Create public beneficial ownership register (LR0037)

1. Build an open, public and machine -readable online register of beneficial ownership in the Liberia Business Registry. The Liberia Business Registry (LBR) will collect, store, and publish high-quality beneficial ownership data, consistent with international best practice. The LBR will make beneficial ownership information for all businesses available online, freely and timeously downloadable as structured data, for all sectors, and for all legal vehicles. The LBR will maintain up-to-date data which covers the complete ownership chain, including the legal ownership of businesses. The portal will be developed by implementing the principles for effective beneficial ownership transparency and will produce data conforming to the beneficial ownership data standards. The LBR, in partnership with the Liberian Extractive Industries Transparency Initiative (LEITI), will also build the capacity and raise awareness among stakeholders, and undertake a risk-based assessment to determine whether any sectors, such as extractives, should have a lower disclosure threshold applied. Establishing an open and transparent online portal showing beneficial ownership information will deter people from doing business through shadow companies which are often registered in tax havens to avoid taxes and launder money. This will also show Liberia is following international standards, which will contribute towards a good business environment. The commitment is in line with OGP values on beneficial ownership as it will increase transparency of information by making vital information about who owns, controls and benefits from the company available to the public. The following milestones will be reached to fulfill the commitments: 1. Set up a coordination committee to consult and establish best practice in beneficial ownership transparency, across technical, legislative, regulatory, and administrative parameters in Liberia. 2. Maintain up to date portal in the Liberian Business Registry with data available digitally, in bulk as well as on a per record basis (in Beneficial Ownership Data Standard (BODS) format) 2.1 dedicating staff member for beneficial ownership at the LBR; 2.2 introducing mandatory requirements on beneficial ownership; 3. Enable improvements and iterations to data quality and standardization, which includes developing and using a system for data verification. Milestone Activity With a Verifiable Deliverable Deadline: Responsible agency 1. Set up a coordination committee to consult and establish best practice in beneficial ownership transparency, across technical, legislative, regulatory, and administrative parameters in Liberia. December 2022 LBR 2. Maintain up to date portal in the Liberian Business Registry with data available digitally, in bulk as well as on a per record basis (in Beneficial Ownership Data Standard (BODS) format) 2.1: Appoint a lead at the LBR to maintain the portal December 2022 LBR 2.2: Introduce mandatory requirements to include beneficial ownership in current business registration forms by making necessary changes to existing rules and procedures December 2022 LBR 3. Develop and use a system for data verification to standardize ownership data December 2022 LBR

Action Plan Review

Commitment 1: Beneficial Ownership Transparency

● Verifiable: Yes

● Does it have an open government lens? Yes

● Potential for results: Substantial

Commitment 1: Beneficial Ownership Transparency (Liberia Business Registry, Liberian Extractive Industries Transparency Initiative, and Liberia Business Association)

For a complete description, see commitment 1 in https://www.opengovpartnership.org/documents/liberia-action-plan-2020-2022/

Context and objectives

The Government of Liberia has slowly made progress toward beneficial ownership transparency over the last decade. In 2017, civil society advocated for inclusion of a beneficial ownership transparency commitment in Liberia’s second action plan. ^[1] This commitment was not started by the end of the implementation period. It was tasked to the Liberia Anti-Corruption Commission, which did not have a mandate over business registration and licensing information. ^[2]

During co-creation, the steering committee proposed this commitment be continued in the 2020-2022 action plan. The participants considered the importance of this commitment in creating an open and transparent business atmosphere. Civil society organizations also strongly supported this commitment, [3] particularly in light of foreign companies’ encroachment on Liberian business space, creating a need for transparency and accountability.

The Liberian Business Registry (LBR) holds responsibility for implementation of this commitment and was extensively engaged during co-creation. [4] The LBR houses all information regarding ownership of companies and business entities and has the statutory mandate and responsibility to collect this information. [5] The LBR, a well-equipped state agency, maintains the necessary budget and staff. This commitment seeks to build on LBR’s mandate to publish business ownership information publicly. [6] The Liberian Extractive Industries Transparency Initiative will assist with capacity building and awareness raising, and will conduct a risk assessment to determine sectors that may warrant a lower disclosure threshold.

This commitment aims to establish the legal and institutional framework to maintain an online public beneficial ownership data register in compliance with the Beneficial Ownership Data Standard. ^[7] Specifically, the commitment seeks to create a coordination committee to review the supporting legal framework and appoint a lead in LBR to oversee the portal. The commitment also aims to develop a system to verify ownership data. These activities represent significant steps toward revealing the beneficial owners of Liberian companies and uncovering illicit gains.

