforest. Eka Tjipta Widjaja, the Salim family, Sukanto Tanoto and Prajogo Pangestu built their fortunes after they obtained licenses to log and clear rainforest during the Suharto years. Between them they have over 140 offshore companies, mostly in the British Virgin Islands. More recently Widjaja, Tanoto and Pangestu have invested heavily in palm oil plantations. A series of reports earlier this year from the Pulitzer Center on Crisis Reporting described palm oil as one of the most controversial commodities on earth. Palm oil plantations have replaced “swathes of rainforest the size of small countries”. The documents obtained by ICIJ show that as Suharto’s rule came to an end in 1997-98, the number of new TrustNet companies and trusts set up for Indonesians spiked. TrustNet’s employee Stephen Breed arranged a trip to Jakarta in late 1997 to speak with at least one important client about the services TrustNet provided. He made an appointment to meet with Marimutu Sinivasan, chairman of Texmaco, an Indonesian textile and industrial conglomerate. Sinivasan was a favorite of Suharto, and state banks and government agencies extended some $2.2 billion in loans to Texmaco, much of it in the dictator’s final months in power. TrustNet incorporated a Cook Islands offshore company on April 4, 1997, named the Pipeline Trust Company Limited and transferred its shares to Sinivasan’s name on Aug. 13, 1997. The Pipeline Trust Company used the TrustNet subsidiaries Directcorp and Secorp as its director and secretary. Sinivasan was the sole shareholder. TrustNet later sent Sinivasan a power-of-attorney document on Dec. 11, 1997 that entitled him to open bank accounts and transfer money in and out of the accounts in the name of the company. Sinivasan could not be reached for comment. Other members of prominent Indonesia families set up offshore companies using TrustNet at this time. In September 1998 TrustNet set up a secretive offshore company called Pico Trading Limited. No real directors or owners were recorded. Invoice records show dozens of payments – usually tens of thousands of dollars each – made from Pico Trading’s bank account. More than $30,000 went to someone called “Yanti Rukmana,” the same name as Suharto’s oldest daughter. But, as the secretive record-keeping intended, there is no way of knowing from the documents if it was actually her. Suharto was finally forced from power on May 21, 1998, and was replaced by his deputy B.J. Habibie, who promised to increase transparency compared to the Suharto years. Yet even Habibie’s own sons used offshore companies, records reviewed by ICIJ show. His younger son Thareq Kemal Habibie was part of the rush of Indonesians setting up offshores in 1998. He formed two British Virgin Islands companies in the last weeks before Suharto had to resign. A decade later another son, Ilham, personally organized at least seven TrustNet companies to provide an offshore base for enterprises inside Indonesia, including exploration and mining. He did not respond to a request for comment. Most of Indonesia’s 240 million people have barely heard of the offshore world. But for wealthy and powerful Indonesians, it is still a routine part of managing their business and finances. [Non-text portions of this message have been removed]
