The Vice President, Prof. Yemi Osinbajo, on Monday called for global action to stem the tide of secret corporate ownership of industries to avoid fraud, money laundering and tax evasion by industries.
Osinbajo made the call in a paper he presented at the Extractive Industries Transparency Initiative (EITI) conference holding in the Indonesian capital, Jakarta.
He lauded the efforts already made by some developed countries to ensure compliance with disclosures but noted that developing countries were far behind and had paid supreme prices for negligence.
“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 under development.
“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,’’ he stated.
Osinbajo noted that corporate secrecy was not just a developing world’s problem as nations 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’s 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.’’
The Vice President quoted a 2004 report by the One Campaign, titled the “One Trillion Dollar Scandal’’ which claims that developing countries lose $1 trillion annually to corporate transgressions.
The report had traced most of the losses to the activities of companies with secret ownership.
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.
The Mbeki 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.
According to Osinbajo most of these illicit flows are perpetrated in the extractive sector and through companies with hidden ownerships.
“We salute 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.
“We call on other G8 and G20 countries not only to follow suit by initiating actions to end corporate secrecy at home and their dependencies.
“Open Ownership and its partners must also be commended for establishing a global register of beneficial ownership with entries on about two million companies.’’
The VP, however, noted that current legislative measures in the mentioned countries might need to go further to effectively discourage or totally prohibit non-disclosure agreements by governments with big entities.
He added that they must re-evaluate the use of secret trusts to hide beneficial ownership from the prying eyes of the law.
Osinbajo underscore the fact that opacity in one section of the globe undermined openness in the other adding “we need to break down this wall together as we are all at risk of the evil effects of opacity in business ownership.
He 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.
“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.
“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,’’ he added.
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