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CSOs advocate for punishment to EITI non-compliant firms

May 06, 2024 / Wahard Betha

A grouping of civil society organisations (CSOs) working in the extractive sector in Malawi, the Natural Resources Justice Network (NRJN), has called on Government to put in place measures to punish extractive firms that do not comply with Extractive Industry Transparency Initiative (EITI) standard of Beneficial Ownership Disclosure (BOD).

A beneficial owner in respect of a company means the natural person(s) who directly or indirectly owns or controls a corporate entity.

All EITI implementing countries including Malawi are recommended to maintain a public register of beneficial owners whereby an extractive company is required to disclose information including the identity of the beneficial owner; implying the name, nationality and country of residence, and whether the owner is politically exposed.

However, Coordinator for NRJN Kennedy Rashid told Mining & Trade Review that the EITI standard on BOD requirement is still  facing challenges since requirement provisions for some companies do not allow disclosure of some information as per standard.

Rashid said: “The issue of beneficial ownership disclosure commitment was indeed agreed upon at EITI as per standard and the idea is to incorporate the standards for BOD in the country and enforce them per requirement.”

“In Malawi, as CSOs we have noticed some positive steps as in disclosure of the legal owners for the extractive companies in Malawi, as evidenced by the beneficial owner disclosure in the MWEITI reports.”

“Nonetheless, we have noted some challenges and gaps in the process. The Companies Act seems like does not provide for mandatory disclosure of beneficial ownership information as it does not require applicants to declare identity number, phone number, number and class of shares owned, which is required under the EITI regulations.

“in the register that is usually in the EITI reports, there is no clear information on how a particular entity or individual is a beneficial owner of an extractive company.”

He also said local citizens have limited access to the required information as many companies choose to put it only on online platforms.

Rashid said: “In Malawi, citizens have not been able to access information on beneficial ownership disclosure. This is due to the fact that most of the information is centrality managed.”

“Though the BOD proposal is to make information available and accessible, the aspect on accountability still remains a challenge.”

 “There is, therefore, a need to make BOD mandatory in Malawi with sanctions for non-compliance.”

The EITI Standard requires that EITI implementing countries should request, and companies disclose the nature of beneficial ownership of oil, gas and mining companies.

Commenting on the development, Coordinator for Chamber of Mines and Energy, Grain Malunga, however, said the Mines and Mineral Act already mandates disclosure of beneficial ownership for any mining or exploration company applying to invest in the country’s extractives sector.

He said: “The Mines and Minerals Act mandates the applicant to reveal beneficial ownership of a mining or exploration company including residential address.

“In terms of licensing, this is done in a transparent manner. Let us wait and see how the Mines and Minerals Regulatory Authority will operate.”

The Malawi Government developed the organizational structure for a Mining Regulatory Authority that we will begin operating once the new Act is operationalised.

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