Press Release / May 9, 2013

Global Witness welcomes Kofi Annan’s call for financial transparency in African resource deals

Campaign group Global Witness has backed a call by prominent figures including Kofi Annan, Bob Geldof and Graca Machel for Africa’s natural resource wealth to be used for the benefit of its people. This year’s report from the Africa Progress Panel, Equity in Extractives, [1] calls for:

  • The G8 and the G20 to establish common rules requiring full public disclosure of the beneficial ownership of companies, with no exceptions.
  • Companies bidding for natural resource concessions to disclose the names of the people who own and control them.   
  • Canada, China and Australia to support project-by-project disclosure standards by their companies overseas, something that that the US and EU have recently supported. 

Global Witness[2] endorses these recommendations as essential to lifting the veil of secrecy that facilitates corruption, state looting and worse. A Global Witness briefing published today highlights how hidden company ownership, for example, is a major barrier in the fight against poverty.[3]

Global Witness campaigner Rosie Sharpe, said: “It is hugely significant that such a prominent and respected figure as Kofi Annan has come out publicly to criticise the lack of transparency in natural resource deals and highlight the importance of increased financial transparency and better governance for African development. What’s needed is for the names of the real, ‘beneficial’ owners of companies and trusts to be put in the public domain.”

David Cameron has made company ownership transparency a priority for the UK’s G8 presidency.  Last month he wrote to European leaders to call on the EU and G8 to ‘break through the walls of corporate secrecy’.

The Africa Progress Panel highlights the cases of the Democratic Republic of Congo and Guinea to show what can go wrong with natural resource deals. It reveals that Congo lost at least $1.36 billion from the under-priced sales of mining assets between 2010 and 2012, in deals involving companies registered in British overseas territories. This is almost twice the country’s annual spending on health and education combined.[4] Three of the deals involved a FTSE 100 mining company, the Eurasian Natural Resources Corporation, which is currently the focus of a Serious Fraud Office corruption investigation. ENRC has said that it is “cooperating fully with the SFO”.

“The involvement of British tax havens in depriving Congo of over $1 billion in mining revenues should be a huge embarrassment to the UK government, especially as it stands to become Congo’s biggest aid donor” said Daniel Balint-Kurti of Global Witness.

The Panel’s report strengthens the imperative for David Cameron to act on his pledge to make transparency a key issue at the G8 and follow through with a promise to publish not only the beneficial owners of British companies, but also those located in the UK’s overseas territories and crown dependencies. This would go a long way to preventing the sort of deals that impoverish places like Congo and Guinea - as well as helping to prevent tax evasion, drugs and arms smuggling, and terrorist financing.

/ Ends

Contact:

Notes to editors

[1] The 2013 Africa Progress Report, “Equity in Extractives”, will be launched by Kofi Annan and the Panel on 10 May 2013 at the World Economic Forum on Africa in Cape Town, South Africa. Global Witness was among several contributors to the report. For more information see www.africaprogresspanel.org or contact Amy Barry on [email protected] or +44 7980 664397.

[2] Global Witness investigates and campaigns to prevent natural resource-related conflict and corruption and associated environmental and human rights abuses. For more information see www.globalwitness.org. Global Witness was instrumental in setting up the Extractive Industries Transparency Initiative and has been leading campaign efforts to address the role of banks and other service providers in facilitating the sort of state looting and corruption that is highlighted by the Africa Progress Panel’s report. 

[3] Global Witness’s report ‘Anonymous companies: how hidden company ownership is a major barrier in the fight against poverty and what to do about it' is available from: http://www.globalwitness.org/library/anonymous-companies-global-witness-briefing or can be downloaded below.

[4] The Panel’s report states that Congo “lost at least $1.36 billion in revenues from the under-pricing of mining assets that were sold to offshore companies” in five major mining deals.  The figure of $1.36 billion lost to Congo is based on the price at which assets were sold to offshore companies compared to the price at which the offshore companies sold on (or “flipped”) those assets to multinationals, or where this data is unavailable against the average of commercial valuations for the assets. The sources of all information are fully referenced in the Panel’s report.  As set out in footnote 105 of the Panel’s report (p. 112), Congo spent $185 million on health in 2012 and $513 million on education.