Civil Society groups from 30 countries converged in Tanzania
Nigeria has been listed among 25 countries where, since the 1980s, ten top extractive industry multinational companies have incorporated and run a syndicate of 6,038 subsidiaries used in various illicit offshore profits transfers involving over $1 trillion (N159 trillion).
Global civil society groups from 30 countries, including Nigeria, who participated in a conference in Dar es Salaam, Tanzania, last week, identified the leading tax havens to include the United States with 1,154 incorporated subsidiaries; United Kingdom, 921; Australia, 611; and Netherlands, 358.
The other countries include South Africa (284), Germany (263), Canada (248), France (198), Bermuda (127), China (84), Brazil (75), Virgin Islands (67), Singapore (59), Bahamas (54), Malaysia (54), Zimbabwe (53), Switzerland (51), New Zealand (51), Cayman Island (49), Luxemburg (48), Chile (44), Spain (41), Hongkong (40), Ireland (37) and Nigeria (37).
Although some participants at the conference – themed: Towards Transparency: Making the global financial system work for development – acknowledged efforts by President Goodluck Jonathan’s administration to promote transparency in the extractive industry, others still had reservations that the government was not doing enough to compel the multinational companies operate in line with international best practices, particularly in the repatriation of profits.
Tanzania’s Policy Forum coordinator, Semkae Kilonzo, had noted in his introductory remarks at the opening session that of the roughly $1 trillion that leave developing countries in illicit financial flows each year, almost half – a staggering $500 billion (N79 trillion)- were out of Africa.
“These proceeds of crime, corruption and tax evasion represent an unacceptable drain on developing economies that is equivalent to eight times the size of global foreign aid,” Mr. Kiionzo said.
The representative of Publish What You Pay (PWYP), Norway, Nick Mathiason, listed some of the multinational companies allegedly involved in the illicit schemes to include: ExxonMobil, Royal Dutch Shell, Conoco Phillips and Chevron Corporation in the oil and gas sector; and Glencore International AG, BHP, Biliton, Rio Tinto, Anglo America and Barrick Gold in the Mining and Trading sector.
Details from the consolidated accounts of the ten companies, Mr. Mathiason said, revealed that of the over $1.82 trillion (N290 trillion) revenue generated since the late 1970s, the companies incurred over $1.59 trillion (N253 trillion) as costs, declaring only $144.76 billion (N23 trillion) as profits, with $106.9 billion (N17 trillion) paid as taxes.
In the oil and gas industry, Shell alone was mentioned as incorporating 694 shell companies in the downstream; 271 in upstream international; 128 in corporate services; 89 in upstream America; 52 in projects and technology, and 39 in trading businesses, all used in various schemes to repatriate illicit profits.
Similarly, British Petroleum incorporated 1596 subsidiaries operating as tax havens as against 536 owned by Conoco Phillips, out of which 427 operate as Holding companies, while 109 are petroleum refineries. ExxonMobil has 170 subsidiaries, and Chevron 77, five of which are operating in Nigeria.
The Senior Economic Justice Adviser of Christian Aid, Joseph Stead, said in his presentation that illicit financial outflows from Africa, between 1970 and 2008, consisted of an average of about $300 billion (N47 trillion) to $520 billion (N83 trillion) in commercial tax evasion; $150 billion – $280 billion (N23.95 trillion to N44.72 trillion) in criminal proceeds; and $15 billion – $24 billion (N2.39 trillion to N3.83 trillion) in payments to corrupt public officials; with only $50 billion – $80 billion (N7.98 trillion to N12.7 trillion) as aid to the affected countries.
For Alvin Mosioma of Tax Justice Network Africa, over $1 trillion (N159 trillion) of unrepatriated foreign profits by these companies were sitting offshore through the activities of these subsidiaries, with an average annual outflow of $810 billion (N129 trillion) of illicit money from developing countries between 2000 and 2008.
Mr. Mosioma added that 18,857 businesses were registered at one address at Cayman Islands, with 98 of the companies listed among the Financial Times Stock Exchange 100, the largest, most actively traded companies on the London.
“There must be a compulsory demand that these multinational companies publish their accounts for every jurisdiction in which they operate, while annual financial statements, including labour costs, employee population, financing costs split between those paid to third parties and other group members; pre-tax profits and how much they pay as taxes to governments, to check the problem,” Mr. Mosioma said.
The conference organised by Financial Transparency Coalition (FTC) in conjunction with Tanzania’s Policy Forum, had participants drawn from 150 civil society groups from over 30 countries.
Deliberations include the detrimental effects of illicit financial flows on the extractive industries (oil, gas, timber and mining), conflict and instability, illicit wildlife and arms trade, as well as how to make the global economy work for rich and poor by increasing financial transparency.
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