FG to unmask Janus-faced comapnies in Nigeria
With the controversy trailing the indigenous status of Lagos Deep Offshore Logistics Base (LADOL), it is heart-warming that the federal government has resolved to enforce the Extractive Industries Transparency Initiative (EITI’s) guideline on Beneficial Ownership register to reveal the real owners of oil and gas companies operating in Nigeria.
The implementation of EITI’s guidelines will no doubt unmask all the faces behind the masks as far as indigenous and foreign companies operating in Nigeria’s extractive industries are concerned.
Indeed, Nigeria has faced the challenges of Illicit Financial Flows (IFFs), due to the scam in contract awards, as well as the opaque nature of the transactions in the country’s oil and gas business.
Citing the 2014 Global Financial Integrity Report in his address to the high-level national side-event, President Muhammadu Buhari, had at the sidelines of the 74th United Nations General Assembly (UNGA) in New York last month disclosed that Nigeria lost an estimated $157.5 billion to illicit financial flows between 2003 and 2012.
Buhari cited tax avoidance as a major form of illicit financial flow, quoting the Tax Justice Network and the International Monetary Fund report as stating that estimated over $200 billion per year is “being lost by developing countries when multinational enterprises do not pay taxes in the countries where they made the profit.
With the opaqueness of the oil and gas business in Nigeria, some companies claim indigenous status, to enjoy all the benefits that accrue to indigenous companies under the Nigerian Local Content Law.
However, when it is time to pay tax, they ascribe ownership of their companies to other entities registered in tax havens to avoid payment of tax, thus validating the claim that their companies are not indigenous after all.
But with the plan by the federal government to implement EITI initiatives, LADOL and other companies operating in the sector will be forced to disclose all their shareholders, or beneficiaries with effect from December 31, 2019, so as to expose shell companies.
Requirement 2.5 of the EITI Standard (2016), which Nigeria is yet to implement, stipulates that by January 1, 2020, all signatories to EITI and Open Government Partnership (OGP), must ensure that their companies operating in oil and gas, as well as mining shall publish the names of their real owners.
With the allegation that a company called LILE (LADOL Integrated Logistics Enterprise), which is a duly registered company in the British Virgin Islands owns the Lagos Deep Offshore Logistics Base (LADOL), it has become necessary for the federal government to implement the EITI initiative to verify the ownership status of LADOL and confirm if indeed, it is a foreign company or a local company.
Despite flaunting the perception of being a Nigerian company which stands for the Nigeria values and interests, LADOL’s shareholding structure is said to be substantially made up of two foreign companies namely: SABLE OFFSHORE INVESTMENTS and ALSBA Ventures Group.
Both companies are registered entities in the British Virgin Islands otherwise known as the safe haven for tax dodgers.
Apart from the federal government’s resolve to implement the EITI guidelines, one of the challenges facing the Minister of State for Petroleum, Mr. Timipre Sylva is this issue of abuse of the local content law.
The minister has to determine whether LADOL and other companies supposedly owned by Nigerians, but allegedly registered offshore like in the British Virgin Islands, qualified for local contents benefits.
Having sold this indigenous ownership status to the government and other regulatory agencies, LADOL has enjoyed the full benefits of the local content law.
However, the Nigerian people and their economy have continued to suffer losses.
Adamu, a public policy analyst, writes from Abuja
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