I was pleased to present evidence to the Africa All Party Parliamentary Group earlier this year. Their findings can be found on the Royal African Society web site.
One of the recommendations that group made based on evidence submitted by my colleagues Prem Sikka, Raymond Baker and me was:
“Include within the Company Law Reform Bill a requirement for UK registered companies to declare beneficial ownership. Encourage the UK’s Crown Dependencies and Overseas Territories to introduce similar legislation where they have not done so already.”
Now the government has responded and has said
“(A)ny requirement to disclose beneficial ownership of any company would be legislatively impracticable and impossible to enforce. Even if workable, it would place an unacceptable burden on companies, their shareholders and others with an interest in shares. In any case, such measures would be ineffective in combating corruption, since criminals would either not disclose their identity or ensure that they did not own, directly or indirectly, the shell companies they were controlling. “
I am appalled by this for two reasons. First of all, we will never stop murder, rape, assault, theft or many other crimes either, but it does not mean we legitimise them, but that seems to be the government’s attitude here. That is irresponsible.More importantly, this comment seems to have been made in complete ignorance of the fact that every financial adviser has to, as a matter of fact, identify the beneficial ownership of any company with which they deal. This is not only legislatively possible (because it is required by legislation), it is enforced and woe betide those who ignore the requirement. As such this is (to rephrase the report:
“workable, and does not place an unacceptable burden on companies, their shareholders and others with an interest in shares.”
Of course some would seek to get round this. Many would not — and if all professional people who assisted the filing of information were made liable for penalties if they assisted anyone to file misinformation then the problem would be substantially solved. Especially if all filing at Companies House her and in the Crown Dependencies was required to be made through approved agents whose job it was to check identities.
Of course this might put up the cost of filing — but at £30 a year (less if filed on online) the price of limited liability is already far too low. £300 a year would be no impediment to anyone who wanted its benefits.
In the meantime this is a government who makes one rule for itself, another for the private sector and continues to show itself reluctant to tackle the real issues behind corruption and tax evasion.
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Richard – this is at odds with current anti-money laundering regulations as it applies to advisors. If unscrupulous people want to get around that then it\’s only a case of finding a \’sympathetic\’ ear within one of the professional firms.
At a practical level, how would you suggest identity checks?
In France you cannot set up in business unless you can prove your identity in multiple ways – for instance, passport plus an entry on the local land tax registry.
If you\’re a foreign national engaged in a controlled activity (as most are there), then you have to obtain a certificate of good conduct from your country of domicile. The local Gendarmerie also perform checks. Only then can you legitimately establish yourself. That doesn\’t prevent many other forms of corrupt practice, but it\’s better than nothing.