The below is based on a speech given by Fredrik Reinfeldt, Chair of the EITI, at the opening plenary of the Opening Up Ownership Conference in Jakarta.
It is a great pleasure to welcome you all to the Opening up Ownership conference. This Conference is a milestone in the global fight against corruption.
When the Panama Papers scandal broke in March 2016, the world woke up to the importance of making progress on ownership transparency in order to fight corruption and money laundering. It is increasingly clear that the battle against corruption in the next few decades will be largely about ownership. The world expects us to act now. If we don’t, the costs will be big. These two days are all about the tools to act – sharing practice, building systems.
In February 2016, the EITI Standard recommended maintaining publicly available register of BO on extractives companies. At the UK anti-corruption summit in May 2016, 38 countries made commitments to improve beneficial ownership transparency, several of which included commitments to public registers. By 2017, more than 20 EITI countries had committed to national registers in their beneficial ownership roadmaps. Here in October 2017, two countries now have public national registers – Ukraine and the United Kingdom.
The 2017 progress report shows efforts made to embed beneficial ownership transparency in legislation, attempts at piloting beneficial ownership disclosure through EITI reports, collaborative efforts across ministries, outreach to stakeholders, and building of registers. We look forward to hearing about how the UK and the Ukraine build registers and what we can learn. We want to hear about what other countries have done to change legislation or make progress on definitions and data collection.
I am proud that the EITI’s 52 member countries have committed to ensure that the ownership of the oil, gas and mining companies that operate in their countries will be open for anyone to see. Adopting the EITI requirement in February 2016 was the foundation stone for setting a global ownership transparency norm. EITI countries, extractive companies and civil society came together to make it happen. The topic was so new, that of course we had to organise the world’s first conference on how to actually make it happen. I am therefore proud of the significant contribution that the EITI is making to the global movement against anonymous companies.
Despite the increased attention to beneficial ownership and the efforts in the EITI, there is to date still relatively little beneficial ownership information out in the open. The so-called “Azerbaijani Laundomat” exposed in August 2017 and the tragic case of the murder of journalist Daphne Caruana Galizia in Malta last week, are only the latest large-scale scheme that we have seen. We will see more and more of these unless there is a step change in beneficial ownership disclosure. We need more commitments and we need more action.
And we need to move fast. The battle for openness globally is under threat. Hidden ownership will remain an issue all around the world and in all sectors and is too tolerated in too many jurisdictions. It has been widely documented how anonymous companies often helps to feed corruption, tax evasion, terrorist financing and money laundering. Estimates suggest that developing countries lose USD 1 trillion each year as a result of corrupt or illegal deals, many of which involve anonymous companies.
It is a particular challenge in the oil, gas and mining sectors, for two reasons:
- Natural resources are finite. The benefits of oil, gas and minerals should reach the people who live in the countries endowed with such resources. Therefore, we have to demand greater scrutiny over who owns and profits from oil, gas and mining activities.
- Oil, gas and mining projects can be very lucrative. Where institutions and policies are weak, contracts for such project might be handed to companies owned by people with political connections, rather than to the companies that are best placed to turn the natural resources into value for both the investor and the people of the country.
The efforts on the roadmaps have shown the importance of four elements:
- The need to involve all relevant government agencies. This is not something that the line ministry or national EITI can do. It also covers company registers, cadastre, tax authorities, ministries of justice, etc.
- Good clear definitions of beneficial ownership and of politically exposed persons.
- Public information in an open data format – through registers and other disclosure – opens up the information not just for investigatory authorities but to the public. It makes it much more different to game the system once you know you are being investigated. It makes it harder to hide money in a different jurisdiction. And it makes verification of the data easier.
- Back it up with legislation to make it clear, irreversible and mandatory.
Today we are gathered here together with the world’s leading experts to take stock of progress, and share best practice on how to build sustainable and strong systems for public beneficial ownership disclosure.
Here in Indonesia, we have witnessed a vibrant public debate about how ownership transparency could improve tax collection in the extractive sector and hold company owners to account. It was therefore natural that the Conference would take place here, co-hosted by the Indonesian government, and I thank HE Bambang and the rest of the Indonesian government for all their hard work in making this conference happen. I also wish to commend Indonesia for its development of a Presidential Regulation that will mandate the establishment of a national beneficial ownership register covering all sectors. I hope that this register will be accessible to the public.
I am also delighted to award Indonesia an honorary mention for its inter-agency collaboration to further the reforms on beneficial ownership transparency. To ensure an effective and sustainable approach to disclosure of beneficial owners, Indonesia is introducing reforms across ministries through harmonization of regulations, information-sharing mechanisms, and broad consultations among relevant ministries and stakeholders.
This conference is also an opportunity to establish new partnerships. I know that many of the participants to this conference might not be too familiar with the EITI, but possess considerable knowledge about beneficial ownership, working for tax authorities or financial regulators. It is timely to bring all of this experience together, and I thank you all for your willingness to travel here and to share your experience.
No one action or tool is going to address all the challenges of anonymous operations and tax avoidance. New international norms are not established overnight, but this Conference is a key milestone towards improved systems to tackle corruption and poor governance. I hope that all countries use the Conference to renew commitments to beneficial ownership disclosure based on greater experience and also ambition.