A crowded hospital, the Panama Papers and squandered public funds

The other day, I visited a relative in a general hospital.

Apr 15, 2016

By Anil Netto
The other day, I visited a relative in a general hospital.

I was shocked to see how crammed the conditions are. In the ward section he was in, as well as in other nearby sections, a space originally meant for three beds on either side now had five beds on each of the two sides. The middle space, which was meant to be an open space, had another two to four beds.

In other words, a section originally meant for six beds, (you can count the number of bed head panels nailed to the wall) now had 12-14 beds. Similar conditions can be found in some of our other general hospitals.

Why do patients have to be crammed in overcrowded government hospitals? Is it because our country lacks funds to provide adequate social amenities for everyone? I don’t think so.

We are supposed to be a resource-rich nation. But, we are unable to hang on to our doctors and specialists in the public sector or provide space for in-patients.

We have lost billions of ringgit through corruption. Over the last decade, the illicit outflow of billions of ringgit in funds from the country has cost the nation dearly.

This is not a problem confined to Malaysia. Of late, we have seen how money has been transferred around the world and stashed abroad.

The Panama Papers provide a startling glimpse: a stash of 11.5m confidential documents about what was being hoarded in 214,000 offshore companies was leaked to the media.

These documents are revealing, as they provide an insight into how the rich, including several heads of states and government leaders, hide their money abroad.

Now, much of the money may have been acquired and then transferred abroad legally. But some of it could be money from shell companies or acquired from illegal activities, like drug trafficking or, simply stashed abroad to evade tax.

There is a difference between tax avoidance and tax evasion. Generally speaking, tax avoidance is legal, while tax evasion and money laundering are illegal.

A lot of media attention focuses on tax evasion using offshore havens and foreign bank accounts.

But less attention is given to tax avoidance, which is usually done with the help of tax accountants and specialists who give advice on the different kinds of tax incentives available and options a person or firm can use to reduce tax liability.

For an individual, sometimes, this could mean setting up a company to reduce the amount of tax paid or, it could mean spouses opting to have separate or joint income tax declarations.

Now, tax avoidance may be legal, but if those earning large incomes end up paying small amounts of tax, then there is something seriously and morally wrong with the system. Throw in an unjust distribution of national income and a regressive tax such as the GST, and you will find a system weighted in favour of the wealthy.
In the case of 1MDB, major questions remain about how public money and public land was used by this outfit. Public land was sold cheaply to 1MDB which, in turn, sold or revalued it at market price.

This is a loss of billions of ringgit in public money which could have gone to public coffers, had the government held on to the land. Given that the audited accounts for the year ended 31 March 2015 are still not ready and the auditor general’s report has been classified, questions about 1MDB’s massive investments and international transfers of funds have not yet been answered.

Speaking of the cases of 1MDB and Brazil’s Petrobas, Mark Branson of Finma, Switzerland’s independent financial markets regulator, had this to say:

“The extent of the cases, and the sums involved, are vast. We are talking about cash flows amounting to several billion US dollars, with individual transactions running into hundreds of millions. Those are significant sums of money for developing nations like Malaysia and Brazil, in which the average monthly income is less than US$1,000.”

The Bishop of Rome, Francis, is all too aware of the global reality. He has said that scripture demands that we work towards an economic system that caters to the needs of the poor and the excluded. “In the case of global political and economic organisation, much more needs to be achieved, since an important part of humanity does not share in the benefits of progress and is, in fact, relegated to the status of second-class citizens,” he once said.

Francis drew a parallel with the Gospel account of Zacchaeus, a tax collector who profited from an unjust economic and taxation system while leaving the multitude of hardworking taxpayers in misery (Luke 19:1-10). Zacchaeus was so touched by Jesus’ words that he was stirred to commit himself to giving half his possessions to the poor and to repay anyone he had defrauded four times the amount.

Today, it is not individual tax collectors who need to be reformed. The entire national and global financial architecture needs to be shaken up to remove tax havens for ill-gotten gains, (the huge bulk of these gains perhaps skimmed off public funds).

We have to ensure that public money is channelled to those who most need it and not siphoned away. This way, we can change the current reality of the patients having to be crammed into overcrowded hospitals and the poor denied the opportunities to live life to the fullest.

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