IOCs used subsidiaries to defraud 24 developing nations of $1tr -Experts
• Say 37 such companies operating in Nigeria
• Africa suffers $500b illicit outflows
• Majors earned $1.8tr since ‘70s, spent $1.5tr
Multinational companies operating in the petroleum and solid minerals sectors have been accused of setting up thousands of subsidiary firms to aid illicit transfer of profits that has in the past 30 years amounted to about $1 trillion.
Financial experts attending the 2013 conference of the Financial Transparency Coalition (FTC) in Dar es Salaam, Tanzania listed Nigeria among 24 other countries where these subsidiaries exist.
According to presentations at the conference Nigeria has 37 companies being used by the IOCs to defraud the nation of vital revenues from the oil and gas industry.
Tanzania’s Policy Forum Co-ordinator, Semke Kilonzo posited that out of about $1 trillion illicit financial out flows from developing country, $500 billion comes from African countries.
“These proceeds of crime, corruption and tax evasion represent an unacceptable drain on development economies that is equivalent to eight times the size of global foreign aid”, he stated.
Nick Mathiason of **Publish What You Pay,** fingered the four leading oil multinational operating in Nigeria of setting up the scam in the country.
According to him, details from the consolidated accounts of 10 oil companies revealed that over $1.8 trillion has been generated as revenue since late 1970s with the companies incurring over $1.5 trillion as costs while a paltry $144b was declared as profits and another $106b paid as taxes.
On his part, Joe Stead, a Senior Economic Adviser to Christian Aid, explained that illicit financial outflow from Africa between 1970 and 2008 consisted of about $520 billion in commercial tax evasion; between $150 and $280 billion in criminal proceeds and $15 to $24 billion in payments to corrupt officials, with only $50 to $80 billion as aids to the affected countries.
Stead held that developing countries are losing about $186 billion annually in tax revenues due to the activities of multinationals in these countries, pointing out that gains made by the countries through Foreign Direct Investments are being cancelled out by monies taken out to tax havens across the globe.