The Trinidad and Tobago Extractive Industries Transparency Initiative (TTEITI)

For the past three years the Extractive Industries Transparency Initiative (EITI) International Board has advocated disclosure of the names of the beneficial owners of oil, gas and mining companies as a further step towards achieving transparency and accountability in the extractive industries. In February 2016, at the 7^th EITI Global Conference in Lima, Peru, attended by a delegation from TTEITI, the EITI Standard 2016 was adopted and included a new requirement that, by 1^st January 2020, all EITI implementing countries must publish a Beneficial Ownership Register.

We of the TTEITI saw that requirement as a big challenge but were heartened when T&T’s Prime Minister, Dr. Keith Rowley, while addressing world leaders at the Anti-Corruption Summit 2016 in London on 12^th May said, among other things:

‘Trinidad and Tobago is committed to the fight against the scourge of corruption and to pursuing those that have engaged in acts of corruption, with a goal of successful prosecution and recovering as many assets that are the fruits of corrupt acts for the benefit of the Citizens of Trinidad and Tobago.

“Trinidad and Tobago is open and committed to assisting its international partners in the fight against corruption. Trinidad and Tobago will work towards the establishing of a registry of company beneficial ownership information. Trinidad and Tobago commits to ensuring that law enforcement agencies have full and effective access to beneficial ownership information for companies and other legal entities registered within its jurisdiction.”

Clearly Dr. Rowley and his Government are on the same page as the EITI. Therefore, TTEITI’s aim of publishing its first Beneficial Ownership Registry during 2016, as reported in the TTEITI Newsletter No. 6, can expect Government’s support.

Beneficial ownership
Underlying the EITI requirement of beneficial ownership disclosure is the fact that, whereas transparency about governments’ revenues from the extractive sectors is important for accountability, it does not tell the whole story. Equally important is who owns and ultimately profits from the activities of the oil, gas and mining companies.

The EITI Standard requires that implementing countries maintain a publicly available register of the beneficial owners of the corporate entity(ies) that bid for, operate or invest in extractive assets, including the identity(ies) of their beneficial owner(s), the level of ownership and details about how ownership or control is exerted. Where possible, beneficial ownership information should be incorporated in existing filings by companies to corporate regulators, stock exchanges or agencies regulating extractive industry licensing.

EITI Chair, Fredrik Reinfeldt, said at the London Summit, “EITI members are showing leadership on beneficial ownership disclosure.” That issue was among the central issues of the Summit, and Heads of State, senior industry and civil society leaders discussed it, among others, and strategies were proposed for international cooperation to tackle it.

Earlier this year, the headlines of the foreign and local mainstream and social media got a reprieve from terrorist attacks by the breaking news of ‘the Panama Papers’ that overnight turned the Panamanian law firm Mossack Fonseca into a household name. Approximately 11.5 million documents were leaked that revealed that the firm had registered annually nearly 20,000 shell companies on behalf of persons in influential positions to hide their identity and conceal their true wealth. Some persons used those companies to make legitimate investments and others to facilitate corrupt payments, launder money and evade the payment of taxes.

There is a general feeling that the Panama Papers revelations are only the tip of the iceberg. The International Monetary Fund (IMF) reports that “every year US$200 billion of untaxed income is taken out of poor countries by international corporations operating in those countries, which represents around 50% more than the total they receive in aid from rich countries. Tax abuse by multinational corporations increases the tax burden on other taxpayers, violates the corporations’ civic obligations, robs developed and developing countries of critical resources to fight poverty and fund public services, exacerbates income inequality, and increases developing country reliance on foreign assistance.”

The need for this degree of transparency was clearly demonstrated by one of the many stories coming out from the Panama Papers revelations. In Uganda, a country in which most of its citizens live on less than US$1.45 a day, an oil company (not operating in T&T) based in Jersey (a British crown dependency) used Mossack Fonseca’s services to move its business registration and assets from the Bahamas to Mauritius. This was in an attempt to avoid paying US$400 million in capital gains tax to the government in 2010 after it sold its 50% share in certain Uganda’s oilfields for US$1.5 billion.

What is the link between the Panama Papers and the Extractive Industries Transparency Initiative (EITI)? Since 2013, long before the revelations of the Panama Papers, the EITI Board began advocating the need for EITI implementing countries to identify and publish the names of the beneficial owners of extractive companies. The TTEITI Steering Committee proposes to publish T&T’s first Beneficial Ownership Register very shortly and so avoid some of the practices revealed by the Panama Papers on the use of hidden ownerships to mask corruption–a clear benefit that T&T will enjoy from such public disclosures.

The TTEITI’s commitment to the publication of T&T’s first Beneficial Ownership Registry goes hand in hand with the pledge made by the Prime Minister of Trinidad and Tobago, in May 2016, at the Anti-Corruption Summit in London. He pledged that this country would establish a registry of company beneficial ownership information. He also committed to ensuring that law enforcement agencies have full and effective access to this beneficial ownership information for those companies and other legal entities registered within our jurisdiction.

It is important to note that EITI Beneficial Ownership reporting mandates the disclosure of not only the names of “the natural person(s) who, directly or indirectly, ultimately own(s) or control(s) a corporate entity, a license or other property”, but also the identity of Politically Exposed Persons (PEPs), which the TTEITI Steering Committee defines as “an individual who is or has been entrusted with a prominent political function. These include foreign and local political figures and extend to their immediate family members and close associates.”

The lesson to be learnt from the Panama Papers by those engaged in EITI implementation is that there is no such thing as too much transparency and that, whereas transparency is not an end in itself, it is the best means of protecting the people’s patrimony. Whenever and wherever high profile persons are implicated in wrongful acts, such as those revealed by the Panama Papers, they must be held accountable for their actions and appropriate consequences meted out to them according the country’s laws.

Look out for T&T’s first Beneficial Ownership Registry which will be published soon on our website: tteiti.org.tt.