Potential for results: Substantial

According to the 2020 Financial Secrecy Index, Liberia has a financial secrecy score of 78, which is considered “exceptionally secretive.” Based on this metric, Liberia is the seventh most secretive financial jurisdiction in the world. ^[8] Liberia’s financial secrecy has landed the country on several international blacklists. ^[9] The Panama Papers leak further implicated Liberia and has heightened international scrutiny. ^[10]

In April 2020, Liberia amended the Associations Law to define a beneficial owner and create an obligation to file beneficial ownership data with the Liberia Business Registry. ^[11] Despite progress, currently, no legal mandate exists for the government to publish beneficial ownership data outside the extractives sector. ^[12] There is also no register for beneficial owners outside the extractives sector. Therefore, expansion of beneficial ownership disclosure across all sectors would represent substantial open government reform.

Disclosure of beneficial owners in the extractives sector was legally mandated under the 2009 Liberian Extractive Industry Transparency Initiative (LEITI) Act and 2014 Petroleum Act. From 2009 to 2011, LEITI attempted a pilot project to disclose beneficial ownership data in the sector. However, the pilot faced significant challenges and saw only a 55 percent compliance rate. ^[13] Compliance—including that among government agencies—remains an issue. [14] In 2016, LEITI published a roadmap for improved beneficial ownership transparency. However, as of 2019, it made no progress. [15] The commitment’s aim to mandate beneficial ownership disclosure and verify compliance is essential to creating a functional register. However, this commitment would be strengthened if the government introduced sanctions for noncompliance or for submitting false information.

An absence of regulations for foreign nationals threatens to create a double standard. Liberia permits foreigners to purchase nonresident corporations with no requirement to disclose ownership or pay taxes to Liberia. Additionally, the Liberian International Shipping and Corporate Registry, managed in the United States, enables ships to circumvent tax rates, labor standards, and other regulations. Fees collected through this register were previously used under President Charles Taylor’s regime to purchase arms during the Liberian Civil War. ^[16] This reform would have a greater impact if the register includes Liberian companies owned by foreign nationals.

Despite these limitations, beneficial ownership transparency would offer major open governance benefits. For example, it would empower journalists and civil society to “follow the money” and see who benefits from government contracts. It would also enable investors and companies to conduct due diligence and enter into contracts and investments with Liberian companies with greater confidence.

Opportunities, challenges and recommendations during implementation

Previous Liberian Extractive Industries Transparency Initiative (LEITI) efforts demonstrate that beneficial ownership transparency in Liberia will require sufficient political and legal incentives for agencies and companies to comply. Additionally, successful implementation will require strong leadership from the Liberia Business Registry (LBR), as well as a coalition of beneficial transparency champions in civil society, the legislature, civil service, and the private sector. Specifically, the IRM recommends the following:

Legal Framework and Interoperability

• LBR and LEITI should partner with legislators to ensure that the 2020 Associations Law provides a legal foundation to translate beneficial owner data collection to ongoing and comprehensive public disclosure.
• LBR and the Public Procurement and Concessions Commission should ensure the open contracting platform in commitment 5 and the beneficial ownership register are interoperable, to aid Liberia’s anticorruption efforts.

Monitoring, Sanctions, and Enforcement through Multistakeholder Oversight

• The Coordinating Committee identified in milestone 1 should offer a multistakeholder platform that brings together relevant government, civil society, and private sector representatives. ^[18]
• The Coordinating Committee should engage leadership across government agencies to increase government compliance and set an example for the private sector. ^[19]
• LBR should establish sanctions that are sufficiently comprehensive, proportionate, and dissuasive, which could include both monetary fines and other penalties. ^[20]
• LBR should actively seek out and engage independent civil society partners to provide third party monitoring and oversight of implementation efforts.
• The OGP Steering Committee should regularly touch base with the LBR to monitor implementation progress and assist in navigating unforeseen challenges.

Results Report

Commitment 1. BENEFICIAL OWNERSHIP

● Verifiable: Yes

● Does it have an open government lens? Yes

● Potential for results: Substantial

● Completion: Limited

● Did it open government? Marginal

Context and Objectives:

Liberia’s commitment on beneficial ownership transparency aimed to build an open, public, and machine-readable online register in the Liberia Business Registry (LBR). This commitment had three milestones: set up a coordination committee, maintain an up-to-date portal backed up by dedicated staff and mandatory reporting requirements, and develop a system for data verification.

This commitment was continued from the 2017–2019 action plan and was moved from the Liberia Anti-Corruption Commission (LACC) to the LBR, which holds the mandate over business registration and licensing information. Appointment of the LBR as the responsible implementing agency facilitated implementation of this commitment.

