PremiumTimes Malabu Scandal: Nigeria, Others Must Commit To End Secret Ownership of Extractive Industry Assets – Osinbajo

Nigeria and other resource-rich countries must commit to end the era of secret corporate ownership of assets in the extractive industry to curb the huge losses associated with such illegal activities.

Vice President Yemi Osinbajo said at the opening session of the two-day conference on ‘Beneficial Ownership’ conference in Jakarta, Indonesia, on Monday, 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.

Mr. Osinbajo made reference 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 $1 trillion 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 developing countries lost about $1 trillion annually to corporate transgressions, most of it 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,” the Vice President declared.

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

Highlighting the global risks and dangers posed by anonymous corporate ownership of assets, the vice President said the Panama Papers investigation, illustrated the monumental scale and threat of the menace.

Citing Nigeria’s experience with the Malabu Oil scandal, Mr. 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.

In Malabu oil scandal, then Minister of Petroleum Resources under the Sani Abacha administration, Dan Etete, used his official position to secretly allocate a lucrative oil prospecting license, OPL 245, to a company he had interest.

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, Mr. 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.

Contributing to the multi-stakeholder discussion on “tackling hidden ownership together”, Minister of State for Budget & National Planning, Zainab Ahmed, said with the country’s economy currently undergoing reinvigoration following the recent exit from recession, the country sees the beneficial ownership rule by EITI as an avenue to increase the country’s revenue earnings from taxes and attract new investments to the economy.

The Minister of Mines and Steel Development, Kayode Fayemi, reassured the conference that the review of the various laws in Nigeria to encourage the disclosure of information to the public on beneficial ownership of public assets, including anti-graft regulations and the media, were practical demonstration of Nigeria’s commitment to EITI in line with government’s fight against corruption.

Mr. Fayemi reiterated President Muhammadu Buhari’s call for the UK and other developed countries that have become safe havens for stolen resources and wealth from developing nations, like Nigeria, to give more meaning to EITI rule by facilitating the return of these stolen wealth to help develop their economies for the benefit of their citizens.

The theme of the conference, “Beneficial Ownership: Sharing Practice; Building Systems,” was inspired by the global outrage in 2016 that followed leaked confidential documents in Panama Papers data base by a consortium of investigative journalists, which implicated high-level individuals, businesses and organisations with links to the extractive sector.

PREMIUM TIMES was the only Nigeria newspapers that was involved in the global investigation, which revealed the use of anonymous shell companies to launder billions of dollars, while concealing the identities of the real owners and potential conflicts of interest.

The conference was to provide the forum for EITI implementing countries to discuss plans to achieve beneficial ownership transparency by 2020.