Create public beneficial ownership register (KE0024)

Reported increase of cases of loss of public funds through fraud, embezzlement and procurement malpractice through companies whose real owners remain shadowy or unknown. Investigations often reveal the directors involved in the vice. There is however, always open inquiries as to whether the known directors are indeed the ultimate, true owners of the companies based on their profiles and the nature and extent of their involvement.

Objective Publish a central public register of company beneficial ownership information operating in the Republic of Kenya.

Status quo As of October 2020, the BRS is actively collecting data on beneficial owners of companies registered in Kenya. This information is currently available to competent authorities.

Ambition The President in June 2018 through Executive Order 2 of 2018 further directed that all entities wishing to provide goods, works and services across all National and County Governments must disclose Beneficial Ownership Information online for public scrutiny. This commitment seeks to progress to an accessible register that supports among others, a wider anti-corruption architecture including public procurement and other contracting spheres and anti-money laundering

No. Verifiable and measurable milestones to fulfill the commitment Status of milestone Start Date: End Date: 1.Make public information on foreign and local company buying property Ongoing February 2021 June 2022 2.Build a module on the Beneficial Ownership Register Information of companies and individuals convicted of bribery and corrupt practices Ongoing June 2021 June 2022 3.Build a module on the Beneficial Ownership Register Information of debarred companies under the Public Procurement and Asset Disposal Act (PPAD) 2015 Ongoing June 2021 December 2022 4.Apply the Beneficial Ownership (BO) data standard to the existing BO register Ongoing December 2021 June 2022

Action Plan Review

Commitment 1. Beneficial Ownership

● Verifiable: Yes

● Does it have an open government lens? Yes

● Potential for results: Modest

Results Report

Commitment 1. Beneficial Ownership

This commitment aimed to enhance transparency and strengthen public accountability by publishing a central public register of company beneficial ownership information for all entities wishing to provide goods, works, and services across all national and county governments.

The commitment had four milestones, two of which were carried forward from the previous NAP. [1] CSO cluster co-lead Transparency International noted the first milestone under the open contracting commitment [2] also belonged to this commitment. [3] As such, the analysis under this section will only focus on the four initial milestones included under this commitment.

Out of the four milestones, three were not yet started and one was completed to a limited extent. Milestones 1 and 2 which required the government to publish information on foreign and local companies buying property and committed to the publication of information on companies and individuals convicted of corruption and bribery respectively were carried forward from NAP III, having not been completed. [4] The milestones, as drafted, were ambiguous and would require further discussions between different actors on how to clarify milestones and their implementation. These actors include the Business Registration Services (BRS), the Public Procurement Regulatory Authority (PPRA), and the Ethics and Anti-Corruption Commission (EACC). The current database on the PPIP portal could also be further enhanced to achieve these milestones by categorizing information in the portal according to the nature of contracts.

The third milestone on the publication of the list of firms which have been debarred from public tendering was ongoing owing to an amendment in the Public Procurement Regulations. Companies engaged in unethical business practices in violation of procurement laws are named in a “list of shame” on the PPRA website. [5] The effect of debarment implies that such firms are not eligible to participate in public tenders during the period of debarment.

The fourth milestone required the government to apply the existing beneficial ownership (BO) data standards to the current BO register. A Transparency International representative reported that this milestone was ongoing. However, no evidence was provided to demonstrate the steps taken towards its implementation. [6]

According to the CSO co-lead, the commitment was designed with little input from the BRS, who was expected to be a key implementer. It is highly likely that the commitment did not align with government priorities and this contributed to the low level of completion. Other obstacles included lack of adequate funds, human resource constraints, COVID-19 pandemic, and political uncertainty associated with the general electioneering period.

During implementation, the government strengthened BO transparency through Legal Notice No. 32 of 2022 on Companies (Beneficial Ownership Information) (Amendment) Regulations. The regulations expanded the scope of beneficial ownership information disclosure to include procuring entities participating in public procurement and assets disposal under the Public Procurement and Asset Disposal Act of 2015, companies participating in a public private partnership arrangement under the Public Private Partnership Act of 2013, and where information effects the country. Key principles for beneficial ownership disclosure included freely downloadable, searchable, and reusable by the public, as well as without a fee, proprietary software, or the need for registration. There is a need for a more comprehensive legislative framework to help improve BO information disclosure and facilitate achieving Kenya’s OGP commitments and international obligations under FATF. Some bills which will strengthen the BO legislative framework are also under consideration, including the Business Laws (Amendment) Bill of 2022, the Companies (Beneficial Ownership Information) Regulations of 2022, the Partnerships (Beneficial Ownership Information) Regulations of 2022, and the Registrar of Companies Forms Rules of 2022.