By Tony Samson
IN ECONOMICS, one can look at any issue from either the demand or supply side. In case of unexplained wealth, for example, one way to check its existence is to see how it is spent. Lifestyle checks are premised on a simple assumption. A person, especially in public service, is expected to live within his known legitimate income which includes his monthly salary, net of taxes and the practice of some other profession, like boxing, property development, and TV hosting.
There is the statement of assets, liabilities, and net worth (SALN) that details a government official’s financial status. This is intended to include any wealth previously (and currently) amassed and unconnected with government service. The list, of course, does not include assets, including cash or property, in the name of other people.
Does the salary of a public official buy the same goods and services as an identical amount for his private sector counterpart? Not at all. Public officials don’t pay for their staff (some of them are researchers with shapely legs), cars, drivers, security details, and gasoline, restaurant meals where they’re guest speakers, salaries and meal allowances, first class trips to Paris in aid of legislation (check out the subway system and how they raise snails), planes for private use when visiting devastated areas, and honoraria (yes, your honor). They also get treated by strangers seated in other tables in a restaurant who get to have their selfies taken with them.
Add to these other perks like Christmas and birthday gifts, insider info on stocks and allocations on IPOs, and friends in car dealerships providing bullet-proof cars for free as “brand ambassadors.” And what about the undisclosed income of other members of the family, some of whom are political consultants to large companies and exclusive franchisees of fast food chains.
One unstated assumption in a lifestyle check is unchallenged — unaccounted-for wealth equals suspicion. If those living beyond their means merit scrutiny, are those publicly living in genteel squalor to be automatically considered honest? What if their assets are hidden from view? Nobody investigates unexplained poverty or unavailable opportunity.
What about those who join government already wealthy and declaring as much as 10 digits as their net worth, are they automatically above suspicion and lifestyle checks? Does possession of billions automatically presume one is no longer greedy? Does greed have an expiry date?
In the corporate world, lifestyle checks, which are also randomly conducted, may have another purpose. They check if an executive’s way of life supports the corporate image. There is likely to be a negative reaction to conspicuous poverty. Why is the vice-president of a large utility company living in a socialized housing development with the laundry hanging outside the window? Isn’t he paid a hefty salary with bonuses and perks?
In the private sector, poverty is too readily perceived as a lack of talent or enterprise. “Poor” and “loser” are sometimes interchangeable. Okay, maybe the low-rent executive has large agricultural properties that are below the radar — but that’s another story.
Still, even corporate conglomerates look at the other end of the lifestyle spectrum. An extravagant lifestyle with yachts and condos in Madrid can also raise red flags for the head of purchasing.
In the last presidential election, the exposé of a candidate’s Hollywood-type mansion with a swimming pool in the boondocks outside the metropolis contributed to his image problems. Never mind if the palatial grounds were not in his name. If his grandchildren’s classmates went there on summer breaks and posted pictures in social media, the presumption of ownership is hard to deny.
Even in a culture that tolerates a little lifestyle extravagance from public officials, there is a line crossed that triggers off alarm bells. One cabinet official in a previous administration famously warned the looters in his party to “moderate their greed.” You can steal, but not too much, he seemed to say.
With the compliance rules for banks to know your customer (KYC) and the myriad rules against money laundering, it takes more creativity and the use of dummies (who can be greedy too) to hide illicit wealth. So, flaunting it with a luxurious lifestyle invites an investigation… and attracts a horde of relatives who want to join in the trough. Isn’t this how dynasty politics starts?
Tony Samson is Chairman and CEO, TOUCH xda.
https://www.bworldonline.com/checking-lifestyle-for-unexplained-wealth/
2019-08-15 16:02:23Z
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