#PanamaPapers: South African govt. opens public registers for beneficial ownership of companies

#PanamaPapers: South African govt. opens public registers for beneficial ownership of companies

 

The South African government has opened public registers to help tackle the issue of hidden ownership of companies and to promote accountability and transparency in its financial system.
At the Open Government Partnership Africa Regional meeting, the South African government unfolded a National Action Plan (NAP) that included a commitment to collect information on beneficial owners of companies incorporated in the country.
The government said the decision was necessary to restore faith in the system following the revelation of a huge volume of documents belonging to citizens tucked away in several secret offshore havens, but uncovered by the recent #PanamaPapers investigations.
The #PanamaPapers leak revealed how politicians and businessmen around the world employed anonymity to shield their business ownership and their wealth in tax havens.
The revelation had sparked agitation by international organisations and civil society groups for countries to tackle anonymous ownership in business by establishing beneficial ownership registers.
“Public registers give investigators, journalists, civil society, and the general public the tools necessary to peel back the layers of secrecy that anonymous companies create,” Denise Mubaiwa of the Economic Justice Network (EJN) of Fellowship of Christian Councils in Southern Africa (FOCCISA), said.
Ms. Mubaiwa said the next step would be for draft legislation to be revised promptly to reflect the South African government’s current commitment to a public register, which she said would enhance accountability in the country as regards company ownership.
With the register, South Africa has joined United Kingdom and Ukraine in launching public registers of beneficial ownership as a demonstration of their commitment to improve their financial transparency and curb vulnerability to money laundering and terrorist financing.

Many jurisdictions around the world do not ask for this information, which encourages shell companies becoming the order of the day in such places.
A 2011 World Bank study research on corruption identified anonymous companies as the main channel used in over 70 per cent of the money laundry cases examined.
The inauguration of public registers would act as check for corrupt politicians, tax evaders and terrorists who intentionally conceal their identities while owning companies worth a lot of money.
South Africa’s commitment is coming just over a year after African leaders adopted a high level Panel report on illicit financial flows (IFFs) from Africa and called on governments to create publicly accessible registers of beneficial ownership to help combat illicit financial flows.
The panel, chaired by former South African President, Thabo Mbeki, estimated that Africa was losing about $50 billion through IFFs annually, representing about 5.5 per cent of the continent’s gross domestic product, GDP.
“It is good to see South Africa commit to beneficial ownership registers, as suggested by the High Level Panel,” Alvin Mosioma of Tax Justice Network-Africa said. “But, it’s vital that they quickly turn this commitment into a binding reality.”
“Illicit financial flows leaving the continent are only growing, and African governments need to take proactive steps to combat them as quickly as possible. South Africa leading the way will provide important cover for other African governments to take the same step,” he said.
Equally, Porter McConnell of the Financial Transparency Coalition, said more governments were waking up to their citizens’ demands for more transparency and accountability in the global financial system.
Mr. McConnell said it was important that South Africa implemented the commitment quickly, by ensuring that the registers were available to the public, so that journalists, researchers, and civil society could use the data.
“The Panama Papers demonstrated that citizens around the world are craving the accountability and transparency necessary to restore faith in how the financial system operates,” he concluded.