Samoa PM Responds To Offshore Business Allegations

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Tuilaepa says Samoa is ‘not a major player’ in offshore industry

By Jasmine Netzler

APIA, Samoa (Samoa Observer, Feb. 2, 2014) - Prime Minister, Tuilaepa Sa’ilele Malielegaoi, says banking centres in the United States and the United Kingdom want to leave offshore finance centres such as Samoa with "nothing."

Tuilaepa made the point while responding to continued exposes of tax havens around the world by overseas media, the latest focusing on China.

Speaking to the media on Thursday, Tuilaepa criticised claims made in an article published in the Samoa Observer on 27 January 2014 titled "Samoa companies invest $2 billion tala into China".

The article quoted overseas estimates that about $2 billion tala is routed through the offshore industry here and then sent back there as investment to avoid taxes.

Tuilaepa says he read the article in question. He explains that Samoa has 30,000 registered offshore businesses.

He claims that this is a very, very small number compared to the registered offshore businesses in the British Virgin Islands.Tuilaepa said that, by comparison, the British Virgin Islands has a million offshore registered companies.

Samoa is nothing like the British Virgin Islands "that has been doing this sort of business for a long time".

His claims to Samoa not being a major global player in the offshore world are backed up by figures from a study showing that the "The vast majority of the almost US$70 trillion foreign financial assets are concentrated in North America, Europe and Japan.

"Areas with assets below $US50 billion are not shown for their relative insignificance in the global context," wrote report authors Benjamin Hennig, from the University of Oxford, and Jan Fichtner, from the University of Frankfurt.

Samoa is not shown in the study, suggesting the centre here handles assets of less than US$50 billion. "Where are those billions?", said Tuilaepa.

"There are no monies."

Instead he said the business strategy is that companies from overseas register their businesses here in Samoa.

They are then called Samoan companies but "they don’t come here".

Tuilaepa pointed out that these companies continue to operate in the countries where they are operating in despite it being called a Samoan company.

He said this was using your brains (ole faaogaina o le mafaufau) – what is called using your skull (ole faaogaina o le tigipoo).

"Give you $5 and call it a business from Samoa," he said.

Tuilaepa said the only good thing about the whole matter is that "taxes are reduced for these companies".

"Taxes would be reduced where they live."

He claims that this is where the article was wrong.

"They don’t give Samoa that kind of money – they live with their money the only thing is they register as a Samoan company."

This is the kind of business that goes on in the United States, Switzerland, and many other countries, he said.

He claims that what is happening is that financial centres in New York and London are wanting to take on all other businesses and to leave countries like Samoa with nothing.

But Samoa does not engage in offshore investments from people that break the law.

He said that in other countries this was the case since they had some lapses in their control. Samoa is known as the clean centre, said Tuilaepa.

This was a result of Samoa still being involved in monitoring processes. What Samoa gets out of these funds go towards financing the Manu Samoa and the competitions held in Samoa, he said.

Without this financial support, Samoa would no longer be part of World Rugby because it would not be able to continue as a result of lack of funds.

Some of the money from this is used to finance projects in; water, electricity, the roads, schools and telephones among other things. He said that some small part of it was used for financing rugby. Tuilaepa recalled a time while he was Secretary of the Ministry of Finance while Sam Saili was the Minister of Finance.

Vanuatu he said was the only country in the Pacific that already operated an offshore business. The minister and himself visited Vanuatu, then Papua New Guinea to do a study on this business.

When they returned to Samoa they tried to look into setting this up in Samoa. However, Sam Saili was eventually booted out of Parliament in which he, Tuilaepa took over as Minister of Finance.

Mr Saili then returned into parliament and looked into the matter again. This was in 1988.

In 1992, a specialist from Vanuatu came over especially for this offshore business venture. Erna Vaai headed the business back then, said Tuilaepa.

Eventually, in another 1000 years, Samoa would be likened to the offshore business level the British Virgin Islands is currently at today, he said.

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