Strengthening Beneficial Ownership Policy to Block Leakages in Public Purse

With an intent to curb corruption in Nigeria through the effective institutionalisation of the Beneficiary Ownership Transparency Register, the Civil Society Legislative Advocacy Centre, on behalf of the  Accountability in Extractive  Sector, cluster within the framework of the Strengthening  Civic Advocacy and Local  Engagement  project being implemented by Palladium with funding from the  United States Agency for  International Development, recently organised a one day dialogue aimed at shaping advocacy for policy and legal reforms around beneficial ownership register. Sunday Ehigiator reports

Nigeria occupies a special place in Africa and global affairs. It is Africa’s largest economy and 26 in the world, with a great potential to become a major player in the global economy through its human and natural endowments. However, as recognised by the Economic Recovery and Growth Plan (2017-2020), this potential has remained relatively untapped over the years partly because of corruption and management of public finances, resulting in poor social and development indices. 

President Muhammadu Buhari, during his swearing-in ceremony in 2015, promised Nigerians that the fight against corruption was a cardinal part of his administration.  His commitment to a full-scale anticorruption agenda was accentuated in May 2016, when he attended the International Anti-Corruption Summit organised by the government of the United Kingdom.

It was on this global stage that he reaffirmed his commitment to strengthening anti-corruption reforms through implementing programs aimed at ‘exposing corruption; punishing the corrupt and providing to the victims of corruption; and, driving out the culture of corruption. 

Following these commitments, the Federal Government sought to deepen institutional and policy reforms and this led to Nigeria joining the Open Government Partnership (OGP) in July 2016.

The OGP is an international multi-stakeholder initiative focused on improving transparency, accountability, citizen participation, and responsiveness to citizens through technology and innovation. It brings together government and civil society champions of reforms who recognise that government is likely to be more effective and credible when governance is open to public input and oversight.

At the national level, OGP introduces a domestic policy mechanism through which the government and civil society can have an ongoing dialogue. At the international level, it provides a global platform to connect, empower and support domestic reformers committed to transforming any society through openness.

Despite these multilevel programs, the significant challenges in optimizing domestic resources, revenue mobilization for sustained development financing, have been occasioned by the obscurity of the true state of the country’s full public finance and resource management processes, which include undisclosed ownership of corporate entities, tax evasion, and avoidance.

In response to this, several initiatives and efforts have been introduced, including the institutionalisation of a beneficial ownership report by the Nigeria Extractive Industries Transparency Initiative (NEITI) through the launch of the Opening Extractives Programme (OEP), a global five-year scheme to unveil the real owners of assets in Nigeria’s oil, gas and mining sectors, in November 2021.

Also is the enactment of the Companies and Allied Matters Act (CAMA) 2020 in August 2020, which provides for the establishment of a beneficial ownership register for all corporate entities in Nigeria by the Corporate Affairs Commission (CAC); and the signing of the Petroleum Industry Bill into law in August 2021 which provides a legal framework for the effective and efficient implementation and integration of open data reforms like the beneficial ownership transparency initiative.

However, while these efforts are commendable, it is worthy to note that the BO transparency register is not an end in itself but a means to an end, as its effectiveness towards accountability in the extractive sector is yet to achieve significant results.

It was against this backdrop that the CISLAC-led AES cluster with support from USAID  on Thursday April 29th, 2022 organised one-day policy dialogue in Lagos which aim was anchored upon the existence of and expectations from the effective implementation of the above frameworks to ascertain the status of progress in the implementation of the beneficial ownership transparency initiative in Nigeria.

In his address, CISLAC Executive Director, Auwal Musa Rafsanjani said while the efforts of NEITI are commendable for making efforts in establishing an extractive sector register, legitimate corporate businesses have an integral role to play in ensuring the effectiveness of the register.

According to him, “While legitimate corporate businesses have an integral role in national development, the involvement of Politically Exposed Persons (PEP) who conceal corruptly acquired wealth through the complex networks of companies deliberately created to hide their identities has further increased the risks they pose to non-fortified economies. The Siemens, Halliburton, and Malabu oil scandals, to cite a few high-profile cases, had a net impact on revenue leakages that were unbearable for the country’s finances and the citizens’ economic well-being.

“We were already facing some sanctions from the European Union for the nonexistence of anti-money laundering legislation; while we see and hear of prosecutions of individuals and entities involved in the Panama papers leaks and the Wiki-leaks among others, there seems to be no legal framework that enables the convictions of all that was involved from Nigeria.

“Aside from the fear of the international community, it is worthy of note here that concealing of the beneficial owners costs lives of our fellow countrymen as terrorists use international financial systems to sustain their operations.”

Rafsanjani noted that without transparent ownership of Nigerian and international companies operating within the Nigerian jurisdiction, Nigeria will not be able to stop the bleeding of cash through illicit financial outflows which are perpetually on a geometric progressive increase year on year and cost the country about $17 billion annually.

He thereby expressed the belief that a collaborative partnership by relevant stakeholders in the beneficial ownership campaign will help give a voice to “this simple but strategic endeavour that will help curb corruption in our financial, procurement and other strategic sectors and contribute effectively to domestic revenue mobilisation for financing development of critical sectors of the economy.”

In brief remarks by other stakeholders at the event who pleaded anonymity, they further stressed the need for a strengthened and robust collaboration among all concerned stakeholders to ensure the complete institutionalisation of an open, effective, and free-for-all ‘Beneficiary Ownership (BO) Transparency Register’.

According to a source from the Economic and Financial Crime Commission (EFCC), the lack of transparency on the part of business owners hampers investigation of corrupt practices, as most of them present invisible addresses that can’t be traced while some even put unborn children as directors or use their family names interchangeably. He, therefore, stressed stronger collaboration with the commission to help tackle the menace.

From the angle of the Federal Inland Revenue Services (FIRS), it also  revealed that some companies try to evade tax by not declaring their profit or even hiding their income tax under a pseudonym.

“Some don’t separate company tax from personal income which makes it difficult for the regulatory authority to regulate and monitor. And for the extractive sector where both foreigners and Nigerians are involved, it is still a problem dealing with leakages, as some elements still connive with them.”

The representative thereby concluded that to fight these battles and rid the country of corruption, all hands must be on deck, as it is a collective responsibility that if won will move the nation forward.