Chineme Okafor, writes on efforts by the Nigeria Extractive Industries Transparency Initiative to enthrone more transparent oil, gas and solid minerals sectors
In 2016, Nigeria and other countries at the Anti-Corruption Summit in London came forward to pledge to establish public registries of beneficial ownership of companies operating within their jurisdictions, especially those in their extractive sectors.
In taking the decision, the country recognised that publishing registers with beneficial ownership information in its oil, gas and solid minerals sectors would help shine light on secret corporate structures which could be used to exploit her minerals without benefits to her people.
The country equally considered that if it had the identities of people holding mining acreages publicly published, it would be able to cut off or reduce instances of laundering of financial proceeds from the sectors, unveil and address existing conflicts of interest, get rid of wrongful allocation of mining rights, as well as end frequent tax evasion by operating entities.
Above all, it would make available to Nigerians information with which they could use to demand for accountability from the operators of companies in the extractive sectors, who regularly explore, mine, and sell minerals expectedly owned by the commonwealth but which only satisfy a few.
For so long, the lack of openness in how the extractive sector operates in Nigeria has reportedly bred instances of corrupt practices, leading to the country's mineral resources frittered away and not properly used to develop her economy or people.
An early commitment
The commitment by Nigeria to establish a public beneficial ownership register got off in 2016 when President Muhammadu Buhari announced at the London anti-corruption conference that Nigeria would officially join the Open Government Partnership (OGP).
At the conference, Buhari had indicated that the country would commit to end secret company ownership as part of the anti-corruption obligations in the OGP framework by opening a publicly accessible beneficial ownership register in the extractive industries.
Furthermore, during his submission of Nigeria's national action plan for the OGP at the at the 4th OGP Global Summit in Paris, France, Buhari had reiterated that it was part of the government's effort to enthrone a culture transparency and accountability in conducting its affairs.
He had explained that the OGP represented for Nigeria an opportunity to do away with the culture of opacity through transparent management of public resources.
Accordingly, the country's OGP national action plan was developed to cover fiscal transparency, anti-corruption, access to information, and citizen engagement. The commitments were equally co-created through a reported robust collaboration between the government and civil society organisations in the country.
As part of its key deliverables, the plan would ensure that Nigeria adopts and practices open budgeting, open contracting, revenue transparency, and publication of a register of beneficial ownership especially in the extractive industry among others.
The plans were equally expected to help the government consolidate its anti-corruption reforms within a time frame and through such efforts - the beneficial ownership register especially, Nigeria would mostly bring an end to situations where individuals and entities disguise their identities to retain controlling powers over companies, corporations and assets.
NEITI on the lead
Following the country's commitment to the OGP framework, the NEITI which is statutorily responsible for keeping an eye on the country's extractive industries by setting up accountability mechanisms in Nigeria's extractive sector, took the lead on the beneficial ownership register.
Partnering with key government agencies such as the Corporate Affairs Commission (CAC), ministry of justice and Department of Petroleum Resources (DPR), the NEITI developed a roadmap for the implementation of the beneficial ownership register in the country.
And through a consultative workshop endorsed by its National Stakeholders Working Group (NSWG), it began to draw up implementation mechanism expected to lead to a December 12, 2019 timeline for the opening up of a public register on beneficial ownership in Nigeria's extractive sectors.
In its justification of the move, the NEITI explained that a growing international recognition that anonymous companies constituted real dangers to the economic, security, and well-being of countries where they operated from meant that the register was important.
It also stated that in an updated reporting standard of the global Extractive Industries Transparency Initiative (EITI), member countries were compulsorily required to report beneficial owners of companies operating in their extractive industries.
"Section 2.5 of the Standard specifically requires implementing countries such as Nigeria to maintain a public register of the beneficial owners of the corporate entity(ies) that bid for, operate or invest in extractive assets, including the identity(ies) of their beneficial owner(s) and the level of ownership," said the NEITI in the roadmap document for the framework which it published.
According to the report, because such anonymous companies tend to deny countries of valuable revenues through tax avoidance, and sometimes outright tax evasion, and could equally mask links to corruption, money laundering, drug trafficking, and even terrorism financing, the EITI considered the beneficial ownership register a practical means of dealing with such flaws.
