Home' Trinidad and Tobago Guardian : May 28th 2015 Contents MAY 2015 • WEEK FOUR www.guardian.co.tt BUSINESS GUARDIAN
COMMENTARY | BG17
The EITI report is meant to be
used as a transformational tool
in promoting transparency and
accountability in the extractive
industries and be a major dis-
incentive to corruption. While
these reports have helped to demystify the
energy sector to the citizens of implementing
countries, it was only natural for the International
EITI to push further the anti-corruption agenda
by recommending the disclosure of beneficial
ownership in oil, gas and mining companies
operating in EITI participating countries.
Eleven EITI countries have started the journey
towards beneficial ownership disclosure with
T&T poised to join by creating in 2016 an online
register that lists the names those who benefit
financially from ownership of such companies.
The EITI Standard defines beneficial ownership
as "the natural person(s) who, directly or indi-
rectly, ultimately own(s) or control(s) a corporate
entity, a license or other property."
The call for such disclosure from EITI coun-
tries is not unreasonable because the real owners
of extractive companies are sometimes "hidden"
behind a board, various stakeholders or by a
shell company which can facilitate and mask
corruption. In other cases the lines of trans-
parency on beneficial ownership could be blurred
when some extractive companies use chains of
legal ownership for tax evasion and tax avoidance
in the jurisdictions where they actually produce,
buy or sell products from the oil, gas and mining
sectors. There is a growing body of research
related to these practices and increased demands
for greater transparency.
According to a 2013 report issued by the ONE
Campaign, "at least a trillion dollars a year is
siphoned out of developing countries through
corrupt activity involving shady deals for natural
resources, the use of phantom firms, money
laundering and illegal tax evasion."
In Nigeria, one of the countries piloting the
Beneficial Ownership Project, the example was
given of the Oil Minister Dan Etete awarding
an oil block to Malabu Oil and Gas, a company
which was formed only a few days before it
won the block. By disclosing beneficial own-
ership, there is less chance of these practices
taking root or going unnoticed.
However, it s not just the EITI that is taking
this step towards publicly providing information
on beneficial owners. This move follows a global
trend set by international policymaking bodies,
with the G8 and G20 having adopted high level
principles on beneficial ownership in Brisbane,
Australia, in 2014 and the European Parliament
and the Council of the European Union having
recently reached an agreement on the fourth
anti-money laundering directive.
The United Kingdom has also followed in the
footsteps of Denmark, France and the Ukraine
by agreeing to create a public register of beneficial
owners. It is instructive to note that in the UK
failure to provide correct information on ben-
eficial ownership can lead to heavy fines and
Given the sphere of influence of politicians,
another term that policymakers grouped with
beneficial ownership is politically exposed persons
(PEPs). The TTEITI Steering Committee defines
a PEP 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."
Within countries, extractive companies face
potential problems when PEPs hold hidden
stakes in a company. This may not always be
an issue and not all PEPs are involved in cor-
ruption however, in some instances, it creates
the environment for corrupt self-dealing and
In a multifaceted country which gains revenue
from the entire energy value chain, from the
upstream, midstream and downstream oil and
gas sectors, it becomes important for T&T to
demonstrate its commitment to greater trans-
parency by continuing to embrace and adopt
anti-corruption measures that help protect
against such practices in the exploitation of the
country s natural resources.
Similar to many other EITI implementing
countries, T&T does not have any laws which
directly call for the disclosure of the extractive
sector s companies beneficial owners or PEPs.
However, there are clauses in the Companies
Act and the Integrity in Public Life Act which
state that a company must keep a register of
substantial stakeholders or individuals who have
"shares in the company entitling him to cast
on his own behalf at least ten per cent of the
total votes entitled to be cast at any general
meeting of the company."
The TTEITI steering committee was guided
by these laws in developing a definition of ben-
eficial ownership to suit our local context. The
committee agreed to define beneficial ownership
as, "the natural person who is directly or indi-
rectly the owner of a company or controls at
least ten percent of the shares or total votes and
exclude persons acting as a nominee, interme-
diary, custodian or agent on behalf of another
Politically exposed persons, who otherwise
benefit financially from the company, are also
considered to be beneficial owners." The def-
inition is just the first step in addressing the
issue and an online registry of beneficial owners
of extractive companies participating in the EITI
will be published by Q1 2016.
In order to further alleviate any perception
of corrupt practices existing within the extractive
industries of T&T, it is the aim of the TTEITI s
beneficial ownership project to advance its pro-
motion of transparency, accountability and good
corporate governance by disclosing the "real"
owners of companies that develop the energy
resources which belong to all citizens.
Greater transparency can only contribute
towards the enhancement of a sound business
climate that encourages greater investment and
helps in building trust among companies, the
public and civil society.
For more information on the subject, please
contact Vanita Redoy and Gabrielle Rawlins
at email@example.com and for more infor-
mation on the TTEITI visit www.tteiti.org.tt
EITI promotes beneficial
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