- Secret Ownership of Companies Dangerous —Osinbajo
Vice-President Yemi Osinbajo on Monday said hidden corporate ownership posed serious danger to developing countries like Nigeria.
He also said 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.
He said one of such incidents involving Malabu Oil and Gas had been a subject of criminal and civil proceedings in many parts of the world involving huge legal costs.
He stated these in his address at the Extractive Industries Transparency Initiative Beneficial Ownership Conference taking place in Jakarta, Indonesia.
Osinbajo said it had therefore become “a matter of life and death” for African countries to break the wall of secret corporate ownership.
“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,” he told the gathering.
He said experience had shown that anonymous corporate ownership could serve as vehicles for masking conflicts of interest, corruption, tax evasion, money laundering, and even terrorism financing.
Osinbajo cited a 2014 report by the One Campaign, titled the “One Trillion Dollar Scandal” which claimed that developing countries lose $1tn annually to corporate transgressions, most of them traceable to the activities of companies with secret ownership. He said hidden ownership and other underhand business practices could erode profitability and shareholder value and that was why ownership transparency was 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 road map 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.”
The vice-president said while governments and citizens stood to benefit from increased revenues, better law enforcement in this area should improve citizens’ welfare as a result of more ownership transparency.
Osinbajo quoted a paper by Stefan Zeume of the University of Michigan and two others as revealing that 1,105 publicly-listed companies mentioned in the Panama Papers lost market capitalisation of $230bn to the leaks, a loss of $200m on the average per company.
On many occasions, he said companies had incurred hefty fines in their home countries for engaging in bribery and other unethical conducts.
He also mentioned the 2015 report of the High Level Panel on Illicit Financial Flows from Africa chaired by former South African President Thabo Mbeki, which stated that Africa had lost over $1tn over a 50-year period and that Africa lost more than $50bn annually to illicit financial flows.
Osinbajo said, “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. It is for us literarily a matter of life and death. Masked or hidden corporate ownership is deeply implicated in the sad story of our underdevelopment.”