A new year, and a new leak of financial information that reveals how shell companies have been deployed to move and hide vast sums of money from a resource-rich state to the accounts of politically connected individuals.
The familiar cast of service providers – including lawyers, accountants, oil companies and consultants – are all present, as are the usual list of secrecy jurisdictions, with Malta taking centre stage. The same goes for the celebrity bystanders – caught again on camera at a party hosted and paid for by compromised characters.
We are writing about the International Consortium of Investigative Journalists investigation into Isabel Dos Santos, Africa’s richest woman and the daughter of the former Angolan president. But we could be speaking about any number of similar cases involving resource-rich states that have come to light in the past few years.
The investigation by the ICIJ and partners is comprehensive, meticulous and well worth reading. It gives a sense of the ease with which powerful, politically connected people can circumnavigate the norms and rules that everyone else abides by. But as with all leaks, once the outrage has passed, it is difficult to know what practically can be done to make grand corruption harder.
As Africa’s second largest producer of oil and a significant producer of diamonds, the Angolan government relies on selling its natural resources to keep the economy afloat. The Luanda Leaks documents read as a catalogue of mismanagement and corruption, with much of Dos Santos’ wealth deriving in one way or another from the extractive industries and subsequent investments in banking, telecommunications and construction.
So an obvious first step is greater transparency in the oil, gas and mining sector and, just as critically, in company ownership in and beyond the extractive industries. The combination of grand corruption in the extractives enabled by international opaque financial service providers produces a resource-finance curse that has hit a growing list of countries that are weak in governance and public oversight.
The Extractive Industries Transparency Initiative (EITI) and OpenOwnership (OO) are working together to disclose the true owners of companies operating in the lucrative oil, gas and mining sector. Publishing this information will not immediately fix the issue, but it will squeeze the space bad actors can operate in and make it harder to act with impunity.
In Nigeria and Ukraine, OpenOwnership has been assisting authorities with setting up beneficial ownership registers. Both countries have come some way: at the end of last year, Nigeria published Africa’s first beneficial ownership register, which is the first globally that focuses on the oil, gas and mining sector.The register itself is a solid first step, with good functionality and innovations, such as the inclusion of licencing data; but our technical team’s preliminary analysis is that more work needs to be done on data quality, echoing issues seen with Nigeria’s pilot data disclosures in 2015. You can read our quick analysis here.
In Ukraine, knowing who is behind the companies extracting resources and controlling them has far greater significance beyond the national economy. It is directly related to national security concerns, including the need to understand political connections and how much influence other countries have on energy supply and revenues. Ukraine’s register has revealed that eleven politically exposed persons own a quarter of all permits for extraction of oil and gas in Ukraine. In 2017, Ukraine became the first government to commit to integrating its register with the OpenOwnership Register, linking their beneficial ownership data across the world. You can read our Ukraine scoping study here.
Similarly, Angola should consider implementing an open beneficial ownership register with information on people who are politically connected. This will shrink the space within which white collar criminals and the corrupt can act with impunity. In 2020, OpenOwnership plans to scale up its work with resource-rich states to include an additional ten countries. Based on the positive anti-corruption actions taken in Luanda by the government last year, we sincerely hope that Angola will be one of them.