We must end secret ownership of extractive industry assets – Osinbajo

We must end secret ownership of extractive industry assets – Osinbajo
October 23 12:01 2017

Vice President Yemi Osinbajo has said Nigeria and other stakeholders must unite to end the era of secret corporate ownership of assets in the extractive industry.

Osinbajo who spoke at the opening session of the two-day conference on ‘Beneficial Ownership’ conference in Jakarta, Indonesia, on Monday, said this is necessary to curb the huge losses associated with such illegal activities.

The Vice President reminded the audience that the sad story of Africa’s underdevelopment and other developing economies was masked or hidden under the wall of secret corporate ownership of assets in the extractive industry.

He referred to the 2015 High Level Panel report on Illicit Financial Flows from Africa chaired by former South African President, Thabo Mbeki, which revealed that Africa lost over $1trillion over a 50-year period and more than $50 billion annually to illicit financial flows.

Also, One Campaign, in another report titled “One Trillion Dollar Scandal” said in 2014 that developing countries lost about $1 trillion annually to corporate transgressions, most of it is traceable to the activities of companies with secret ownership.

“So for us in the developing world, and especially in Africa, breaking the wall of secret corporate ownership is an existential matter. It is for us literarily a matter of life and death.

“Anonymous corporate ownership could serve as vehicles for masking conflicts of interest, corruption, tax evasion, money laundering, and even terrorism financing,” he said.

He said the Panama Papers investigation, illustrated the monumental scale and threat of the menace.

Citing Nigeria’s experience with the Malabu Oil scandal, Osinbajo said the country was still grappling with the negative consequences of the use of secrecy by senior government officials and their cronies between 1993 and 1998 to award themselves juicy contracts in the extractive industry.

Commending United Kingdom, Norway, Netherlands and Denmark for leading the initiative to establish public registers of the real, human owners of companies in their countries, the Vice President urged other G8 and G20 countries to follow, by initiating actions to end corporate secrecy at home and their dependencies.

With a global register of beneficial ownership already recording entries on about two million companies, Osinbajo said existing legislative measures must effectively discourage or totally prohibit non-disclosure agreements by governments with corporations.

He also asked countries to re-evaluate the use of secret trusts to hide beneficial ownership from the prying eyes of the law.

Nigeria, he noted, fully subscribed to EITI and the ownership transparency principles, as they not only aligned with the country’s national priorities, but also boost the electoral mandate of the present administration to fight corruption, combat insecurity and grow the economy.

Apart from being one of the first set of countries to join the EITI, and one of the 12 implementing countries to pilot beneficial ownership disclosure, he said Nigeria was also one of the few to have disclosed beneficial ownership details in three audit reports.

Besides, he said, the Nigerian Extractive Industries Transparency Initiative NEITI, also published a comprehensive roadmap that would culminate in the establishment of the register of beneficial owners of companies operating in the country’s extractive sector.

Specifically, he said President Muhammadu Buhari during the May 2016 London anti-corruption Summit made a commitment to establish a public register of the beneficial owners of all companies operating in the
country.

In December 2016, the country also joined the Open Government Partnership, OGP and submitted a National Action Plan that prioritises the establishment of a public register of the beneficial owners.

“These are commitments that we made not because we are seeking applause or commendation, but because we are convinced they are in our best interests,” he said.

Other measure adopted to reinforce the country’s commitment to the EITI, the vice president said, included presentation of a draft Money Laundering Prevention and Prohibition Bill to the National Assembly in 2016 to correct the deficiency of the 2011 Act Money Laundering (Prohibition) (Amendment) Act No. 11, 2011.

This, he explained, was to bring the law in line with the Financial Action Task Force, FATF, standards and remove the barriers to full
beneficial ownership disclosure in the country.