Inside Politics

UN meeting urged to tackle abuse of anonymous firms

Monday, January 18th, 2021 12:00 |

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Lewis Njoka @lewisNjoka

Local and international organisations are calling on the upcoming United Nations General Assembly Special Session (UNGASS) to end the abuse of anonymous companies and other legal vehicles that facilitate cross-border corruption and other crimes.

In an appeal signed by Transparency International, Africa Centre for Open Governance (Africorg) and various other organisations, businesses and individuals, the signatories are calling on the UNGASS 2021 to commit to making centralised, public beneficial ownership registers a global standard.

UNGASS 2021 will take place in New York from June 2 to June 4 this year and will focus on corruption.

“Companies that exist only on paper, exploiting our legal systems and concealing their ultimate ownership, are tools for the diversion of critical resources needed to advance sustainable development and collective security,” reads the appeal.

“For decades, as scandal after scandal has demonstrated, anonymous shell companies have been used to divert public funds, channel bribes and conceal ill-gotten gains, as part of corruption and money laundering schemes stretching across borders,” it adds.

They said information on the natural persons who own, control or benefit from a legal vehicle will enable cross-border enforcement and the tracing of ill-gotten assets for confiscation.

Conflict of interest

Additionally, it will help in detecting conflict of interest and corruption in public contracting as well as make it easier for businesses to carry out due diligence. 

“Transparency in company ownership is more than a technical solution to a problem. It is a matter of social justice,” reads the appeal.

This comes at a time when the government has ordered all companies in the country to furnish it with the list of their beneficial owners by January 31 in a move aimed at curbing corruption, money laundering and terrorism.

Failure to disclose the information, as required by the Section 93A of the Companies Act 2015, could see the companies face legal action.

On October 30 last year, Business Registration Service (BRS), the government office mandated with overseeing the companies registry, gave companies up to January 31 2021 to lodge a register of beneficial owners with the Registrar of Companies.

 “To enable Companies comply, the Service will grant a grace period up to January 31, 2021 for preparation of Beneficial Ownership registers.

A Beneficial Ownership E- system manual is available on the BRS system portal to guide users,” said BRS Director General, Kenneth Gathuma, in the October statement. 

“The Beneficial Ownership Register will create greater transparency in the ownership of companies in Kenya and support the government in the fight against corruption, money laundering and financing of terrorism,” he added.

As per the Act, all registered companies are must keep a register of their beneficial owners and lodge the same with the Registrar of Companies.

The appeal notes that decisive reforms are needed to ensure that the resources needed to pay for critical public services such as schools and hospitals are not misappropriated and hidden away in tax havens. 

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