The real owners of extractive companies, known as the beneficial owners, are often kept anonymous or hidden by a chain of shell companies. This can be a particular challenge in the extractive industries, where knowing who has the rights to extract oil, gas and minerals is key to addressing risks of corruption or conflict of interest.
Protecting anonymity can deter investment and make it harder to curb corruption. It is estimated that developing countries have lost USD 1 trillion a year since 2011 as a result of corrupt or illegal deals, many of which involve anonymous companies. Investigations using beneficial ownership information culminated in data leaks such as the Panama Papers, the Luanda Leaks and the Pandora Papers.
The EITI has been able to deliver practical results through the inclusion of beneficial ownership information in licensing and company registration processes as well as through EITI reporting. Publishing details of company ownership can help close channels for corruption, enable effective taxation, build fairer markets, encourage responsible investment and manage business risk. Addressing these issues will remain critical as the energy transition gathers pace.
The EITI Standard requires implementing countries to disclose beneficial ownership information for extractive companies from 1 January 2020. Disclosures related to beneficial ownership transparency are covered by EITI Requirement 2.5.
The EITI and Open Ownership (OO) are partnering to deliver Opening Extractives, a global programme which aims to transform the availability and use of beneficial ownership data for effective governance in the extractive sector.
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Trinidad and Tobago
In 2015, the Trinidad and Tobago EITI Steering Committee “unanimously agreed to implement a TTEITI Beneficial Ownership Project”, and ever since the country started gathering beneficial ownership data to populate their Registry.
The Beneficial Ownership Registry offers a free, public repository of key information on oil, gas and mining companies operating in Trinidad and Tobago which voluntarily report to the TTEITI.
In October 2020, the EITI conducted a pilot project in partnership with Directorio Legislativo to identify corruption risks related to politically exposed persons (PEPs) in Colombia. By cross-checking beneficial ownership data for extractive companies with financial disclosures, the tool generates red flags, such as potential conflicts of interest in licensing and contracting. Since beneficial ownership data is not publicly accessible in Colombia, the tool drew on proxy data from publicly available contracts.
The results revealed 19 red flags from a sample of 900 public officials. The project was awarded second place in the IMF Anti-Corruption Challenge.
Companies ultimately benefit from beneficial ownership transparency, as it can help their own anti-corruption efforts and creates a level playing field for responsible business. In 2021, a group of leading mining and energy companies committed to support greater transparency through their own beneficial ownership disclosures.