With regard to the politicians, the National Anti-Corruption Commission (NAAC) is empowered to go after their financial records. Those who hold or used to hold public office are required by law to report their assets in Thailand and abroad to the anti-graft agency before taking and after leaving office.
In this context, assets hidden abroad in offshore shell companies as arranged by the law firm could draw legal action if it can be proved they exist under the names of ex-politicians or their nominees.
Coincidentally, the leak happened just as the military-led government is about to hold a referendum, possibly in August this year, on a new draft charter that would reduce the powers of elected politicians.
In addition, the Anti-Money Laundering Organisation (AMLO) is tasked with investigating suspected cases in which illicit money from trafficking of narcotics and people, and other crimes was laundered and hidden in offshore tax shelters.
For rich businessmen and celebrities, it is not unusual to set up offshore companies to minimise or avoid tax payment. Even well-known multinational companies in the West utilise such means as a crucial part of their tax and asset management strategies to avoid bringing funds into countries where tax liabilities are relatively high.
Meanwhile Thailand-based wealthy individuals and companies seek loopholes to park their money abroad and then, with the help of specialist lawyers and bankers, manage to get those funds back into Thailand through various channels and methods.
In fact, Panama is not the most popular tax shelter for Thais, but many do use the legal services of Mossack Fonseca to manage their assets abroad. The Panama-based law firm has a branch office in Bangkok.
In terms of overseas investment by Thailand-based persons and entities, the Cayman Islands is the most popular destination with nearly $10 billion in outstanding investment, followed by Singapore ($8.1 billion), Hong Kong ($7.7 billion) and Mauritius ($6.7 billion).
Among the major sectors with the most overseas investment are mining, financial services and insurance, food and beverages, and real estate.
Generally speaking, these overseas investment activities are legal since businesses have to manage their investment portfolios and tax liabilities efficiently.
However, there are loopholes for those who intend to hide their ill-gotten wealth or avoid the hefty tax liabilities if they bring home income from abroad.
To manage those funds, secretive offshore companies are set up in territories where rules and regulations create tax shelters.
In this context, US regulations are currently among the strictest, requiring banks around the world to report any American citizen’s overseas deposits which are in excess of $50,000.
Yet, there are still many loopholes for US firms seeking to avoid hefty taxes back home. For example, Apple held more than $181 billion in offshore accounts to avoid paying billions of dollar in federal taxes.
The practice, which is common among major technology firms such as Cisco, Google and Hewlett Packard, is legal but has raised ethical questions.
Hence, the problem as caused by the rich and powerful is global in nature and affects every capitalist society.