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UGO ANADI AND CHIAMAKA MBONU
Worried about the quantum financial loss and terrorist financing in the nation, Stakeholders in the extractive sector has affirmed that full disclosure of 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.
This they also detailed that Nigeria looses about 18 trillion naira every year while developing countries loose about one trillion dollars every year, courtesy of Global financial integrity index report .
Also, recent FIRS report showed that over 6,722 companies are not paying taxes in the country due to non-disclosure of the real owners of companies which empowers illicit financial flows.
According to the stakeholders many unwholesome practices of multinational financial institution and oil and gas companies remains the biggest component of illicit financial flows in Nigeria and there is need to put a stop to it.
All this was stated at a two-day advocacy and sensitization dialogue on advancing remedial activities in the extractive sector, contract transparency and beneficial ownership as a strategy to curb illicit financial flows in Nigeria, by The Civil Society Legislative Advocacy Centre (CISLAC)/ Transparency International Nigeria (TI-N) with support from Oxfam
Speaking at the event on Contract transparency and Beneficial Ownership Transparency: Progress, challenges and opportunities, Mrs. Obiageli Onuorah , Ag. Director, Comms & Advocacy, Extractive Industries Transparency Initiative (NEITI) said that beneficial owners can hide behind legal person members of a company without being identified.
‘When we refer to ‘beneficial owners’ of companies, we refer to the identity of the natural persons or real owners. Often, these real owners are unclear because they can be hidden by a chain of shell companies. This can be a particular challenge in the extractive industry, where knowing who has the rights to extract oil, gas and minerals is key to addressing risks of corruption or conflict of interest.
According to her beneficial ownership information enables Nigerians to expose corruption and nepotism in the acquisition process. Besides asking companies to voluntarily disclose information on their ownership structure, including any politically exposed persons
She affirmed that the recently passed PIA mandates disclosure of persons with significant control Section 7(f) of the Petroleum industries Act (PIA) 2021, So with that that NEITI has put into effect a mechanism to capture ownership of divested wells, license holders, lease holders and companies bidding for extractive industry contracts.
Onuorah declared that the benefits of Beneficial Ownership and contract transparency are huge ,which include, Curbing corruption and Illicit Financial Flows , helps build trust and confidence between operators and communities, Increases capacity for good governance allows for comparison of different contracts and enables regulators and citizens monitor for compliance
Speaking on challenges, she stated that are making every possible efforts to handle them ,which includes Inter-agency synergy and partnership on implementation of contract transparency, Reluctance/resistance to change/reforms among public servants, Lack of citizens interest and engagement in the implementation of Contract transparency, Perception of Beneficial Ownership , people fanning to be witch hunted.
On the way forward, she said that the agency is engaging the National assembly and civil society to exert pressure on Beneficial Ownership disclosure and contract transparency, also effort is being made to have a completed templates , which should be matched with search records obtained from Corporate Affairs Commission and better automation of records,
Also, there is need to apply other sunshine Laws to track ownership licenses and go levels deeper to uncover/verify true identities with adequate Mobilisation and strategises.
Mr Chinedu Bassey , Programme Manager, Tax ,Justice ,Environment And Conservation, CISLAC who spoke on “Why Beneficial And Contract Disclosure: CSO Perspective said that Beneficial ownership information supports anti-corruption efforts through the value chain – from licensing to project closure.
He noted that Increased transparency around real owners can increase trust and accountability for citizens and their government
The representative of OXFAM in Nigeria , Mr. Henry Ushie, Programme Lead ,Public Private Sector Transparency And Accountability said , that they are in the project to ensure equitable distribution of wealth among the people.
‘We are here to promote justice and reduce poverty in the land. If we reduce inequality, we will reduce poverty.
He called on the CSO and media to join force in fighting injustice and corruption which are the real enemies of the people.
It could be recalled that Illicit financial flows drain tens of billions of pounds out of Africa every year, which happens in several ways including through abusive transfer pricing, over invoicing, tax evasion, use of offshore financial banking centres, the smuggling of cash and illicit goods and money laundering. It is now ten years since the report by the High Level Panel on Illicit Financial Flows from Africa, headed by former South African President Thabo Mbeki, revealed that 50 billion dollars leak annually from Africa to other global jurisdictions. Some said that was a conservative estimate and the sum may have been higher. In 2020, the United Nations Conference on Trade and Development (UNCTAD) estimated that Africa loses about $88.6 billion annually to illicit capital flight.
