Publishing information on the real owners of companies, also known as beneficial owners, can help governments curb corruption and support a more transparent environment for business. A session at the 4th International Collective Action Conference in Basel discussed how the new Opening Extractives programme seeks to create momentum for beneficial ownership transparency in a sector that has been prone to corruption risks. This guest blog by Mark Robinson, EITI Executive Director, explains the key takeaways with insights from the other panellists.
Why beneficial ownership transparency matters
As countries around the world face the dual challenges of climate change and the economic impact of the COVID-19 pandemic, sustainable governance of natural resources is becoming an ever more critical issue. Funds are urgently required to address healthcare, economic and social needs arising from the pandemic. In resource-rich countries, the extractive sector makes a key contribution to tax revenue.
There is a new wave of understanding of the importance of beneficial ownership transparency, including how government, industry and civil society organisations can support it. Anonymous companies remain a major obstacle in the fight against money laundering, corruption and tax evasion, which costs developing countries billions of dollars of lost revenue, in addition to the severe social costs. Protecting the real owners of the companies, also known as beneficial owners, can deter investment and make it harder for governments to curb corruption.
No one makes the case for open registers more strongly than countries which are heavily exposed to mining, oil and gas revenues. This case, and the legal framework on which it relies, was clearly articulated at the International Collective Action Conference by Alhaji Garba Abubakar, Registrar-General at the Corporate Affairs Commission in Nigeria:
Governments must know the real owners and beneficiaries of the companies with whom they are dealing to ensure compliance with the law.
– Alhaji Garba Abubakar, Registrar-General, Corporate Affairs Commission, Nigeria
How does beneficial ownership data combat corruption?
Access to quality beneficial ownership data strengthens accountability in several ways. It shines a light on potential areas for corruption, strengthens responsible investment and provides information for citizens to hold those who misuse anonymous companies to account.
By reducing the scope for corruption, tax evasion and other financial crimes, information about the beneficial owners of companies supports the potential for increased government revenues from the extractives sector, as well as the chances that these revenues will be used for development, rather than the enrichment of the few. Making sure this essential data is available, however, can only be possible with support from all sectors.
This is the goal of our ambitious joint initiative, Opening Extractives. Working with governments, industry and civil society, Opening Extractives is committed to pushing the agenda forward and moving from commitments to action on beneficial ownership transparency.
Opacity about who owns companies is at the heart of wide-ranging weaknesses in the global financial system. It is a massive gap in our knowledge about the businesses that shape our lives. Without it, we will continue to tackle corruption, tax evasion and governance failures blindfolded and with our arms tied behind our backs.
– Thom Townsend, Executive Director, Open Ownership
A new programme, new momentum
Opening Extractives will build on progress made by governments, companies, civil society and other stakeholders to establish the legal reforms and technical systems required to make ownership data public and promote its use.
For the past year, the EITI and Open Ownership, who are jointly implementing the programme, have worked with local stakeholders to create a platform for government, civil society and industry to define their priorities to advance beneficial ownership transparency at the national level.
Argentina, Armenia, Ghana, Indonesia, Liberia, Mexico, Mongolia, Nigeria, the Philippines, Senegal and Zambia will draw on the programme to support their national efforts on beneficial ownership transparency, with launch events in eight of these countries to date.
The programme has also provided technical support on disclosure of beneficial ownership data for national governments and capacity building to increase its use. It works to ensure that knowledge and lessons are shared at regional levels, and that evidence and insights are communicated globally to scale impact.
In addition to fostering discussion and engagement, Opening Extractives has worked to understand the state of beneficial ownership reform through scoping studies that provide the foundation for technical assistance and capacity building.
What does Opening Extractives aim to achieve?
Through the initiative, we hope to achieve three outcomes by the end of 2025:
- Ensure government, industry, and civil society actors have greater access to comprehensive and reliable information on the ultimate owners of extractive industry companies.
- Enable government, industry, and civil society actors to more easily identify and address the risks related to hidden ownership.
- Advance beneficial ownership transparency in the extractive industries by communicating the impact and outcomes of the programme.
The programme is primarily supported by the BHP Foundation and is working with other donors to broaden its support base and its potential reach and impact.
A collective response to corruption
The role of beneficial ownership transparency is paramount to closing channels for corruption, enabling effective taxation and building fairer markets. By involving governments, companies and civil society, Opening Extractives capitalises on the success of EITI’s multi-stakeholder approach and provides an opportunity for quality beneficial ownership data to become accessible to citizens.
Opening Extractives empowers citizens with information that helps them harness the transformative power of natural resource wealth for sustainable and inclusive human development. For beneficial ownership transparency to be successful working collectively across sectors is critical, which is why this initiative is so important.
– Claire Harbron, Chief Investment Officer, BHP Foundation