South Africa commits to end anonymous companies
Cape Town 6 May 2016— Just one month after the Panama Papers hit newsstands, the South African government has committed to tackling the very type of hidden ownership that was central to many offshore structures scrutinized in the months-long investigation.
On the sidelines of the Open Government Partnership Africa Regional Meeting, the South African government announced a National Action Plan (NAP) that includes a commitment to collecting information on the beneficial owners—the person or people ultimately benefitting from or in control—of every company incorporated in the country. Currently, many jurisdictions around the world don’t ask for this information, which is why anonymous companies are a favorite tool of corrupt politicians, tax evaders, and terrorists who wish to conceal their identity.
“This is an encouraging announcement, especially because of the commitment to a public register, rather than a register that’s only accessible to the authorities,” said Denise Dube Mubaiwa of Economic Justice Network of FOCCISA. “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. The next step is for draft legislation to be revised promptly to reflect the South African government’s commitment today to a public register.”
South Africa’s commitment comes just over a year after African leaders adopted a report from the High Level Panel on Illicit Financial Flows from Africa, which calls for governments to create publicly accessible registers of beneficial ownership to help combat illicit flows. The Panel, chaired by former South African President Thabo Mbeki, estimates that Africa loses at least US$50 billion through IFFs each year, which is roughly 5.5 per cent of the continent’s gross domestic product.
“It’s good to see South Africa commit to beneficial ownership registers, as suggested by the High Level Panel, but it’s vital that they quickly turn this commitment into a binding reality,” said Alvin Mosioma of Tax Justice Network-Africa. “Illicit 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.”
With this announcement, South Africa joins a growing number of governments calling for incorporation transparency. The UK launched a public register of beneficial ownership this year, and Ukraine launched the first public register in 2015; more recently, Australia and the Netherlands also announced plans to create a public register.
“From Australia’s announcement last week to South Africa’s commitment today, it seems governments are waking up to their citizens’ demands for more transparency in the global financial system,” said Porter McConnell of the Financial Transparency Coalition. “It’s important that South Africa implements this commitment quickly, and that any register is available to the public, so that journalists, researchers, and civil society can 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.”
 The High Level Panel on Illicit Financial Flows from Africa released a report in February 2015 identifying the problem and potential solutions to illicit flows. The report was formally adopted at the African Union Summit in 2015.
 A 2011 World Bank study researching grand corruption found that anonymous companies were used in over 70% of the cases examined.
 The National Action Plan is a multi-year document produced by members of the Open Government Partnership outlining their objectives and commitments.
 Australia recently announced its plans to create a public register of beneficial ownership information.