Report of a One-Day CSOs Workshop on Supporting Beneficial Ownership (BO) Transparency Champions in Nigeria

Report of a One-Day CSOs Workshop on Supporting Beneficial Ownership (BO) Transparency Champions in Nigeria

Report of a One-Day CSOs Workshop on Supporting Beneficial Ownership (BO) Transparency Champions in Nigeria  Organized By Civil Society Legislative Advocacy Centre (CISLAC)

Venue:  Bolton White Hotel, Abuja. Date: 27th April, 2017

 

Introduction

Civil Society Legislative Advocacy Centre (CISLAC), with support from Transparency International and funds from DFID on 27th April, 2017 held a One Day Civil Society Organizations (CSOs) workshop on Supporting Beneficial Ownership Transparency Champions in Abuja.  The objective of the workshop was to discuss the concept of Beneficial Ownership, its challenges in Nigeria, how CSOs fit in its narrative, and advance ways that Beneficial Ownership can be holistically implemented in Nigeria to positively affect the economy, help fight corruption and impact the lives of Nigerians.

 

Opening Remarks

Mr Kolawole Banwo, a member of CISLAC management team welcomed all participants present and stated that CISLAC is the National Contact for Transparency International in Nigeria and it is on that basis that CISLAC was selected to implement the Supporting Beneficial Ownership Transparency Champions project in country. He went on to say that  Beneficial Ownership has three components under which it is being implemented: Tax Justice, NEITI, & the EITI process, and though issues of Beneficial Ownership have been in discuss in other parts of the world for many years, it has only gained popularity/ momentum in Nigeria and Africa in the last few years.

 

He opined that the importance of demanding accountability/ transparency in how business is done in our country and the impact that disclosure of Beneficial Owners has in fighting corruption and opening up processes to ensure that resources impact the lives of the people cannot be overemphasized. He saw the workshop as a platform where participants will be able to look at what should be done and how it can be done, to the end that participants will be better informed and enhanced to improve the lot of our people and our nation.

 

In conclusion, he acknowledged that there will be lots of fight backs but participating CSOs should not lose sight of the importance of the issue of BO and its impact on our nation. He thanked all present and wished them happy deliberations.

 

Hajia Hadiza Kangiwa, a member of CISLAC’s Board of Trustees (BOT) represented the Executive Director of CISLAC; Mallam Musa Anwal (Rafsanjani). In her welcome address, she introduced CISLAC as a non for profit organization which was specifically funded to engage legislators to ensure that they are accountable to the people at the Federal and State Levels. CISLAC she said collaborates with other NGOS, iNGOs and CSOs on issues bothering on corruption.

 

CISLAC for the project in question she said is collaborating with Transparency International on Beneficial Ownership, a concept she described as important not just  in financial accountability but in the need for the organizations doing business in the regions to be environmentally accountable as well. She wished all participants a successful workshop.

 

Project synopsis, Objectives and Implementation Design

Lovely Agbor, the project Lead gave a brief background on the inception of the project and its implementation plan. She mentioned that the project is a one year project that emerged from the discussions of the 2016 Anti-Corruption Summit in London during which the presidents of Nigeria, Ghana and Kenya made commitments to have a central register of companies doing business in their various countries. The main objective of the project she said is to ensure the realization of commitments made by our leaders on the issue of establishing register for BO companies.

 

The project implementation methodology she said would be to engage different stakeholders in a multi stakeholder forum, beyond the Extractive Sector, with the aim to have a holistic approach to the issues of Beneficial Ownership by moving beyond the extractive sector to begin to ask questions on the impact of the Beneficial Ownership discuss on other aspects of the nation’s economy. There will also be Advocacy Engagements, CSOs workshop, Development of facts sheets and a Research to know the status of Nigeria regarding availability of policy and legal framework to identify the instruments available that can be used in the engagements, and if these instruments are not available, how to ensure their availability. She mentioned that the CSOs’ Workshop is to build capacity of Civil Society Practitioners to have increased awareness and information on the BO concept, and have a critical mass of people to begin to infuse Beneficial Ownership/ Accountability discuss in their everyday lives.

