Vice President Yemi Osinbajo says experience has shown that
anonymous corporate ownership could serve as vehicles for masking conflicts of
intereste, corruption, tax evasion, money laundering, and terrorism financing.
The vice president
spoke Monday morning in Jakarta, Indonesia, at the ongoing beneficial ownership
conference of the Extractive Industries Transparency Initiative (EITI). Osinbajo
said while aonymous companies are not always illegal or designed to harm, secrecy
provides a convenient cover for the criminal and the corrupt.
According to him,
for developing nations, especially Africa, breaking the wall of secret
corporate ownership is an existential matter; of life and death as masked or
hidden corporate ownership is deeply implicated in the sad story of
underdevelopment. He cautioned that opacity in one section of the globe
undermines openness in the other, stressing the need for all countries to break
down this wall together as they are all at risk of the evil effects of opacity
in business ownership. Osinbajo disclosed that Nigeria was still grappling with
the negative consequences of the use of opacity by senior members of government
and their cronies between 1993 and 1998 awarding themselves juicy contracts in
the extractive industry.
"One of
such incidents involving a company called Malabu Oil and Gas has been and is
still subject of criminal and civil proceedings in many parts of the world
involving huge legal costs while the full benefit of the natural resource
remains unexploited for the benefit of the people of Nigeria to which it
belongs. "We must be careful not to frame this campaign as a zero-sum
between society and business. While governments and citizens stand to benefit
from increased revenues, better law enforcement in this area should improve
citizens’ welfare as a result of more ownership transparency. Many big
businesses are equally concerned because most are legitimate and many have
signed on to business integrity protocols such as EITI and the UN Global
Compact.
"Legitimate
businesses benefit not only from the better business climate that results when
governments better serve their citizens but also from knowing who they are
doing businesses with or competing against, they benefit from a level playing
field, lower costs of doing business, and from reduced reputational
risks," he said. He stated: "A report that will be frequently cited
in this gathering is the one by the One Campaign, titled the 'One Trillion
Dollar Scandal.' The 2014 report claims that developing countries lose $1
trillion annually to corporate transgressions, most of it traceable to the
activities of companies with secret ownership."Another report that may
enjoy mention here is the 2015 report of the High Level Panel on Illicit
Financial Flows from Africa chaired by former South African President Thabo
Mbeki. The panel stated in its report that Africa had lost over $1
trillion over a 50-year period and that Africa loses more than $50 billion
annually to illicit financial flows. Most of these illicit flows are
perpetrated in the extractive sector and through companies with hidden
ownerships."
Noting that on
many occasions, companies had incurred hefty fines in their home countries for
engaging in bribery and other unethical conducts, Osinbajo said hidden
ownership and other underhand business practices could thus erode profitability
and shareholder value. The vice president saluted the UK, Norway, Netherlands
and Denmark for leading the way in establishing public registers of the real,
human owners of companies in their countries, urging other G8 and G20 countries
to follow suit. He, however, noted that current legislative measures in those
countries might need to go farther to effectively discourage or totally
prohibit non-disclosure agreements by governments with big corporates as well
as to re-evaluate the use of secret trusts to hide beneficial ownership from
the prying eyes of the law.
He said Nigeria would remain on the board of the EITI
and the ownership transparency train because they aligned with her priorities
and would help to advance the electoral mandate of President Muhammadu Buhari's
administration--fighting corruption, combating insecurity and growing the
economy. Osinbajo concluded: ''As difficult as it may seem, establishing a
publicly accessible register of beneficial owners of companies may be the
easiest part. Making the register count will take a lot of work. It will be
important to develop mechanisms to verify the data disclosed and to build the
capacities of tax authorities, law enforcement agencies, media and civic groups
and even citizens to wade through, interrogate, make sense of and use the data
in the registers.
"We also need
to move away from the illusion of a magic bullet. In fact, there are no magic
bullets in the quest for openness and governance reforms. Those who profit from
opaqueness will not roll over. They do not have the incentives to do so. "So, it is not inconceivable that as we
are busy trying to break down the walls of corporate secrecy, they are also
busy erecting new ones. So have no illusions that they will not devise grand
schemes to game the system. In fact, they will try. Our task is to make it more
difficult for them to hide or disguise the identities of real owners of
companies to the detriment of the larger society. As with freedom, the price of
openness will always be eternal vigilance."
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