It further said that, "all EITI-implementing countries are expected to publish a beneficial ownership roadmap by January 2017 and commence full implementation by January 2020," adding that the need to develop an implementable roadmap on the framework in Nigeria was quickly adopted.
What the register would contain
In approving the roadmap for beneficial ownership disclosure in Nigeria, the NEITI stated that its NSWG took into consideration some ongoing reforms in the country which include the government's anti-corruption agenda and oil sector reforms, as well as government's commitment to implementing open contracting data standard.
It added that while the implementation of the beneficial ownership register would expect to eliminate acts of corruption through transparency and accountability in the extractive industry, its consultations with stakeholders indicated that the EITI template for disclosure would be adopted but with some modifications embedded for local appropriateness.
According to it, the EITI had indicated that by 2020, all countries implementing its principles would have to ensure that all oil, gas and mining companies that apply for, or hold a participating interest in oil, gas or mining exploration or production license or contract in their countries publish the names of their real owners.
The register it said should include the identity of the owner including the name, nationality and country of residence.
Companies with such license would also have to publish further details such as the date of birth, national identity number, residential address of their beneficial owners, while the register would be expected to publicly identify any politically exposed persons holding ownership in oil, gas and mining projects in any of the countries.
The EITI equally recommended that the register be published at least in the country's EITI report. However, the NEITI indicated that while the codification would be done through the adopted legal framework, access to all information disclosed in the register would be limited for security reasons.
It equally stated that the very sensitive information provided in the register would only be available to competent authorities as defined through further consultation with stakeholders such as the Nigeria Police, the Economic and Financial Crimes Commission (EFCC), and the Nigerian Financial Intelligence Unit (NFIU).
Based on the World Bank's estimation that roughly 70 per cent of the biggest corruption cases between 1980 and 2010 involved anonymous companies which are often used to mask corruption, industry experts informed THISDAY that it is expected that the implementation of beneficial ownership register in Nigeria would apart from engendering transparency, also help the country strengthen its tax collection efforts by clamping down on tax evaders.
They noted that complex company structures which could be unmasked through the beneficial ownership register have been found to also be used for tax evasion and money laundering acts, adding that the Panama and Paradise Papers were typical examples of such occasions.
According to them, through such complex company structures, individuals move funds across borders without alerting tax authorities either as launderers or to reduce a company's tax burden.
They stated that with regards to the extractive sectors, the such revenue losses could be heavy and with immediate impacts on the society.
Speaking during the recent visit of the head of EITI's international secretariat in Oslo, Norway, Mark Robinson to Nigeria, NEITI's Executive Secretary, Mr. Waziri Adio, explained that expected beneficial ownership register for the extractive sectors would contain information on the actual owners of the extractive industries companies, irrespective of the names of those who manage them in trust for their principals.
Adio, thus implied that despite the possibilities of extractive companies in Nigeria being held in trust for people, the real owners of the companies would be disclosed in the register to be published on December 12.
Similarly, the Nigeria Natural Resource Charter (NNRC) which measures with established frameworks how countries manage their natural resources for the development of its people, stated that once published, law enforcers, civil society and others stakeholders would have a responsibility to scrutinise the information therein, and take action to hold to account those who misuse the country's natural resources through anonymous companies.
Tengi George-Ikoli, who is the Programme Coordinator at the NNRC, stated that by 2020, when Nigeria and all EITI countries have to ensure that companies that apply for or hold a participating interest in an oil, gas or mining license or contract in their country disclose their beneficial owners, Nigeria would have begun to gradually eliminate unfair practices in her extractive sectors.
"The EITI standard also requires public officials - also known as Politically Exposed Persons (PEPs) to be transparent about their ownership in oil, gas and mining companies. This information will be publicly available and will be published in EITI reports and, or public registries.
"The EITI requirements have sparked reform in 20 countries now working on establishing public registers. Hidden ownership also poses problems for honest companies because they don't know who they are doing business with. Publishing the real owners will help ensure that there is a level playing field for all companies and allow them to know who they are doing business with," George-Ikoli said.