By Obiageli Onuorah
In 2013, Nigeria began its journey towards revealing the real owners of its assets in the extractive industries. By 2016, at the anti-corruption summit which took place in London, President Muhammadu Buhari made a pledge alongside other world leaders to work together towards revealing real owners of companies doing business across jurisdictions in the world. A communique issued at the end of that summit highlighted the key role that beneficial ownership (BO) disclosure will play in the fight against corruption and illicit financial flows especially in resource rich and developing countries like Nigeria.
“We will enhance transparency over who ultimately owns and controls them, to expose wrongdoing and to disrupt illicit financial flows. As recent events have shown, we need to take firm collective action on increasing beneficial ownership transparency,” an excerpt of the communique read.
Further, the communique spelt out how partnerships between local and international jurisdictions will enhance and facilitate the use of BO to track incidences of corruption among collaborating countries. It specifically said: “We will support developing countries to collect beneficial ownership information and use it in public contracting and other sectors work.”
In its earliest policy brief published in May 2016, NEITI highlighted the dangers of secrecy in the ownership of extractive sector assets in Nigeria. In it, the NEITI called on the government to implement and institutionalise ownership transparency as a “systematic and more sustainable way of fighting corruption”
On the fringes, work went on towards getting a register containing real owners of companies in Nigeria’s extractive industry in place by January 1, 2020, the deadline given by the global Extractive Industries Transparency Initiatives (EITI) for all implementing countries to comply with the requirement. By December 2019, NEITI’s beneficial ownership register was in place. The register is publicly accessible on a portal linked to the NEITI website on bo.neiti.gov.ng.
The ultimate game changer, however, is the new Companies and Allied Matters Act, 2020 (CAMA 2020) signed into law by the President in August 2020. CAMA 2020 specifically required individuals and companies in sections 119-123 (Pages 70-73 of the new Act) under the caption: ‘Disclosure of persons with significant control’ to declare their ownership interests and structure.
With an established publicly accessible register of extractive companies and the recently signed CAMA Law 2020, Nigeria has once again blazed the trail of few countries with legal framework for beneficial ownership disclosure not only in its extractive sector, but for every company doing business in the country.
The EITI in its 2019 Standards required implementing countries to, “document the government’s policy and multi‑stakeholder group’s discussion on disclosure of beneficial ownership.”
The global body further recommended that implementing countries should, “maintain a publicly available register of the beneficial owners of the corporate entity(ies) that apply for or hold a participating interest in an exploration or production oil, gas or mining license or contract.”
Beneficial Owners of extractive assets according to the NEITI are the natural person(s) who directly or indirectly ultimately owns or controls at least five per cent of a corporate entity.
By the CAMA Law 2020 and the NEITI register of beneficial owners of companies, Nigeria has met the above requirements demanded of it by the EITI, a milestone for the country and NEITI.
As NEITI and indeed Nigeria celebrate the opportunities provided by the provisions of CAMA 2020, implementing sections 119-123 of the Act and the Requirement 2.5 (e) of the 2019 EITI Standard, need ingenuity.
Section 2.5 (e) of the EITI Standard states that: “The multi-stakeholder group (MSGs) should assess any existing mechanisms for assuring the reliability of beneficial ownership information and agree an approach for corporate entities to assure the accuracy of the beneficial ownership information.”
Though CAMA 2020 does not set any specific penalty(ies) for a breach of the provisions of Sections 119-123 of the law, it gives bite to the EITI requirement 2.5 which recommended that MSGs should require companies to attest to the beneficial ownership declaration form through a, “sign-off by a member of the senior management team or senior legal counsel, or submit supporting documentation.”
Although recent cases like the OPL 245 (Malabu oil) are signals that where the intention is anything but noble, entities will hide or misrepresent facts and politically exposed persons and government officials may use proxies as fronts, the NEITI Act 2007 in sections 16 Subsection 3, 4 and 5 have envisaged some of these challenges and provided sanctions for misrepresentation of facts.
This ranged from the fine of N30 million, to the revocation of the operational license of the company, including jail terms and fines for directors or other persons involved in the management of the company. NEITI should invoke this section of the NEITI Act when the need arises, leaning on the legal backing of Sections 2 (e) and (1) of the NEITI Act and Sections 119-123 of the CAMA Law.
Furthermore, other sunshine laws in Nigeria could aid ownership transparency. They include the Nigerian Code of Conduct and Tribunal Act 1990 which requires senior government officials including politically exposed persons to disclose their assets and interests in companies; the Public Procurement Act and the Money Laundering Prevention Act which mandate banks and designated non-financial institutions to identify and verify identity of BO of accounts of legal entities carrying out financial transactions.
The Bank Verification Number (BVN) requirement by the federal government has also put faces to corporate and private accounts through the use of bio-metric data.
For now, Nigeria joins the league of countries with a specific law on beneficial ownership disclosure. With the support of the monitoring and whistle blowing role of the media, professional bodies and the civil society, beneficial ownership disclosure will deepen and strengthen transparency and accountability in Nigeria’s extractive sector, a key mandate of NEITI.
Onuorah, is the Assistant Director, Communications and Advocacy at the NEITI. She can be reached via firstname.lastname@example.org