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Published On: Tue, Oct 24th, 2017

Osinbajo urges global action against corporate secrecy, illicit funds flow

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By Lawrence Olaoye

Vice President Yemi Osinbajo has called for global cooperation against corporate secrecy and illicit flow of funds as they both constitutes great existential danger to developing countries.
Osinbajo in the speech he delivered at the Extractive Industries Transparency Initiative (EITI) Conference in Jakarta, Indonesia, yesterday lamented that anonymous companies have been used to defraud several developing countries, including Nigeria.
The Vice President recalled that Nigerian senior officials in the past used the opacity of corporate business ownership to award juicy contracts in the extractive industry to themselves to the detriment of the people.
While acknowledging that anonymous companies may not be illegal, Osinbajo said secrecy provides a convenient cover for the corrupt and criminals.
The Vice President said “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.”
He commended United Kingdom, Norway, Netherlands and Denmark for leading the way in establishing public registers of the real, human owners of companies in their countries and call on other G8 and G20 countries not only to follow suit by initiating actions to end corporate secrecy at home and their dependencies.
Osinbajo also commended Open Ownership and its partners for establishing a global register of beneficial ownership with entries on about two million companies. He however warned “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 who reiterated Nigeria’s commitment to EITI objectives said the country had taken legal steps by initiating and passing into laws legislation to ensure transparency, full disclosure of business ownership and anti-money laundry laws.
While urging the world leaders to break the walls of secrecy in doing business, Osinbajo listed four expected challenges they must be willing to confront.
These challenges, according to him, include resistance in many countries by vested interests to the passage of a comprehensive legal framework for the implementation of an effective beneficial ownership disclosure regime; the huge budgetary implications for developing countries of establishing, verifying and ensuring compliance.
Others are balancing of conflicting interests and the right to personal data protection/safeguards from political witch-hunting and resolution of grey areas on the materiality threshold and the scope of beneficial ownership.

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