If properly enforced, Ghana’s new 2019 Companies Act will make it much more difficult for Chinese fishing corporations to illegally use Ghanaian ‘front’ companies to obtain local licences, a legal analysis has confirmed.
Designed to improve transparency in company ownership and reveal any vested interests, the Act requires clear identification of ‘beneficial owners’ – those that take home the profits.
This new law offers a great opportunity to realise legal and sustainable fisheries, says the Environmental Justice Foundation, which commissioned the analysis, but cautions the law must be fully enforced to generate these benefits. The confusion that front companies create around ownership means that these corporations often go unpunished for serious illegal fishing crimes which are threatening Ghanaian livelihoods and food security.
Around 90% of Ghana’s industrial trawl fleet is linked to Chinese ownership, investigations by EJF have shown. These operators work through Ghanaian ‘front’ companies, using opaque corporate structures to import their vessels and register and obtain a licence.
Ghanaian law expressly forbids foreign ownership of industrial trawl vessels operating under the Ghanaian flag. Both in terms of ownership on paper, and, crucially, in terms of those who profit from the vessel – known as the ‘beneficial owners’.
Industrial vessels – with the sole exception of tuna vessels – should be wholly owned by Ghanaians, says Section 47 of the 2002 Fisheries Act (Act 625), and specifically refers to beneficial ownership. Information on beneficial ownership must be provided to the Fisheries Commission as part of an application to register a vessel as a Ghanaian fishing vessel, as laid out in the 2015 Fisheries (Amendment) Regulations.
Crucially, the new 2019 Companies Act (Act 992) clarifies the definition of a beneficial owner, showing clearly that the way Chinese fishing corporations are using Ghanaian front companies is illegal. The act requires that companies identify beneficial owners and disclose information on them. This includes ‘politically exposed persons’– anyone who has been entrusted with a prominent public function, and therefore may be at higher risk of involvement in bribery and corruption because of the influence they wield.
These laws are in place to ensure that the Ghanaian people receive a fair value for their resources: flouting them is denying the country of crucial economic revenue. Investigations by Ghana’s Serious Fraud Office in the early 2000s uncovered major tax and other non-tax breaches by Chinese fishing companies operating via local intermediaries.
Front companies also mean that the true beneficiaries are not held accountable for other crimes. In 2019, an industrial trawler – the Lu Rong Yuan Yu 956 – was caught fishing illegally. When the local owner refused to pay the fine it seems that no attempt was made to pursue the Chinese company that operates the vessel, Rong Cheng Ocean Fishery Co Ltd. This corporation also operates five other trawlers and two tuna vessels – all fishing under the Ghanaian flag.
Ghana’s fisheries are being driven to the brink of collapse by industrial trawlers breaking the law. If they are allowed to continue with impunity, without risk that they will be properly sanctioned, national food security and the livelihoods of millions of Ghanaians will be put at risk.
EJF’s Executive Director Steve Trent, said: “Ghana’s fishing sector is lagging behind others in terms of transparency of operations, resulting in widespread illegal fishing and loss of revenue for the Ghanaian people. The Fisheries Commission must work with the Ghana Revenue Authority, Ghana Investment Promotion Centre and Registrar General’s Department to fully investigate beneficial ownership and ensure that the fishing sector complies with all relevant laws. This is the only way that the government can ensure that the Ghanaian people receive a fair return on their own resources and that the fishery can be sustainably managed.”