Osinbajo wants global action against corporate secrecy, illicit financial flows

Nigeria’s Vice President Yemi Osinbajo on Monday described corporate secrecy as a global challenge and canvassed the support of a global approach to tackle it.

This was as he said that secrecy enjoyed by companies with hidden ownership provides a convenient cover for the criminals and the corrupt to carry out evil activities like illicit financial flows especially in developing countries like Africa.

Osinbajo stated this in his address on Monday at the Extractive Industries Transparency Initiative (EITI) beneficial ownership conference in Jakarta, Indonesia.

He said, “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. 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.

“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.”

On how corporate secrecy is a global threat Osinbajo said, “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.”

While he applauded 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, Osinbajo called on other G8 and G20 countries not only to follow suit by initiating actions to end corporate secrecy at home and their dependencies.

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“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,” Osinbajo said.

 

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