Panama Papers rock public faith in govt’s Pracha Rath scheme

The Pracha Rath scheme covers public-private partnerships (PPP) for the construction of national infrastructure and is a pet project of Prime Minister Prayut Chan-o-cha, who is desperate for it to go well.

The idea is for partnerships that lead to benefits for both the public and the private sphere, but for that to happen both sides must commit to “growing together” in good faith.

Concealing vast sums of money overseas could be a breach of that faith. As such, Thais were keen to hear whether any names featured in the massive leak of offshore financial dealings are also involved in the government’s Pracha Rath scheme.  

It has since been disclosed that among almost 1,000 Thai names in the leak of 11.5 million documents last week are singers, athletes, politicians and key business figures. More significantly, some of those business figures are working with the government on public projects. 

Using foreign legal and accounting firms to do business or store wealth in tax havens is neither unusual nor necessarily illegal.

Yet the secrecy and confidentiality it affords makes it a favoured method for money launderers, tax evaders and others who want to conceal funds. 

And that information blackout naturally triggers suspicion regarding Thais who have established companies in tax havens. 

So far, very few of those individuals have been brave enough to come forward and explain why their names appear in the Panama Papers.

That mirrors the general practice in Thai business, where big firms remain reluctant to disclose details of their offshore entities in their annual financial reports.

Such financial secrecy in a bid to minimise tax burdens is generally seen as legitimate business practice and can be perfectly legal. But that doesn’t mean all such transactions are legitimate.

The Prayut government is currently making strenuous efforts to bring the underground economy of entrepreneurs and small and medium-sized enterprises into the tax payment system. These people typically have little money to hire law firms to shield them from taxation. Meanwhile efficient taxation of salaried workers ensures that public funds keep flowing. That effort and efficiency seems to slacken markedly when the focus turns to the wealthy.

The Anti-Money Laundering Office (Amlo) has announced it will coordinate with counterparts in other countries to probe the transactions of Thais whose names appear in the Panama Papers. Authorities have promised to give more details at a press conference today.

The question is, can authorities force these individuals and other Thais to disclose details of their opaque overseas dealings, or must the public depend on voluntary declarations?

In particular, should the business figures who are involved with Pracha Rath projects and whose names appear in the Panama Papers be spurred to disclose information?

The judgement will depend upon how much public pressure is brought to bear.

But without such information, how can a doubting public trust that Thai corporations are sincerely committed partners in national growth?