A miner enters a mine shaft outside the town of Lydenburg in Mpumalanga, South Africa. (Photo: Waldo Swiegers / Bloomberg via Getty Images)
The Extractive Industries Transparency Initiative (EITI), which aims to promote financial accountability in historically vulnerable hydrocarbon and mining sectors, has launched a new project. Opening Extractives will help 13 countries implement reforms on the disclosure of beneficial ownership of extractive companies.
First published in Daily Maverick 168 weekly newspaper.
In particular, South Africa has not signed up to either initiative, which is a shame as corporate beneficial ownership disclosure is an important tool in the fight against corruption, tax avoidance, capital flight, environmental mismanagement and other ills related to the sector. Ultimately, such initiatives can help break the ban on the “resource curse” – the paradox of widespread poverty amidst natural resource wealth. Think of the Democratic Republic of the Congo, Angola, Nigeria, and even South Africa.
EITI, citing UN figures, says that, according to the United Nations, “Africa loses £ 88.6 billion each year to illegal capital flight. At a time when the continent is facing costs of more than $ 200 billion to cope with the Covid-19 crisis, citizens and governments can hardly afford to have such riches sent abroad. “
South Africans can certainly refer to stolen and wasted money that could have been used to cover the rising costs of the pandemic, and that does not include the “extractive” sector in the orthodox sense of the word.
“If we succeed, the price is great,” said Helen Clark, former Prime Minister of New Zealand and EITI Chair, in a statement. “Billions of dollars should be poured into infrastructure and investment to improve the lives of many millions of people, rather than into the pockets of corrupt officials or business people. If managed responsibly, the extractive sector can be a source of wealth. Giving transparency to corporate ownership and promoting the use of beneficial ownership data can help make this a reality. “
In parallel, major public natural resources companies – BHP, Rio Tinto, Anglo American, Newmont, Glencore and Repsol – have signed a commitment to support the project goals. Public company ownership is generally fairly transparent, but EITI said it will “disclose information about subsidiaries and evaluate company ownership data while doing due diligence on partners and suppliers.”
A rule of thumb: if you can’t find a warm body at the top of the ownership structure, it’s likely buried in a tax haven and there’s a reason the beating heart at the top doesn’t want to be discovered.
Participating countries include Mexico, Argentina, Zambia, Mongolia, Ghana and Indonesia. South Africa – which for all its usefulness has a penchant for multilateral initiatives – remains a blatant omission. That raises some obvious questions. DM168
This story first appeared in our weekly newspaper, Daily Maverick 168, which is available for R25 at Pick n Pay, Exclusive Books and airport bookstores. For your nearest specialist dealer, please click here.