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| Corporate ‘middlemen’ mask who really profits from Australian fossil fuel projects, report warns | Corporate ‘middlemen’ mask who really profits from Australian fossil fuel projects, report warns |
| (about 1 hour later) | |
| Nominee companies – paid to be listed as shareholders on behalf of unnamed investors – could be reducing accountability over financial support of industry | Nominee companies – paid to be listed as shareholders on behalf of unnamed investors – could be reducing accountability over financial support of industry |
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| Three global banks are being paid to obscure who profits from 51 fossil fuel projects in Australia that produce 22m tonnes of carbon emissions each year, according to new analysis. | Three global banks are being paid to obscure who profits from 51 fossil fuel projects in Australia that produce 22m tonnes of carbon emissions each year, according to new analysis. |
| An analyst who authored the report says it highlights a “massive problem” in Australia that could be reducing the amount of scrutiny investors face for financial support of the fossil fuel industry. | An analyst who authored the report says it highlights a “massive problem” in Australia that could be reducing the amount of scrutiny investors face for financial support of the fossil fuel industry. |
| US-based research group Global Energy Monitor (GEM) investigated the dominance of nominee companies in Australia, which are paid to be listed as shareholders on behalf of unnamed investors. | US-based research group Global Energy Monitor (GEM) investigated the dominance of nominee companies in Australia, which are paid to be listed as shareholders on behalf of unnamed investors. |
| It found nominees were listed as major shareholders in 25 publicly listed energy firms in Australia, which collectively account for nearly 18% of the nation’s fossil fuel emissions. | It found nominees were listed as major shareholders in 25 publicly listed energy firms in Australia, which collectively account for nearly 18% of the nation’s fossil fuel emissions. |
| “Nominee companies are middlemen in corporate ownership: They hold shares in name only, masking the identity of the actual owners,” said the report by GEM research analyst Gabe Louis. | |
| “This makes it incredibly difficult to pinpoint who is the actual shareholder. With no rules on nominee companies, fossil fuel backers can profit while staying hidden from public scrutiny.” | “This makes it incredibly difficult to pinpoint who is the actual shareholder. With no rules on nominee companies, fossil fuel backers can profit while staying hidden from public scrutiny.” |
| The report found almost all nominees in Australia were subsidiaries of the world’s largest banks. | The report found almost all nominees in Australia were subsidiaries of the world’s largest banks. |
| It found three nominees, subsidiaries of Citibank, HSBC and JP Morgan, were listed as shareholders in companies producing carbon emissions roughly equivalent to the output of 4.4m Australian homes each year. | It found three nominees, subsidiaries of Citibank, HSBC and JP Morgan, were listed as shareholders in companies producing carbon emissions roughly equivalent to the output of 4.4m Australian homes each year. |
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| The report found nominees were listed as owners of close to 70% of Origin Energy’s shares, two-thirds of Whitehaven Coal’s shares, and more than a third of AGL Energy’s shares. | The report found nominees were listed as owners of close to 70% of Origin Energy’s shares, two-thirds of Whitehaven Coal’s shares, and more than a third of AGL Energy’s shares. |
| “Because shareholders can exercise voting rights and benefit financially, understanding these ownership structures provides a clearer picture of which actors are connected to Australia’s fossil fuel sector,” Louis said. | “Because shareholders can exercise voting rights and benefit financially, understanding these ownership structures provides a clearer picture of which actors are connected to Australia’s fossil fuel sector,” Louis said. |
| “While there’s a lot the Australian government will need to do to hit its new climate target, making the ownership of fossil fuel interests more transparent is a low-hanging fruit.” | “While there’s a lot the Australian government will need to do to hit its new climate target, making the ownership of fossil fuel interests more transparent is a low-hanging fruit.” |
| Jenifer Varzaly, an associate professor in commercial law at Durham University who has investigated nominee companies in Australia, said they may provide a “cloaking mechanism” for some investors. | Jenifer Varzaly, an associate professor in commercial law at Durham University who has investigated nominee companies in Australia, said they may provide a “cloaking mechanism” for some investors. |
| In Australia, companies must disclose the names of investors that hold more than 5% of shares. But Varzaly said if the shareholding hovered below that 5% threshold, and was listed in the name of a nominee, then “the public will not know who sits behind it”. | In Australia, companies must disclose the names of investors that hold more than 5% of shares. But Varzaly said if the shareholding hovered below that 5% threshold, and was listed in the name of a nominee, then “the public will not know who sits behind it”. |
| While close to 70% of Origin’s shares are held by nominees linked to JP Morgan, HSBC and Citibank, others nominees are listed as owning tens of thousands of shares in the company but less than the 5% threshold. | While close to 70% of Origin’s shares are held by nominees linked to JP Morgan, HSBC and Citibank, others nominees are listed as owning tens of thousands of shares in the company but less than the 5% threshold. |
| Transparency International Australia’s chief executive, Clancy Moore, agreed nominee companies could “mask the true owners of corporate structures in Australia”. | Transparency International Australia’s chief executive, Clancy Moore, agreed nominee companies could “mask the true owners of corporate structures in Australia”. |
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| “With a draft bill in parliament, the Albanese government is taking the first steps in lifting the veil on corporate ownership in Australia,” Moore said. | |
| “But more needs to be done to create a centralised, publicly accessible register of who ultimately owns and benefits from private and public companies in Australia.” | “But more needs to be done to create a centralised, publicly accessible register of who ultimately owns and benefits from private and public companies in Australia.” |
| Legislation introduced to parliament last month would increase corporate transparency by creating a register of beneficial owners. But the legislation does not specifically address the issue of nominees. | Legislation introduced to parliament last month would increase corporate transparency by creating a register of beneficial owners. But the legislation does not specifically address the issue of nominees. |
| The Greens spokesperson for economic justice, Nick McKim, said nominees “were letting coal, oil and gas profiteers cash in from the shadows”. | The Greens spokesperson for economic justice, Nick McKim, said nominees “were letting coal, oil and gas profiteers cash in from the shadows”. |
| McKim said the Financial Action Task Force, a multilateral organisation that sets standards for corporate transparency, recently found Australia generally was only “partially compliant” with its recommendations on corporate transparency. | McKim said the Financial Action Task Force, a multilateral organisation that sets standards for corporate transparency, recently found Australia generally was only “partially compliant” with its recommendations on corporate transparency. |
| “If we had a public beneficial ownership register with teeth, nominee companies would be redundant,” McKim said. | “If we had a public beneficial ownership register with teeth, nominee companies would be redundant,” McKim said. |
| In the UK, nominee companies that hold more than 25% of a company’s shares must disclose who is benefiting. This is not required in Australia. | In the UK, nominee companies that hold more than 25% of a company’s shares must disclose who is benefiting. This is not required in Australia. |
| Nominee companies are not exclusively used to mask investments in the fossil fuel sector. Close to 70% of shares in Australian pharmaceutical company CSL are registered with nominees, according to its latest annual report. About 90% of shares in property developer Mirvac are listed as being nominee companies. | |
| Nominee companies also provide other services to investors including transaction settlement, administration and financial reporting. | Nominee companies also provide other services to investors including transaction settlement, administration and financial reporting. |
| Treasury, the treasurer’s office, Citibank, HSBC and JP Morgan were contacted for comment. |
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