Guyana urged to strengthen legal framework on beneficial ownership disclosure

The Guyana Extractive Industries Transparency Initiative (GYEITI) yesterday hosted a workshop aimed at examining ways to improve transparency and accountability in Guyana’s extractive resources sector.

The workshop, which saw members of civil society, representatives from the extractive resources sector, government, and the GYEITI Multi-Stakeholder Group in attendance, was intended to provide information and facilitate discussions ahead of Guyana’s EITI validation assessment in January next year.

The workshop focused on streamlining beneficial ownership disclosure measures, identifying and insulating politically exposed persons, and mainstreaming future GYEITI reports. Guyana’s first report, for the financial year 2017, was submitted on April 24, 2019.

Francisco Paris, who leads EITI’s Latin America and Caribbean division, said beneficial ownership provisions ensures transparency concerning the operators benefitting from the extractive resources sector.

Beneficial ownership involves identifying human owners of businesses; identifying the persons in control; and establishing ownership thresholds, such as, for example, establishing percentage of shares or capital needed to establish ownership.

Paris said identifying the person who owns the company is important as there are often attempts to hide this fact through shell companies and other schemes.

Beneficial ownership is defined at Section 2 of Guyana’s Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) Act, but the term is not defined in any of Guyana’s natural resources-related legislation.

As a result, such legislating is needed, even if it means merely articulating that this definition obtains for the extractive resources sector. GYEITI has crafted a beneficial ownership roadmap with 22 sub-objectives to be completed. Thirteen have already been completed as of October 24, 2019.

Making disclosures mandatory

There is no law in Guyana requiring companies in the extractive resources sector to disclose the beneficial owner behind the operation, and/or the person or persons who have effective control of the company. Consequently, currently, companies decide whether they provide this information.

One stakeholder pointed out that if companies opt not to cooperate, State agencies are powerless to insist. She further said that with Guyana’s validation coming up in January 2020, it seems unlikely that this information will be gathered in the time remaining.

The provision of this information can be made mandatory by passing or amending legislation. However, given government’s caretaker status, it is unclear whether it has the legal capacity to pass new legislation. Furthermore, the January 2020 deadline leaves a very narrow window.

Jacqueline Taquiri, an expert in tax law and the extractive industries working with EITI, said that the validation process taking place in January will just require Guyana to say where it is so far with meeting the EITI Standard, after which Guyana will have a further two years, up to December 31, 2021, to implement all areas highlighted as necessary.

A representative of the Guyana Geology and Mines Commission (GGMC) told the gathering that if the information needed is communicated to the GGMC in a timely fashion, this information can be obtained relatively quickly. She explained that licences and permits issued for the extractive resources sector are renewed yearly. She said that the required information, if communicated to the GGMC in a timely manner, can be added to the form, thereby making the provision of the information a condition for receiving the licences. This approach, though not legislative, would eliminate the voluntary nature of such disclosures.

This method is similar to the approach by the Environmental Protection Agency (EPA), which, in the absence of local legislation on the management of hazardous and non-hazardous waste from oil ships, has included provisions of international conventions into the permits issued to the operators. Executive Director of the EPA, Dr Vincent Adams, has said breach of those provisions in the permits is a ground for their rescission.

Politically exposed persons

Meanwhile, emphasis was also placed on treating with politically exposed persons who are relevant to the extractive resources sector.

Paris said that it is important to define the term in local law, and to ensure that the definition is wide enough to capture all relevant persons.

This term is also defined in the AML/CFT Act, which definition new legislation can refer to, or mirror to ensure expedient legislating. However, as stated earlier, this is not possible in light of the government’s caretaker status. This definition can be augmented by examples from provisions made in other jurisdictions. For example, high ranking officers in foreign missions, ambassadors, and members of governing bodies of political parties are classified as politically exposed persons in the European Union’s 3rd Anti Money Laundering Directive.

Paris shared that some jurisdictions, including Ukraine and the United Kingdom, have established registers through which this information is available to the public.

Main Gaps

Meantime, Taquiri gave a presentation on the major gaps identified based on Guyana’s first report.

These include lack of mining cadastral portals, a registry containing all operators in Guyana’s extractive resources sector, and contract transparency regarding the mining sector.

She shared that it is ideal to have a cadastral portal online through which the public can have access to all active mining licences. Both this mechanism and the registry allows for enhanced transparency.

While praising the disclosures of contracts in Guyana’s petroleum sector, Taquiri said there needs to be similar public disclosures in the mining sector, and spoke of the need for a policy on transparency in these areas.

Taquiri also pointed to what she said was a lack of data on revenue received from specific companies by the Guyana Revenue Authority (GRA). A GRA representative, however, said that while the tax body can share summarised or aggregate information, the law prevents it from sharing the tax information of specific companies.

Section 4 (1) of the Income Tax Act mandates all persons involved in the collection of income taxes refrain from disclosing that information. It is an offence to breach this provision. This has to be addressed from a legislative standpoint.

Taquiri also said that Guyana should move towards recording the financial data of operators in the local extractive resources sector by project. As such, as opposed to reporting on the aggregate numbers of an oil company’s aggregate operations, or a mining company’s aggregate operations, there should be block by block reports on the royalties or taxes paid with respect to every individual concession a company has been given.

Taquiri also strongly suggested that Guyana consider eventually moving toward ‘systematic disclosures’, which includes routine and publicly available company and government reporting. To be valuable, the information which informs this reporting must be audited to ensure reliability, and meet EITI standards. Such information would need to be accompanied by explanations as to how it was generated and compiled.