By Francis Agbere, Extractive Industry Programme Manager, Oxfam in Ghana
This past summer, Ghana become the second country in Africa to guarantee beneficial ownership disclosure in the petroleum sector. As part of the bidding process for new oil fields, the new disclosure regulations require companies to release information on their ownership structure and on who will really benefit from exploiting Ghana’s natural resource wealth. This provision is a crucial step forward in the fight to reduce illicit financial flows that have cost Ghana billions of dollars.
Since the first crude left the Jubilee oil fields in 2010, civil society organizations tracking the extractive sector in Ghana channeled their energy into improving the governance of oil and gas projects. They campaigned to influence government policy and legislation to maximize petroleum benefits, to protect the public purse from pilfering. Activists and experts encouraged the government in Accra to adopt appropriate laws to guarantee Ghanaians can benefit from the petroleum wealth under their feet. This included plugging leaky beneficial ownership laws.
Unfortunately, in the short-term, the political expediency of profit took precedence over long-term development. Politicians capitalized on the public euphoria to expand drilling and promised that the pending oil money would be a panacea for all of Ghana’s problems. In the early days of the oil boom, Ghana paid little attention to the operations and structures of clandestine companies like the E.O. Group, which never opened a physical office in Ghana and allegedly helped facilitate corruption through its shadowy business arrangements. The recent release of the “West Africa leaks” shined a spotlight on the challenges of this period yet again.
Despite these challenges—and through painful, persistent and necessary active citizenship—Ghanaian civil society successfully pushed for beneficial ownership legislation. This effort shaped a promising new crop of laws and amendments, starting with the Companies Act of 2016, which requires companies to disclose their ownership structure. It has been heartening to see committed activism around illicit financial flows mature into campaigns that achieve concrete policy wins on beneficial ownership and contract disclosure.
Until recently, there was wide room for oil companies to evade tax through aggressive transfer pricing—by shifting costs offshore—as laws on the books did not require any disclosure of their ownership structure. Thankfully, these new rules have made this practice increasingly difficult and serve as an essential deterrent to these behaviors.
Now the challenge for civil society in Ghana is how to translate all of the data on beneficial ownership into real benefits for citizens, such as improved service delivery and strengthened economic development.
As an entry point, activists must coalesce around a new strand of work on illicit financial flows that is connected to more effective cost auditing in both the mining and petroleum sectors. Oil, gas and mining costs form the basis for tax assessment and collection, which in turn provides real benefits for citizens. But when costs are inflated or shifted to offshore companies, citizens lose out. Activists should use the data disclosed in Ghana’s beneficial ownership law to ensure costs and taxes are kept under scrutiny. New disclosures would help auditors clamp down on offshore profit shifting to better guarantee no money is left on the table.
However, this new legislation is unlikely to deliver real benefits if it is never enforced. Ghana’s new regulations are contingent on the discretion of the Minister of Energy. What happens if this discretion is never exercised or exercised in bad faith? The Minister of Energy, for example, controversially bypassed a competitive bidding process in favor of direct negotiation with U.S. supermajor ExxonMobil. Government and civil society should consider this impediment in future reviews to ensure that discretionary powers are not abused to give companies preferential treatment of hide shady ownership schemes. This might require an independent monitoring body, coupled with regular media attention, to ensure that the government discloses data in a timely way.
The benefits of ownership transparency should also extend to the mining sector. The government of Ghana committed to replicating the Petroleum Revenue Management Law in the mining sector in the form of a Mineral Revenue Management Law – an election promise that Oxfam and our partners are following up, by leading a campaign for its implementation. Progress in the petroleum sector, including the petroleum register which lists contracts on a public platform, is not reflected in the significantly older mining sector. As the government considers reviewing its mining codes this year, it should incorporate beneficial ownership requirements.
As Ghana continues to develop its oil and mining governance framework, the story remains quite chequered. New petroleum producers like Guyana, Kenya, Senegal, Tanzania, and Uganda should learn from our experiences—and mistakes—to develop early beneficial ownership provisions and ensure that their citizens reap the most from their resources. Recent progress on contract disclosure standards by the Extractive Industries Transparency Initiative, a global anticorruption platform for the oil and mining industries, is a clear pointer that disclosure is an established global norm. The next step is turning all the data into real benefits.
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