Out of this amount, Nigeria alone is said to account for about 10 billion dollars, according to the Independent Corrupt Practices and Other Related Offences Commission (ICPC). A report released by the Nigeria Extractive Industries Transparency Initiative (NEITI) put the figure as $15 billion to $18 billion annually. Global Financial Integrity ranks Nigeria as one of the largest countries experiencing illicit financial outflows in the world, an assertion re-echoed by the country’s Central Bank. These are monies that could be used for creating jobs, improving infrastructure, reducing inequality and addressing poverty.
In the last few years, some of the funds looted and stashed abroad by Nigerian politicians have been returned. Management of these funds, however, including the disposal of other proceeds from crime assets recovered by law enforcement agencies, continues to be a major cause of interagency rivalry amid suggestions of malpractice.
To this end, recently Nigeria’s parliament invited the new Chairman of the Economic and Financial Crimes Commission (EFCC) Abdulrasheed Bawa to explain the circumstances behind the hasty transfer of some forfeited assets to the Office of the Attorney General. In 2017, the government of Switzerland returned $320 million allegedly stolen by the Nigeria’s late military ruler Sani Abacha and another $311 million allegedly stolen by the same person was recovered and returned from the United States and Jersey; however, the level of transparency involved in the utilisation of these returned assets, and by who, has caused raging debates, especially among civil society groups.
In this latter case it was reported that two lawyers hired by the government, and allegedly linked to Attorney General Abubakar Malami, were paid $15 million as legal fees under circumstances described in the media as dubious and controversial. Another Swiss lawyer claimed that the legal costs for the repatriation had been fully covered in the past making the whole transaction look more suspicious. The Nigerian government entered a Memorandum of Understanding with the Swiss Government to third party civil society groups to monitor the expenditure of the repatriated Abacha loot to ensure it was used on programmes that target the poor and vulnerable. As part of this agreement, the African Network for Environment and Economic Justice (ANEEJ) based in Benin City, Edo State, coordinated civil society groups who monitored the re-distribution of the returned Abacha loot through a nationwide conditional cash transfer programme.
The unprecedented economic fallout as a result of the pandemic has led to enormous disruptions that must be fixed. The impact has been severe on developing countries already weakened by poor governance and weak regulatory oversight. Meanwhile, donor countries are proposing sharp cuts in their expenditure on foreign aid with expected consequences on the world’s poorest. The vulnerabilities of the health systems in these countries have been exposed by the pandemic as in desperate need of resources. Needless to say, countries need to look elsewhere to address the shortfalls. Addressing illicit financial outflows is one of the ways to forestall the negative impact on development financing and economic growth in countries like Nigeria.
Illicit financial flows are multidimensional and transnational in character. They involve a complex network of interconnected players from banks, company directors and employees to such professionals as lawyers and auditors. Successfully tracking illicit financial flows is a multifaceted endeavour that requires political will both nationally and internationally. Efforts must be made to reduce the bureaucracy involved in the repatriation of stolen funds through simplifying Mutual Legal Assistance Agreements between source and destination countries. The same political elite who allegedly engage in these practices cannot be relied on to push policies against it lest they become victims of their own efforts. Alternative complimentary mechanisms must then be sought.
That the global North is the primary beneficiary of these financial flows means its countries continue to show a skin-deep commitment to preventative measures or acts of rectification. Criminal funds are deposited in their banks where they benefit their economies and serve their interests. As the headquarters of the global shadow financial system, a majority of the world’s tax havens and secrecy jurisdictions are under territories occupied and controlled by western powers.
However, it is time to do something for the future of the nation, because Full ownership disclosure will definitely Increase government revenues, help in confidence building between investors and their partner local companies, r educes the incidence of corruption and money laundering, Ensures transparency, Cuts off funding for drug lords and terrorists, Facilitates the tracking, recovery and repatriation of Nigeria’s stolen assets in foreign jurisdictions.
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