Extradition treaty will not harm banks, property: MMLee Kuan Yew's "laughable" remark might soon indeed turn out to be, errr, laughable. On Tuesday, he told us that it's very unlikely that any wanted Indonesians are here in Singapore at all.
Wednesday • April 25, 2007
By Lee U-Wen
THE agreement between Singapore and Indonesia to sign an extradition treaty will not scare wealthy Indonesians away from Singapore, nor will the pact harm the Republic's banking and property sectors.
Making these points yesterday, Minister Mentor Lee Kuan Yew said the treaty — to be signed in Bali on Friday — would, rather, "act as an inhibitor".
"It's laughable. Do you believe that any Indonesian who was likely to be extradited would be here at all? (The treaty) acts as an inhibitor, and does give an extra barrier for any would-be escapee from their system," he said in an interview with Reuters before gracing the opening of its new office at One Raffles Quay.
However, Forbes quickly reported that Singapore is believed to be "a haven for as many as 200 Indonesians suspected of embezzlement, many of whom fled [Indonesia] with stolen funds as the banking system collapsed in 1997."
Today is Saturday, and we learn from the Straits Times itself that in fact, the Indonesia government already has 18 specific individuals living in Singapore that they want to investigate:
LKY has been insisting that Singapore has "very strict rules to prevent money-laundering". That's his way of saying that there is no dirty Indonesian money in Singapore. I do agree with Lee that Singapore's anti-money laundering rules are strict. Our rules satisfy the international standards set by the Financial Task Force Action on Money Laundering.
ST April 28, 2007
Indonesia to go after 18 suspects
BALI - INDONESIA plans to 'go after' about 18 people living in Singapore following the signing of an extradition treaty with the Republic, Attorney-General Abdul Rahman Saleh told reporters yesterday.
'There are a lot of Indonesian assets in Singapore. We need to ask for those assets to be returned.'
Indonesia has said that the treaty would allow Jakarta to chase down alleged corrupt officials and businessmen from the time of former dictator Suharto.
Deputy Attorney-General Hendarman Supanji said a list of 20 people - 'suspected, accused or convicted' - had been drawn up and would be handed to Singapore almost as soon as the signing was over, he told reporters in Jakarta.
Indonesian Defence Minister Juwono Sudarsono said last Sept 25 that an extradition treaty would help track down six Indonesian businessmen living in Singapore with US$600 million (S$910 million) in government debts.
Some 18,000 Indonesians, with a total net worth of US$87 billion, are said to be living in Singapore.
Mr Teten Masduki, founder of Indonesia Corruption Watch, believes tens of billions of US dollars have been stockpiled in the Republic since the 1997 financial crisis.
Jakarta had accused Singapore of delaying the treaty for fear that the suspects' withdrawals would shake its financial system and property sector.
Singapore had denied it was a magnet for laundered funds, saying adequate safeguards were in place.
Today the MAS has regulations that spell out in great detail all the anti-money laundering procedures that banks in Singapore must follow. For example, there are rules about checking on the customer's true identity; keeping proper records of his transactions; verifying his sources of funds; and reporting any suspicious transactions to the authorities.
However, there is something which Lee didn't tell you. So Mr Wang will have to do the job again.
These anti-money laundering rules basically came into existence only in November 2002. It was all part of a worldwide response to the September 11, 2001 terrorist attacks. The concern was that terrorist groups could secretly be using banks to finance their activities. All over the world, countries including Singapore then began to pay serious attention to the need to implement anti-money laundering rules for their financial institutions.
The point is that prior to November 2002, MAS Notice 626 on the Prevention of Money Laundering simply didn't exist. In those days, Singapore, like most other countries in the world, simply didn't take money laundering as seriously as it does now.
It is alleged that corrupt Indonesians had fled to Singapore after the 1997 Asian financial crisis, and deposited their illegal money into our banking system. This sounds quite plausible to me. Singapore would have been a natural destination, because it is so close to Indonesia.
And in those days, our banks simply wouldn't have had any standard systems, processes or policies to deal with the situation. Back then, it may not even have been improper for the bank to simply accept the money and say thank you, no further questions.
So when Lee Kuan Yew says that Singapore has "very strict rules to prevent money-laundering", what this means is that today, we have very strict rules to prevent money-laundering. We didn't have these rules in 1997, 1998, 1999, 2000 or 2001 - the critical years, from Indonesia's point of view.
These would have been the years when the corrupt Indonesians urgently needed to flush their dirty money through our financial system, to conceal its origins and "wash" it clean. In other words, money laundering.