MELBOURNE–When Hong Kong authorities charged Thomas and Raymond Kwok in one of the territory’s biggest bribery cases in 2012, the billionaire brothers resigned as heads of the company controlling one of Australia’s most lucrative security firms.

But while the Kwoks stepped down as the directors of Wilson Offshore Group Holdings (BVI) Limited — the holding company for major Australian government contractor Wilson Security — any transfer of power was an illusion.

Raymond (l.) and Thomas Kwok

With the help of controversial law firm Mossack Fonseca, the brothers secretly retained control via a pair of paper companies registered in the British Virgin Islands. The holding company’s new directors were in fact two firms run by the Kwoks themselves. Wilson Security subsequently earned hundreds of millions of dollars in contracts for Australia’s off-shore detention centers and government departments include defense and the prime minister’s office. (Thomas Kwok was sentenced to five years in prison in 2014, while Raymond Kwok was cleared of all charges.)

Panama Papers expose monitoring gap

The revelations, reported by the Australian Broadcasting Corporation, are among a raft of disclosures in the Panama Papers that raise questions about Australia’s monitoring of business that extends beyond its borders into Asia and further afield.

“One of the key issues out of all this, which I think a lot of governments and companies will be starting to question, is how well do we know the people we do business with?” Transparency International Australia CEO Phil Newman told Asia Times.

“And that goes to the general pushes which have been happening in the G20 and the OECD about the need for much stronger beneficial ownership regimes nationally and globally — looking to put in place registers where owners or companies are much more public than they are today.”

The leaks, which have implicated Russian President Vladimir Putin and senior members of the Chinese leadership, have also exposed Australians moving their money overseas to avoid scrutiny from authorities. The Australian Taxation Office said it was investigating more than 800 wealthy individuals, more than 120 of whom have been connected to an off-shore entity in Hong Kong. Having an off-shore account itself is not illegal, and it’s unclear how many of those named may have engaged in criminal tax evasion, rather than legitimate accounting. Tax office data also showed that low-tax Singapore was by far the most popular destination for Australian firms moving profits off-shore, which is also not illegal.

Newman said further cooperation was required between Australia and its Asian trading partners to minimize tax evasion.

“I think what we would say is that there is a lot of rhetoric around cooperation on these matters but there’s less evidence of significant, tangible action taking place, and even less evidence of investigations and prosecutions and penalties being applied where there are issues found,” he said.

Oz draws illicit capital

More troubling are indications that Australia has become a major destination for money laundering. In January, evidence of dirty money in the housing market, much of it from Asia, was cited as a reason for Australia’s downgrade to 13th place in TI’s Corruption Perceptions Index.

Jason Sharman, deputy director of the Centre for Governance and Public Policy at Griffith University, Queensland, said Australia’s corruption problem was worse than its reputation suggested.

“In fact it’s got a reputation as a fairly clean jurisdiction that it probably doesn’t deserve, in part because of things like the procurement deals to do with the Kwok brothers but at least as much through elites throughout the Asia Pacific stealing money and then putting it in Australia, particularly in Australian real estate which, is a problem in the main the Australian government has chosen to ignore,” said Sharman.

China pipeline?

Last year, Four Corners, the ABC’s flagship investigative journalism program, warned that Australia was a destination for tainted investment from China, described by one interviewee as “by far the biggest exporter of illicit capital.”

In his own research, Sharman found that politicians and officials in Papua New Guinea who had been either accused or convicted of corruption held about A$200 million worth of property in Queensland alone.

“Recently you’ve seen initiatives in Britain and the United States to actually follow through and see who owns property and in some cases to try and seize that property, even though the crimes from which the money was derived did not take place in the United States and Britain,” said Sharman. “In contrast the Australian government’s approach has been kind of denial and a head-in-the-sand approach.”

Australia was already capable of probing and even seizing suspicions investments, he said, but lacked political will.

“We’ve got the international commitments saying we should do that and there are the domestic laws on the books that would enable them to do that,” he said.

John Power is a journalist who has reported on North and South Korea since 2010. His work has appeared in outlets including The Daily Mail, The Christian Science Monitor, Mashable, NK News, Asian Geographic, The Diplomat, The Korea Herald and Narratively, among others. He is currently based in Melbourne, Australia.

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