 

Participants’ Expectations

Participants expected to have the following outcomes from the workshop.

  • Seven (7) participants expect to have more knowledge of the BO concept for effective engagement with stakeholders.
  • Sixteen (16) participants expected to have an in-depth understanding of BO & its Legal Framework so as to streamline it in ongoing projects in their various organizations and share information gained. E.g, work on taxation.
  • Two (2) participants expected to have more knowledge on the role of CSOs and stakeholders in the BO Concept.
  • Four (4) participants’ expectation was that CISLAC /CSOs engage government agencies/ NGOs on how BO affects government, the fight against corruption and the development of country.
  • One (1) participant expected that at the end of the meeting, all the objectives of the workshop would be met.
  • Nine (9) participants wanted to know how to get information/design strategies to engage stakeholders.
  • Seven (7) people expected to know the legal gaps / risks associated with replicating the BO law in Nigerian context and its sectors and how BO affects host communities.
  • One (1) participant expected to know the relationship between BO & Open Contracting.

 

Presentation/Technical Sessions

Mr Dauda Garuba , the consultant on the project facilitated the technical sessions on the  Concept of Beneficial Ownership(BO) titled: Beneficial Ownership: Context, Conceptualization and Legal Framework.

The presentation was in two parts: the first part explored the Concept of Beneficial Ownership: Talking about how the concept began to gather momentum to the point it entered mainstream discuss and began trending in the country.

 

He explored the global context and local trends in Beneficial Ownership, starting from the  Financial Action Taskforce (FATF) of 1990, 2004 & 2012 through to the World Bank/UNODC (Statutory Assets Recovery and Initiative) 2008, G20 High level participation on Beneficial Ownership Transparency 2014 to the Ukraine. He reviewed the various definitions of the Beneficial Ownership (BO) Policy that exists, their limitations and identified how it differs from other kinds of ownerships and why the Beneficial Ownership policy matters. Among such definitions is one by Transparency International which defines BO as the Natural persons who ultimately owns, controls or benefits from a company or trust fund and the income it generates. His presentation highlighted the following as reasons/importance of the BO policy.

  • Hiding identity of real owners of corporate entities contributes to corruption, money laundering and tax evasion.
  • Conflict of interest (Politically Exposed Persons)
  • BO Register could provide the missing ‘first mile’ data for understanding and dealing with challenges posed.
  • Pervasive use of off shore jurisdictions and complex company structure to hide beneficial owners of businesses.

 

Question/ Reactions

Detailed below are questions and responses that emerged from the presentation.

  1. Comrade Donald Ideh, a consultant wanted to know how comprehensive the various definitions of Beneficial Ownership are.

In response to the question, the facilitator opined that while most of the definitions individually do not capture the concept in all its facets, a look at all the existing definitions would give one a complete understanding of all aspects of the policy. E.g. while the Ghanaian definition is comprehensive, that of Nigeria is not, mainly because Nigeria does not have a BO Policy in her laws.

  1. Is the concept of BO focused mainly on corruption and are there frameworks to the BO discussion?

Speaking to the question of the BO policy focusing  principally on corruption, the facilitator said that the discuss was initially focused on the corruption in the extractive sector but is widening to accommodate other areas and plans are on to infuse it in all relevant sectors and areas of engagement as much more would be achieved with that approach. He also mentioned terrorism as a major factor in BO, and stated that the BO discuss can extend to and be linked to cases of terrorism in which companies in the west can be used to fuel/sponsor terrorism in the east.

  1. How do you handle the key issues? I.e. human rights?

Responding to how the question of how the key issues surrounding the BO discuss can be handled, a participant, Mr Kolawole Banwo answered that the BO concept as discussed in Nigeria is in terms of manufacturing & services. And the different criteria in handling the issues ultimately centers on and is woven around BO. And there isn’t going to be a one way implementation plan, it is going to be on what the standards are.

