The world has seen many instances of politicians using secret anonymous companies for corruption. You may have heard of the Panama papers, Paradise Papers and other leaks. Most of these have one thing in common: anonymous companies. Here’s a breakdown of how politicians and public servants use secret companies for corruption.
The Loophole in the Financial System
Typically, secretive anonymous companies function by taking advantage of a certain weakness in company laws around the world, which is now being corrected in many countries.
So what’s this weakness we’re talking about? It’s the details of a company’s owners. When you want to register at a library to be eligible to borrow books, they ask for your name right? But in many countries around the world, when you’re registering a company, the name of the true owner of the company – the actual person or people – is not really a requirement. This has been the case in so many countries around the world and it still is, although some are now taking steps to correct that.
Some countries, especially island nations like Mauritius, Cayman Islands, British Virgin Islands and others, deliberately offer this privacy along with privacy in banking, low taxes and other incentives, to attract people and companies who want to dodge tax or hide some money in a faraway country with low tax requirements. Apart from island nations, many other countries around the world have similar weaknesses which are exploited by the powerful and the greedy.
In such countries, a foreigner can register a “business” which doesn’t have any office, doesn’t have employees and doesn’t do any work. The name of the business can then be used to buy and sell items or to send and receive money.
In the countries that offer more secrecy, the owner’s name is not associated with the business at all and is not known anywhere. If you go to that country’s business registry to look for information about a secret company, you will find that the owner of the company is another company or an agency lawyer. And for the address of the company, you will find an address which is not correct or which does not even exist.
How the Corruption is Executed
So based on this, a politician or public official in Ghana can go and create a secret ghost company in a faraway country like Bermuda. This secret company’s name can be used as the owner of another company registered in Accra at the Registrar General’s Department. The real owners, the men owning the company, are not known by anyone. The Ghanaian company can then be awarded a contract by a government ministry whose minister secretly owns the company. When a minister awards himself a contract, you know the danger. Charges for work done or goods delivered are not likely to be so normal.
Secret anonymous companies also offer politicians faraway bank accounts which they can use to receive money that is questionable. And some of them do use it.
Recently, more than 20 non-governmental organizations in Ghana have opposed a controversial telecom contract between the government and a company called KelniGVG. The company is quite new and its owners are not known. Phone calls and emails to them don’t really work and nobody has come out to speak for the company as a director or a representative. The only people defending the company and its contract are ministers and government officials. Does this ring a bell?
The disgraced chairman of the Ghana Football Association, Kwesi Nyantakyi was eager to create a company for his dealings with the “investors” from TigerEyePI who were investigating him. Does this ring another bell?