Tobi Soniyi in Abuja
The federal government yesterday in Abuja said it would establish a Beneficial Ownership Register to stop individuals from using illegal business entities to circumvent due process and for money laundering purposes.
The Attorney General of the Federation and Minister of Justice, Mr. Abubakar Malami (SAN) said this in Abuja at a National Consultation Workshop on Beneficial Ownership.
The minister said setting up the registry would ensure that owners of companies bidding for government contracts are known.
Beneficial ownership refers to the real owner of a company as against the legal owner who is the face of the company.
Malami said that this was part of the national anti-corruption strategy set up to combat corruption in the country.
He said: “Often, companies are registered for the purpose of circumventing due process and for money laundering.
“For instance, research conducted by the Financial Action Task Force (FATF) on ‘corporate vehicles’ has shown that some business entities exist solely on paper without the requisite obligation to list the real people who actually own or control them.
“In the extractive industry, for example, these business entities are used to hold extractive rights and provide a channel for transferring extracted resources out of the host countries without paying specified royalties and taxes.”
The minister said that these sharp practices allowed the beneficial owners to avoid responsibility for violation of laws and regulations on labour and taxes.
He stated that a central register of beneficial ownership would make information available to financial institutions in conducting due diligence procedures on their customers and to law enforcement authorities that may require it for investigation purposes.
He also explained that in many jurisdictions, nominee directors or shareholders were used as a conduit to obscure the true identity of the ultimate beneficiaries.
“Obscurity over who is the ultimate beneficial owner of a company can militate against the ability of banks and other financial institutions to conduct effective checks with the attendant consequence that these institutions become unwitting conduits for the perpetuation of financial crimes and corruption.
“For example, investigations into the alleged bribery among leaders of the Federation of International Football Association (FIFA) revealed how complex networks of companies were deliberately created to obscure the details of ultimate beneficiaries.”
He observed that the World Bank has estimated that corrupt politicians use secret companies to obscure their identities in 70 per cent of more than 200 cases of grand corruption.
He said the current administration has prioritised the fight against corruption to foster economic development in country, hence the need to ensure transparency and accountability in the business environment.
In his goodwill message, a representative of the United State Agency for International Development (USAID) Mr. Blaire King said it was important to know those who are benefitting from government contracts directly.
King congratulated Nigeria on becoming the 70th member of the Open Government Partnership and expressed the hope that both the U.S. and Nigeria would share experiences and learn from each other.
Mr. Waziri Adio, Executive Secretary, Nigeria Extractive Industries Transparency Initiative (NEITI) also highlighted the importance of the Beneficial Ownership Register, saying that it was a “game changer”.
According to him, knowing who owns what was critical to transparency in the business environment, particularly as it relates to attracting investors.