The strongest move by the country’s oldest political party since the charter drafting began months ago has injected more heat into the political situation. The Democrats are opposed to the question proposed by the National Legislative Assembly (NLA) on whether the appointed Senate should be empowered to join elected MPs in voting to select a new prime minister.

The Democrats, though, have so far declined to join the Pheu Thai Party in campaigning against the draft constitution, arguing that a no vote would lead to a redrafting of the charter and an extension of military rule.

Instead, they are calling on Prime Minister Prayut Chan-o-cha to clarify what a new charter would look like should the current draft fail to pass the national vote, tentatively scheduled for August 7. Government figures have suggested that a previous charter or mixture of charters could be wheeled into place should a no vote prevail.

The Democrat Party had previously fallen in line with the ruling National Council for Peace and Order (NCPO), but that has now changed.

The NCPO, meanwhile, has been consistently critical of politicians – particularly those who voice opposition to its rule. Democrat leader Abhisit Vejjajiva has now joined other politicians in rousing the junta’s ire. The Democrats have dubbed the draft constitution ” democracy in retreat”. Abhisit said the draft “distorts the democratic will and weakens people’s power compared with state authority”.

In response, General Prayut, who also heads the NCPO, slammed politicians who criticised the draft and the NLA’s additional question, saying it was a matter for voters. “They [politicians] have no right to decide whether to disagree or not. This is a national referendum and it’s a matter for the people,” he said.

Soldiers subsequently seized more than 1,600 boxes of medicines bearing the Democrat leader’s image and due to be distributed for Songkran by party officials in Kamphaeng Phet. The seizure marked the first such military action against the Democrats. Earlier, thousands of red Songkran bowls bearing a message from former prime minister Thaksin Shinawatra were seized from Pheu Thai Party politicians.

Abhisit urged the junta to be more tolerant of opinions different from its own. He said it could not force agreement and should instead heed opinions expressed with good intention. “The prime minister should not view people who disagree with him as enemies. They are in fact his good friends,” he said.

Only time will tell just how far the Democrats are willing to go in their opposition to the charter draft and additional referendum question. Meanwhile observers will be watching for changes in their relationship with the NCPO. It should be noted that many of the party’s supporters are avid backers of the junta. Will the Democrats be able to win back support from these people when the dust settles?

If the Democrats are serious about their opposition and also manage to regain support from disillusioned backers, the draft charter and the additional question are unlikely to get an easy passage at the referendum. As it has turned out, the country’s two largest political parties are both against the draft constitution.

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.