Osinbajo: Nigeria Still Grappling with Consequences of Malabu Oil Scandal…

Says hidden corporate ownership poses real danger

Vice-President Yemi Osinbajo yesterday in Jakarta, Indonesia, said Nigeria was yet to overcome the consequences of the shady award of OPL 245 to Malabu Oil and Gas Limited in 1998.

Osinbajo made the remark while addressing the conference on beneficial ownership organised by the Extractive Industries Transparency Initiative (EITI).

Malabu, which has been described as one of the largest corruption scandals in the global oil industry involved controversial $1.3 billion deal on OPL 245 perceived as the most valuable oil field in West Africa.

Investigation on the scam is being conducted in Nigeria, Italy and Netherlands because of the involvement of oil giants, Shell and ENI, as the oil block, comprising about 9 billion barrels of crude oil, was sold to Shell and ENI at the rate of $1.3 billion in 2011.

The proceeds were said to have been shared among public officials in Nigeria as bribes while the government allegedly got $210 million as signature bonus on OPL 245.

But Osinbajo, in his speech, observed that the scam had been a subject of criminal and civil proceedings in different countries with huge legal costs while the intended blessings of the natural resource has continued to elude Nigerians.

He said hidden corporate ownership poses real and present danger to Nigeria and most countries, especially developing nations.

“Masked or hidden corporate ownership is deeply implicated in the sad story of our underdevelopment,” the vice president said.

He cited a 2014 report by the One Campaign, titled: ‘One Trillion Dollar Scandal,’ which claims that developing countries lose $1 trillion annually to corporate transgressions - most of it traceable to the activities of companies with secret ownership - and a 2015 report of the High Level Panel on Illicit Financial Flows from Africa which noted that Africa had lost over $1 trillion over a 50-year period and loses more than $50 billion annually to illicit financial flows.

Noting that most of these illicit flows are perpetrated in the extractive sector and through companies with hidden ownership, Osinbajo said: “So for us in the developing world and especially in Africa, breaking the wall of secret corporate ownership is an existential matter. It is for us literarily a matter of life and death.”

He added that while anonymous companies were not always illegal or not always designed to harm, the secrecy around their ownership provides a convenient cover for criminals and corrupt individuals.

“Our lives experience has shown clearly that anonymous corporate ownership could serve as vehicles for masking conflicts of interest, corruption, tax evasion, money laundering, and even terrorism financing,” he said.

Buttressing his point, Osinbajo said Nigeria had been contending with the consequences of such opaque company ownership.

“Nigeria is still grappling with the negative consequences of the use of opacity by senior members of government and their cronies between 1993 and 1998, awarding themselves juicy contracts in the extractive industry. One of such incidents involving a company called Malabu Oil and Gas has been and is still subject of criminal and civil proceedings in many parts of the world which involves huge legal costs while the full benefit of the natural resource remains unexploited for the benefit of the people of Nigeria to which it belongs,“he said.

Calling for global efforts to tackle the problem of hidden corporate ownership, the vice president said this was not just a developing world’s problem, adding: “We live in a more interconnected world, and anonymous companies have footprints and tentacles that do not respect the developed/developing divide.”

He said even when the degree of exposure might differ, the whole world was at risk of the dangers posed by anonymous corporate ownership. Osibanjo said the Panama Papers clearly illustrated the global scale and spread of this problem, noting that this is a global challenge and nothing less than a truly global approach will be needed to tackle it.

He commended the United Kingdom, Norway, Netherlands and Denmark for leading the way in establishing public registers of the real human owners of companies in their countries, and called on other G8 and G20 countries not only to follow suit by initiating actions to end corporate secrecy at home but also in their dependencies.

“It is important to underscore the fact that opacity in one section of the globe undermines openness in the other. We need to break down this wall together as we are all at risk of the evil effects of opacity in business ownership,” he said.

While lauding Open Ownership and its partners for establishing a global register of beneficial ownership with entries on about two million countries, he noted that current legislative measures in those countries may need to go farther to effectively discourage or totally prohibit non-disclosure agreements with big corporates, and to re-evaluate the use of secret trusts to hide beneficial ownership from the prying eyes of the law.

He observed that laws passed in some very developed countries did not go far enough to set the examples really needed as they

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