Palau newspaper faces defamation charges over leaked tax report

Palau newspaper Island Times was sued for “negligence and defamation” after it shared leaked tax documents of Surangel and Sons, a company owned by the father of the country’s president, to social media. Pacific and global media groups warn that the lawsuit is an attempt to silence Palauan media that “threatens public trust in media and private sector transparency.”

Palau is a Micronesian nation with a population of around 18,000.

Surangel and Sons, the country’s largest private sector employer with diversified business operations, insisted that the newspaper published an article containing disinformation. “The lawsuit stems from an article published by Island Times that contained false and unsubstantiated allegations against the company.”

Based on the tax documents, Island Times publisher Leilani Reklai claimed that in 2023, Surangel and Sons reported a gross revenue of over USD 70 million and claimed deductible expenses of over USD 67 million, leading to just USD 300,000 in business profit taxes. In their reporting on the issue, Island Times noted that the President, Surangel Whipps Jr., has repeatedly emphasized how Palauan businesses pay a higher share of taxes.

The company is seeking punitive as well as compensatory damages. In a statement, Surangel and Sons shared that the “monetary awards should be substantial enough to prevent similar conduct from the newspaper and Reklai in the future.”

In the face of the pressure, Reklai has insisted she will not stand down. She underscored the need to face the charges because of the dire implications for the media sector.

I feel like the lawsuit is trying to control how the media here in Palau tells a story. I feel like we are being intimidated that we are being forced to speak a certain narrative rather than present diverse community perspectives.

If I don’t stand up to this, it sends a signal to all journalists here that they risk facing claims for damages from powerful companies and government officials while carrying out their work.

Palau Media Council noted that the newspaper reported on matters that are already in the public domain.

This lawsuit raises critical concerns about citizens’ access to information and the freedom of the press — both of which are cornerstones of a democratic society.

The council sees this legal action as an assault on press freedom and an attempt to undermine the accountability that is vital to democracy.

She did not originate the information but responsibly conveyed what these documents suggested, raising questions about the current administration’s narrative on corporate tax contributions.

Reporting on such information is a journalistic duty to ensure transparency in tax policies and government incentives impacting the private sector.

The Pacific Freedom Forum made a similar note about the role of journalists in obtaining, studying, and sharing official documents as it urged Palauan authorities to reform its restrictive defamation media laws. “Many governments have decriminalized these outdated laws because of the censorship and fear they represent.”

The Pacific Islands News Association also released a statement expressing concern about the defamation suit.

Democracy thrives when people are informed enough to form independent opinions about their lives. For that, we need a strong, independent media. We urge the government and business community in Palau to recognise the media as defenders of democracy, not to suppress it in reporting vital national issues.

But Surangel and Sons asserted that “the unauthorized disclosure of sensitive business information not only violates our privacy rights but could possibly impact our competitive position in the market.” The company added that in publishing the article, Island Times was “jeopardizing the employment of hundreds of Palauan workers,” and announced that it would discontinue selling the newspaper in its retail stores.

It also called out Pacific media watchdogs for seemingly prejudging the case.

This approach undermines ethical journalism and threatens the privacy rights of businesses in Palau. These organizations seem to have readily sided with Islands Times without conducting independent research, such as reviewing the lawsuit we filed.

Palau’s Minister of Finance said that the leaked tax document contains false and altered information.

I would hope the media would make extra effort to help educate the public and discourage misinformation and breaches of privacy of the tax office and any other government office.

In 2023, Palau was among the countries that topped the Pacific Islands Media Freedom Index.