  1. Is there any law around the BO concept?

Reacting to the question of an existence of a law on BO, the facilitator reiterated that there is yet to be a law covering the BO concept in Nigeria but what exists is a substantial stakeholder ownership which cannot be applicable to all scenarios. The alternative being considered is to enact a law or replicate the laws of other countries and plans are already underway to ensure that Nigeria has a law on BO soon.

  1. How do you balance the BO laws to protect the rights of citizens who are company owners?

On balancing the BO laws to protect the rights of citizens who are company owners, the facilitator mentioned that rights protection is a major component of the BO Policy as it is important to respect company’s owners’ privacy; however, plans are underway to introduce finger prints as part of company registration process in the BO law.

 

The second part of the presentation looked at the Review of the principles of BO, Legal and Implementation Frameworks. He started off by saying that BO is not specifically mentioned in any known Nigerian law; however, it can be inferred from a concept defined in the Company and Allied Matters Act (CAMA) as substantial shareholder. He went on to categorized the presentation under the four (4) headings: Analyzing various laws around the concept of BO- substantial shareholder, Re-configuring for contemporary BO practices, anticipated challenges in BO in Nigeria, and opportunities for CSOs intervention.

 

While analyzing the laws around the concept of BO, he identified the following gaps in the old, against contemporary BO.

  • Minimalist in definition- especially as provided by FATF recommendations 2012
  • Law may not have anticipated the contemporary challenges.
  • The law is week.

Re-configuring for Contemporary BO practices

  • Crisis of politically exposed persons (PEPS) Fuel Subsidy Payments, etc.
  • Panama papers (and involvement of high profile political figures)
  • London Anti-corruption Summit.
  • Open Government Partnership (OGP)
  • NEITI’s Initial Pilot and later a Roadmap on BO implementation.
  • Peculiar culture of corruption in Nigeria.

Anticipated Challenges to BO in Nigeria

  • Absence of a comprehensive legal framework for BO Implementation
  • Cost of establishing and enforcing compliance
  • Materiality threshold? (revenue inflow from the entity – company)
  • Rights to personal data protection and rights violation against anti-corruption
  • Human capacity development
  • Untying the knot of legal entities deliberately formed to hide the identity of beneficial owners
  • Inter-agency collaboration and harmonizing on specific issues such as reporting threshold (between CAMA’s 5%, the money laundering prevention and prohibition) (Repeal Bill) 25% and NEITI’s all in oil and gas and ‘silence (?)’ in solid minerals.

 

Opportunities for Civil Society Intervention

  • Capacity Development
  • Diplomacy of win-win approach (especially in pushing for law)- ease of doing business’, foreign direct investment and reputation management, while not losing sight of corruption that is the target
  • Advocacy for inter-agency collaboration (collaboration instead of competition)
  • Multiple points of entry (NEITI Roadmap, CAMA Amendment, OGP Implementation, Investigative Journalism)
  • Exchange programmes (OGP-Nigeria/ UK Government) similar cross-border exchanges among civil society organizations.
  • Leveraging on different strengths from different areas of work
  • Avoid political witch-hunting and seek for incentives to assuage compliance
  • Advocacy and collaboration on data verification, reliability and sanctions for defaulters.
  • Provision of good market information
  • Mitigation against tax avoidance and illicit financial flows
  • Opportunity for fair allocation of licenses
  • Check on cooperate corruption: complex cooperate structures and partnerships disguise to bid for contracts
  • Check on individual corruption: politically exposed persons (PEPs)
  • Opportunity for records and data match and analysis footage of parent holdings vis-a vis payments reported

Questions/Responses

  1. Comrade Monday Bolanle Osas, from Centre for LSD thanked the presenter for the good and in-depth presentation and mentioned that it helped in his understanding of the BO concept. He however expressed concern with the success/ nature of the win-win approach as suggested in the presentation, stating that it may allow defaulters to maintain personal gains at the detriment of the success of the BO Policy, he also sought to know the nature of the incentives that would be given to compliant companies

In response, the facilitator said that the win-win approach stands to say that, looking at the kind of government we have in the country, and the need for the laws around BO Policy to be enacted, it is of outmost importance that instead of taking on a direct/ confrontational approach, CSOs should engage by politely lobbing and massaging the leaders into submission without coming off or giving the impression of fighting the government.  The incentives he said can come in the form of awards for companies doing responsible business in the country.

