Hannibal: A corporate striptease

Posted on Monday, 11 April 2011 15:18

North Africa’s revolutions and the search for stolen assets, combined with the scramble for Africa’s mineral wealth, has concentrated minds on international rules.

“We are all naked! There are no secrets any more!” exclaimed telecoms entrepreneur and philanthropist Mo Ibrahim at a gathering of executives, politicians and lobbyists in Paris. Middle-aged men and women sitting alongside Ibrahim shifted uneasily.

“There was a revolution in technology in Africa,” he continued. “The young people of Tunisia and Tahrir Square and now Libya … have reminded us that there is something called civil society that can take on the biggest institutions.”?

Ibrahim was speaking at a conference on 2-3 March to promote the Extractive Industries Transparency Initiative (EITI). North Africa’s revolutions and the search for assets stolen by deposed autocrats combined with the scramble for Africa’s mineral wealth fuelled by manufacturers in China and India has concentrated minds on international rules.

Delegates to the Paris conference differed sharply over efforts to strengthen EITI’s provisions. The initiative was launched to promote accountability in the oil and mining business by encouraging companies to report all the payments they make to governments.

Nine years later, EITI remains a set of voluntary principles without legal force. Meanwhile the US Congress passed a law last July, the Dodd-Frank Act, requiring US-listed resource companies to report all payments they make to governments.

Activists and politicians in developing countries want European governments to introduce their own ‘Dodd-Frank plus’ laws, making it compulsory for European-listed companies to report all payments.

Mo Ibrahim, whose experience in building up a $2.5bn telecoms company gives his charitable foundation added credibility, wants rapid action: “It is time for Europe to follow the US example … when it comes to corruption, Europe is always dragging its feet. You need to stand up and make it clear that we need transparency.”

Such views won support from German and French officials at the conference. Senior officials in the European Commission confirmed that there are moves to pass a Europe-wide set of laws on corporate transparency by the end of this year.

Another enthusiast, veteran financial player George Soros, arrived at the Paris conference straight from Guinea, where he said that newly elected President Alpha Condé had just signed up to the provisions for EITI membership as he ordered a review of the country’s mining policy.

Condé’s commitment to EITI principles may prove testing for companies such as China’s Chinalco and Russia’s Rusal, which have previously refused to comply with such requirements.

That news failed to sway some of Europe’s biggest corporate battalions such as Anglo-Dutch Shell whose chief executive Peter Voser told the conference that attempts to introduce a Dodd-Frank type law in Europe would tear asunder the uneasy coalition on accountability between companies, developing country governments and civic activists.

“Dodd-Frank treats foreign governments not only as irrelevant but as a problem and not a solution,” argued Voser, adding that its provisions may violate some countries’ national laws on the confidentiality of financial transactions.

Some directors fear that such legal provisions could eventually be extended to forcing companies to publish their tax accounts on a country-by-country basis, a matter of great interest both to governments of the countries where they are listed and where they operate.

Neither side won outright victory in Paris but the proponents of new European laws on corporate accountability are ahead on points. That leaves the big multinational companies with some tough choices: comply or relocate to Shanghai or Mumbai. But they should be aware that the accountability movement’s next port of call will be Asia.

This article was first published in the April 2011 edition of The Africa Report.

Understand Africa's tomorrow... today

We believe that Africa is poorly represented, and badly under-estimated. Beyond the vast opportunity manifest in African markets, we highlight people who make a difference; leaders turning the tide, youth driving change, and an indefatigable business community. That is what we believe will change the continent, and that is what we report on. With hard-hitting investigations, innovative analysis and deep dives into countries and sectors, The Africa Report delivers the insight you need.

View subscription options