‘Beneficial ownership register vital in anti-corruption campaign’

During the build-up to the 2015 general elections, one statement that resonated among many Nigerians was ‘if Nigeria did not kill corruption, corruption would kill Nigeria’.

It was a pronouncement by one of the front line candidates then. But the pronouncement has turned out to be a mere slogan with little or no impact. This is because that about $18b (N954b) leaves Nigeria through illicit financial flow with about 92 per cent of the crime allegedly committed in the oil and gas sector.

It was also said that while over three-fifths of global trade happening in multinationals companies involves over-invoicing or underpricing trade deals; transfer pricing, use of offshore finance and tax havens have been noted as windows for Illicit Financial Flows (IFF).

In 2015, the Economic Commission for Africa reported that the United States accounted for 29.0 percent of IFF from Nigeria, Spain accounted for 22.5 percent, France, 8.7 percent, Japan 8.5 percent, and Germany 7.7 percent. The five countries, which contributed 76.4 percent of total illicit financial flows from Nigeria from 1970 to 2008, were the key destinations of Nigeria’s oil products at that time.

With oil and gas-related products accounting for about 92 percent of Nigeria’s total merchandise exports, the Partnership for African Social and Governance Research (PASGR) in a report noted that oil-exporting countries like Nigeria are vulnerable to illicit financial transfers.

To halt the trend of illicit financial flow out of Nigeria considering the humongous amount involved and its negative impact on the provision of infrastructure and services, some stakeholders spearheaded by Civil Society Legislative Advocacy Centre (CISLAC) have called for deliberate action to reverse the flow. And they believed that one of the steps to take is to ensure that the Beneficial Ownership Register (BOR) policy is implemented and backed with strong political will.

To galvanise support for the BOR and the war against corruption was why the CISLAC/ Transparency International-Nigeria (TI-N) with support from the Tax Justice Network – Africa (TJNA), at a briefing provided insight on the anti-corruption potential of the beneficial ownership register in Nigeria.

Leading the conversation, Executive Director, CISLAC, Auwal Rafsanjani, stated that transparency of ownership and control of companies, partnerships, trusts and other legal entities that can hold assets and open bank accounts is critical to the ability to determine where illicit funds are moving to and who is moving them.

Rafsanjani noted that the Nigerian government has made significant progress in the implementation of the beneficial ownership transparency as indicated by the signing of the Companies and Allied Matters (Amendment) Act 2020 and the ongoing process towards the establishment of a central register for disclosure of all corporate entities in the country that would subsume and complement the beneficial ownership register for extractive sector companies already established by the NEITI in December 2019.

According to him, while the rapid uptake of beneficial ownership is significant, the quality, accuracy and utility of the data for its intended purpose of curbing Illicit Financial Flows (IFFs) are dependent on the right legislative framework being in place and the data conforming to the beneficial open data standards (BODS).

He said the capacity of the tax and customs authorities, policing and prosecution authorities, the mandatory clause on beneficial ownership information to be provided when companies are incorporated or trust registered, and the presence of a mandate to ensure that information provided by any entity is periodically updated and on a regular basis among others, have the capacity to hamper the effective implementation of this initiative regardless of how good it looks.

He also identified enforcement ability to ensure that information is placed on the publicly accessible platform and modalities to verify declared information and false declarations, which should result in robust penalties.

“Let us be clear that beneficial ownership and the more general issue of money laundering is not only a Nigerian or African problem. But as long as inefficiency and the lack of political will to sanitize our systems persist, consequences in the form of terrorism financing, transnational organized crime, tax evasion and illegal enrichment of politically exposed persons will prevail.

“We thus seek advocacy for identifying a verification process that ensures people in the official register are authentic- that is, they are who they say they are, authorized- that is those persons have agreed to be involved in a legal entity, and that all the registered data is valid.”

Also, the CISLAC Boss said the process should be a fully automated information technology system with human supervision that will have access to relevant data, held by national and foreign authorities for cross-checking and advanced analysis and could be managed by NEITI, or another body that has experience with data analytics, such as financial intelligence units or tax authorities.”

He further stated that government must deploy an approach that clearly defines the roles and responsibilities of various relevant stakeholders in defending the system or preventing misuse.

Also speaking on the issue, the Registrar-General and Chief Executive Officer (CEO) of Corporate Affairs Commission (CAC), Alhaji Garba Abubakar, said Nigeria has started implementing the Beneficial Ownership Disclosure since January 3, 2021.

He disclosed that the process was delayed till 2021 from 2016 when President Mohammadu Buhari made commitments to the anti-corruption summit in London, due to the absence of a legal framework to back it up.

“The Companies and Allied Matters Act (CAMA) 2020 was reenacted and it now provides for mandatory disclosure of persons with relevant control. The CAC is the agency responsible for giving effect to the provisions of this new law.

“Since January 3, the CAC has deployed an electronic register that covers all aspects of our registration services, and this includes the disclosure of beneficial owners.”

Abubakar revealed that from January 3 till date, every company registered with the CAC has been mandated to disclose its beneficial owners at the point of registration, and whenever there is any change in the information, the update must be provided especially while filing annual returns.

“For a new company registered from January 3 till date, the information is available, if you go to www.pre.cac.gov.ng, you click on any company registered from January 3 till date; you can view that information at no cost.”

He said for companies registered earlier than that date, including the legacy companies, the disclosure would start from their next financial annual returns, which depends on the financial end of the year of each company.

Abubakar maintained that the whole essence of the effort is to entrench transparency and support the anti-corruption initiatives of the government, such that if a citizen observed that the information in the portal is not actually a true reflection of the ownership of the company, then such person can escalate the information and report to relevant agencies for investigation.