 

  1. How can companies be made to pay taxes on their actual income and not by what they publish in papers?

It was answered that there are no ends to resolving the issues and government on their part are limited by procedural issues, for instance, the Whistle Blower Act may help but even that is limited; the security of the whistle blower is not absolute as there is no defined way of keeping the records away from affected persons who may eventually find themselves in government.

 

  1. How do we ensure compliance from the various intermediaries (accountants, lawyers, financial institutions) on the BO Policy?

There is no guarantee that the intermediaries are in favour of the BO Policy. however, ways of censorships can be devised, that is, put things in place that give sanctions on violation of ethics and laid down principles and CSOs can also go further by analyzing and putting forward in engagements motivating factors for the key players mentioned above. There is also need for CSOs’ exchange visits towards developing capacity for engagement.

 

  1. A question was asked as to why the banks were not part of the meeting.

Lovely Agbor, the project Lead answered that the meeting was a CSOs’ workshop and the banks will be called to participate in the multi-stakeholder forum scheduled to hold in June.

 

Group Activities

Following the technical sessions, three (3) groups were set up to brainstorm and come up with more strategies / suggestions to the CSO engagement Plan and the next steps. Each group was to answer the following questions.

  1. Are there any other platforms that should be included in the plan above?
  2. How do we engage(key into) the OGP Action Plan
  3. What are the practical steps you will take as an organization?

 

PRACTICAL STEPS TO BE TAKEN

Group 1

S/N Activity Goal/Objectives Responsible Organization Time Frame
1 Sensitization via traditional and social mediums Create awareness to influence policy makers- ICAN, TUC,APBN CISLAC &BudgiT April-Dec.
2 Advocacy engagements and Lobbying Get budget of stakeholders CISLAC/Action  Aid April-Dec.
3 Training on BO/OGP To build capacity of CSOs on BO, OGP and Strategies for Engagement of Stakeholders CISLAC/CSO Experts July,2017

 

Group 2

S/N Activity Goal/Objectives Responsible Organization Time Frame
1 Engage Union Leadership on Advocacy Key into BO ASUU, TUC, ALLC, NLC, NUPEG, SU Leaderships etc. 6 Months
2 Town hall meeting Awareness/ Participation to push forward the BO conversation CBO,FBO & Traditional Rulers 6 Months
3 Advocate for and participate in the development of Code of Conduct and Sanctions that promote BO Promote/Enforce Professional Ethics in Corporations and ensure adherence to the BO Policy CSOs MBA, ANAN, UAN  6 Months

 

 

S/N Activity Goal/Objectives Responsible Organization Time Frame
1 Training for CSOs Empower CSOs with skills and information on the concept of BO CISLAC &ALL May-Dec, 2017
2 Exchange Programmes for CSOs Empower CSOs with  information on the concept of BO/ skills for engagement CISLAC &ALL May-Dec, 2017
3 Production of learning documents To facilitate awareness creation CISLAC &ALL May-Dec, 2017
CSOs/Media Capacity development on OGP To facilitate awareness creation/skills for engagement CISLAC& ALL May-Dec. 2017

 

CONCLUSION/CLOSURE

The facilitator concluded that all participants should go beyond the workshop and gather more information on BO as CSOs can only engage effectively by first educating themselves. The process he said should not only be limited to the CSO world but should be extended to the government so that engagements can produce results. It is an ongoing process and there are wider consultations going on at the Ministry of Justice level. He prayed that participants’ expectations have been met, and thanked everyone for their time.

 

The project lead, Lovelyn Agbor thanked all participants for the time and brought the meeting to a close at 3:00pm

 

 

Cross section of participants at the workshop

Group photograph at the workshop

    

 

 

 

 

 

 

 

 

 

 

 

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