By Johnbosco Agbakwuru
ABUJA – VICE President Yemi Osinbajo, Monday, said that the developing world especially Africa, should break the wall of secret corporate ownership if they want to survive.

According to him, “It is for us literarily a matter of life and death.”

Prof. Osinbajo said that 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.

The Vice President who stated this at the opening session of the two-day conference on ‘Beneficial Ownership’ conference in Jakarta, Indonesia, said 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 said, “Masked or Hidden corporate ownership is deeply implicated in the sad story of our underdevelopment.

“Yes, we know that anonymous companies are not always illegal or are not always designed to harm. But we also know that secrecy provides a convenient cover for the criminal and the corrupt. And we are not just operating from the theoretical or hypothetical standpoint.

“Our lived experience has shown clearly that anonymous corporate ownership could serve as vehicles for masking conflicts of interest, corruption, tax evasion, money laundering, and even terrorism financing.

“But this is not just a developing world’s problem. We live in a more inter-connected world, and anonymous companies have footprints and tentacles that do not respect the developed/developing divide.

“Even when the degree of exposure may differ, everyone in today’ world is at risk of the dangers posed by anonymous corporate ownership. If nothing else, the Panama Papers clearly illustrated the global scale and spread of this problem. So this is a global challenge and nothing less than a truly global approach will be needed to tackle it.”

He said that the EITI and its various partners deserved commendation for not relenting in the campaign to end corporate secrecy.

He said, “I will be preaching to the converted if I say that hidden corporate ownership poses real and present danger to most countries, especially the developing ones such as ours.

“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.

“So for us in the developing world and especially in Africa, breaking the wall of secret corporate ownership is an existential matter.”

Prof. Osinbajo commended the United Kingdom, Norway, Netherlands and Denmark for leading the way in establishing public registers of the real, human owners of companies in their countries and called on other G8 and G20 countries not only to follow suit by initiating actions to end corporate secrecy at home and their dependencies.

He said, “Open Ownership and its partners must also be commended for establishing a global register of beneficial ownership with entries on about two million companies.

“However, we must note that current legislative measures in the mentioned countries may need to go farther to effectively discourage or totally prohibit non-disclosure agreements by governments with big corporates, and to re-evaluate the use of secret trusts to hide beneficial ownership from the prying eyes of the law.

“It is important to underscore the fact that opacity in one section of the globe undermines openness in the other. We need to break down this wall together as we are all at risk of the evil effects of opacity in business ownership.

“Nigeria is 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 stated that a paper by Stefan Zeume of the University of Michigan and two others showed that 1,105 publicly listed companies mentioned in the Panama Papers lost market capitalisation of $230 billion to the leaks, a loss of $200 million on the average per company.

The Vice President noted, “On many occasions, companies have incurred hefty fines in their home countries for engaging in bribery and other unethical conducts. Hidden ownership and other underhand business practices could thus erode profitability and shareholder value.

“This is why Ownership transparency is a potential win-win for all, business inclusive.

“So we need everyone on board: governments, businesses, development partners, international organisations, civil society groups, media, and citizens.

“For us in Nigeria, we will remain on board the EITI and the ownership transparency train because they align with our national priorities and will help to advance the electoral mandate of our administration, which is to fight corruption, combat insecurity and grow the economy.

“You will recollect that Nigeria was one of the first set of countries to join the EITI, one of the 12 EITI-implementing countries that piloted beneficial ownership disclosure, and one of the few countries that have disclosed beneficial ownership details in three audit reports.

“Through our national EITI agency (NEITI), we also published a comprehensive roadmap that will culminate in the establishment of the register of beneficial owners of companies operating in our extractive sector.

“But we are taking this beyond the extractive sector. At the May 2016 London Anti-Corruption Summit, President Muhammadu Buhari made a commitment to establish a public register of the beneficial owners of all companies operating in Nigeria.

“In December 2016, Nigeria joined the Open Government Partnership (OGP) and submitted a National Action Plan that prioritises the establishment of this all-encompassing and publicly accessible register.

“These are commitments that we made with all sense of seriousness. They are commitments that we made not because we are seeking applause or commendation, but because we are convinced they are in our best interests.

“To further reinforce our determination by our course of actions we presented a draft Money Laundering Prevention and Prohibition Bill to the National Assembly in 2016.

“The 2016 draft Money Laundering (Prohibition) (Amendment) Act attempts to cure the deficiency of the 2011 Act Money Laundering (Prohibition) (Amendment) Act No. 11, 2011 to bring it in line with the FATF standards and it contains robust provisions on removing the barriers to full beneficial ownership disclosure in our laws.

“We are however mindful of challenges that will dog this initiative not just in our country but globally. Already, we have noted that the laws passed in some very developed countries do not go far enough to set the examples we really need as they do not cover territories and dependencies where most of the stolen assets from developed countries end up.”

He said reactions such as resistance in many countries by vested interests to the passage of a comprehensive legal framework for the implementation of an effective beneficial ownership disclosure regime should be expected.

Other reactions he said would include huge budgetary implications for developing countries of establishing, verifying and ensuring compliance, balancing conflicting interests and the right to personal data protection/safeguards from political witch-hunting.

Besides, he said that resolution of grey areas on the materiality threshold and the scope of beneficial ownership will also pose as a problem.

“These are of course all surmountable with the required political will and sustained pressure from the global community.”