#PanamaPapers: NEITI demands public disclosures of beneficial owners of extractive companies

The Nigerian Extractive Industries Transparency Initiative (NEITI) on Monday debuted with a ‘Policy Brief’, a special publication focusing on beneficial ownership disclosures by owners of assets in the country’s extractive industries.

Executive Secretary of NEITI, Waziri Adio, said the publication was part of the new policy and advocacy instruments by the new management to deepen its transparency and accountability engagement with policy makers and Nigerians.

In the maiden edition of the brief, NEITI identified four key areas government must act on, including the establishment of a public registry of beneficial owners of extractive companies and the initiation of a policy and legal frameworks on ownership disclosure in Nigeria.

NEITI also asked government to ensure that beneficial ownership reporting in extractive sector was built on its yearly audit reports, while ownership disclosure should be incorporated in the Petroleum Industry Governance Bill, PIGB currently before the National Assembly for approval.

The 2016 Extractive Industries Transparency Initiative (EITI) Standards expect Nigeria and other implementing countries to maintain a public register of the beneficial owners of all corporate entities that bid for, operate or invest in extractive assets, including the identities of their beneficial owners, the level of ownership and details of how ownership or control is exerted.

“All EITI-implementing countries are expected to publish a beneficial ownership road map by January 2017 and start full implementation by January 2020,” NEITI said in the brief. “Disclosing the real owners of companies operating in the extractive sector in Nigeria will expand the frontiers of transparency and accountability and yield other benefits to the country.”

The recent “Panama Papers” leak revelation attracted global attention on the potential and real dangers of anonymous companies often used to deprive countries of valuable revenues through tax avoidance, and sometimes outright tax evasion.

Anonymous companies, NEITI pointed out, were used not only to mask possible corrupt relationships with government officials, but also to cover probable links to money laundering, drug trafficking, and terrorism financing.

Urging the Nigerian government to lift the veil of secrecy on ownership of companies in the extractive sector, NEITI said full ownership disclosure would facilitate the present effort to trace, recover and repatriate stolen assets in foreign jurisdictions.

In most resource-rich countries, NEITI noted that anonymous ownership often served as a vehicle to conceal illicit wealth and conflict of interests by politically exposed persons (PEPs).

NEITI criticized the practice of granting pioneer status to prospective investors, saying between 2009 and 2014 the country lost over $1.17 billion (about N230.5 billion) to some upstream companies influenced by behind the scene beneficial owners.

The agency observed that local and international oil companies operating in most developing countries have a complex ownership structure that makes it difficult to identify their real owners or their connection to companies with whom they transact business.

NEITI said Nigeria, alongside 11 other EITI-implementing countries, in 2013 volunteered to pilot the reporting of beneficial ownership in the oil, gas and mining sector by releasing the ‘beneficial ownership’ information in the 2012 NEITI Oil and Gas Audit Report.

The information captured through templates filled out by companies and validated with records at the Corporate Affairs Commission (CAC) and the Department of Petroleum Resources (DPR), NEITI pointed out, covered “legal owners” and not “beneficial owners.”

Of the 40 companies covered by the report, NEITI said only 21 listed at least one ‘natural person’ as part of their registered beneficial owners, while others identified legal directors, rather than the true beneficiaries who really control the companies.

NEITI expressed optimism that beneficial ownership transparency would help in curbing corruption and lower the risk of financial misconduct in the extractive sector in Nigeria.

Beyond a public register by 2020 as demanded by the EITI, NEITI said government could generate information about the real owners of companies in the extractive sector by creating a beneficial ownership database of operating companies accessible only to law-enforcement agencies and other government entities.

Other ways include mandatory public disclosure of the beneficial owners of companies doing significant contracts with government; and legislations that make it mandatory for companies to disclose their beneficial owners at the point of incorporation.

In terms of legislation, NEITI said beneficial ownership provisions should be included in the PIGB as well as amendments to the Companies and Allied Matters Act (CAMA) and the Petroleum Act 1969, while the Code of Conduct Bureau and Tribunal Act could be amended to make it mandatory for public officials declare their assets publicly.


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