NEITI seek legislation to uncover owners of oil and gas companies

Following Nigeria’s membership of Open Government Partnership (OGP), a platform for openness and transparency in government, the Nigeria Extractive Industry Transparency Initiative (NEITI) is pushing for a legislation that will mandate the disclosure of real owners of companies in the oil, gas and mining industries, hampered by absence of legal framework.

The Executive Secretary of NEITI, Waziri Adio stated this while playing host to a Consultative Forum of Open Government Partnership Tuesday in Abuja.

While emphasizing the need for transparency and accountability in the sector, he said that government should enact laws that will make it compulsory for the real names and identities of players in the extractive industry to be made public.

“In the 2013 oil and gas audit by NEITI, forty one (41) out of the forty four (44) companies covered responded to NEITI questions and inquiries by returning the completed templates on beneficial ownership. However, most of the ownership information were about the legal owners as opposed to the beneficial owners or real owners of the Companies.

“Knowing how much companies paid in the form of taxes, royalty, rents etc. and how much government received is important, but not enough. Knowing those who are the real owners of the companies is critical to checking corruption, money laundering, drug and terrorism financing, tax avoidance and evasion,” Adio said.

Adio acknowledged although laws like the Companies and Allied Matters Act, Freedom of Information Act, Code of Conduct Tribunal Act and Public Complaints Commission Act are relevant legislations for ownership identifications, but noted that policies like Financial Action Task Force, Bank Verification Number, Automation and Access to Corporate Affairs Commission’s register will support efforts at ownership disclosures.

In a statement issued by the Director of Communications Orji Ogbonnaya Orji, Adio called on the President to issue an Executive Order on “Compulsory beneficial ownership disclosure” by extractive companies in Nigeria, insisting that such legislation be embedded in the Petroleum Industry and Governance Bill (PIGB) as well as in the Companies and Allied Matters Act (CAMA).

The NEITI boss maintained that about forty – three Extractive Industry Transparency Initiative (EITI) implementing countries have published beneficial ownership of oil and gas companies out of which twenty, including Nigeria, plans to establish a public register of beneficial owners by 2020.

He added that NEITI has published a road map on beneficial ownership disclosure which provided clear definition of who beneficial owners are, the level of details to be disclosed and institutional framework that are required for effective implementation of beneficial ownership disclosure including a definition of Politically Exposed Persons (PEPs) and their reporting obligations, challenges around data collection, reliability, accessibility, timeliness and provided clear guides on them.

Adio identified delay and refusal to provide the real information on the audit templates, confusion over ownership structure (legal), conflict with existing confidentiality agreements, negative perception of beneficial ownership by covered entities (witch hunting), inconsistencies between beneficial ownership disclosures and information in CAC, use of surrogates by Politically Exposed Persons and government officials, as some of the challenges confronting NEITI.

In his presentation to the forum, the Attorney General of the Federation and Minister of Justice, Abubakar Malami, affirmed Federal Government’s commitment to beneficial ownership disclosure.

“More than ever before, the Government is determined to implement the legal basis on which beneficial ownership is founded from both an international and national perspectives.

“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. These practices also allow the beneficial owners to avoid responsibility for violation of laws and regulations on labor and tax”.