The Tax Justice Network’s Financial Secrecy Index (2022) reports that Liberia’s scope of financial secrecy is at 73/100. [1] The country loses approximately USD 145.5 million in tax each year to global tax abuse, which the Tax Justice Network equates to 427.41% of the health budget. [2] As noted by Liberia Extractive Industries Transparency Initiative (LEITI), a beneficial ownership (BO) regime would “help to curtail tax evasion, fight fraud and other forms of corruption leading to robust mobilization of domestic resources.” [3]

Did It Open Government? Marginal

This commitment has marginally contributed to open government practices by continuing to build a legal and institutional framework for disclosure of information on the beneficial owners of companies. Specifically, implementation has advanced civic participation, as a broad coalition of civil society and government partners collaborated to develop regulations and forms for beneficial ownership disclosure. Once a public beneficial ownership portal is established, these reforms are expected to also strengthen government transparency and accountability.

This commitment is assessed as having achieved a limited level of completion by the end of the implementation period. There was progress made under milestones 1 and 3. These are important foundational activities for beneficial ownership transparency. However, overall completion of this commitment did not include implementation of the milestone with the greatest potential impact—milestone 2, to build and open a public and machine-readable online register of beneficial ownership in the LBR.

The LBR, with support from government agencies and local and international civil society organizations (CSOs), took steps to address issues raised in the IRM Action Plan Review and Open Ownership Scoping Report. [4] Most importantly, the LBR has shown strong ownership and intention to see action in this commitment. As highlighted by Favour Ime of Open Ownership, movement in BO in Liberia and pulling together of stakeholders would not have been possible without the leadership and ownership of the director general of the LBR. Ime stated, “LBR has put the weight on the matter, his voice is the loudest, he wants to question and pass it on to staff. He has been behind and in front of the consultation, in awareness raising campaign in regions—he was there for three of the regions.” [5]

The progress made represents noteworthy incremental steps over the implementation period. An analysis of the progress, intentional investment, and continued commitment has the potential to help achieve greater open government results in the longer term, if the commitment is carried over to the next action plan, with more feasible milestones.

Changes over the implementation period

Fundamental steps were taken over the 2020–2022 action plan that have potential to move this commitment forward, if it continues in the next NAP.

Drafting of the BO regulation and forms

Interviews with Ime [6] from Open Ownership and Samson Dee, [7] director general of the LBR, indicate that the Beneficial Ownership Forms and Regulations were drafted in consultation with government and CSO stakeholders. These stakeholders include Liberia’s Financial Intelligence Unit (FIU), the Liberia Revenue Authority (LRA), the Ministry of Foreign Affairs (MFA), LEITI, LBR, the Liberia Petroleum Authority, the Bureau for Concessions, private companies, the Accountability Lab, and the Liberian Bar Association. In July 2022, Open Extractives hosted an Anglophone Peer Exchange Programme that brought together implementing agencies from Ghana, Liberia, Nigeria, and Zambia, countries that are also undertaking beneficial ownership transparency reforms. [8] These actors shared challenges, successes, and best practices on BO. Launch, [9] review, and sensitization on the draft regulations [10] and forms [11] were after the NAP implementation period. [12]

This process contributed to all the milestones. Conversations with Ime [13] and Dee [14] indicated that there is a National Steering Committee involved in the process. This committee is to receive the final version of the forms and regulations before they are submitted to the Ministry of Foreign Affairs for assent. This committee was consulted in establishing the best practices in beneficial ownership transparency across technical, regulatory, legislative, and administrative parameters in Liberia. Using the Open Ownership nine principles of effective beneficial disclosure, [15] during consultations in August 2022, the committee made critical decisions that informed drafting of the regulations and forms. These consultations were important in raising local nuances that were useful in developing the draft.

The draft regulations [16] introduce requirements to include beneficial ownership in current business registration forms; a system for data verification to standardize ownership data; and clarity on sanctions for non-compliance, submitting wrong/false information. The regulations empower LBR to take the necessary steps to enforce the provisions of the primary law. The National Steering Committee shared the draft regulations and forms for feedback and validation in November 2022. Dee stated his hope that the regulations would be adopted in early 2023. [17]

What stands out from this process is the time spent in consultation. From Ime’s [18] point of view, that time was critical in ensuring that most actors were on board. “A robust regulatory framework is instrumental in serving as a solid foundation for the development of a BO register,” Ime said.

The Liberia Scoping Report notes that while the forms and regulations are in place, “the real impact of BO data lies in its utility.” This is only possible if any many people, organizations, and companies are aware of them. “The BO data is available in a structured format which allows data to be easily analyzed and linked with other databases.”

Looking Ahead:

The progress shared above demonstrates that Liberia has built up momentum in pushing beneficial ownership in the country. Involvement of stakeholders—government, CSOs, private companies—and technical and funding partnerships have contributed to steps achieved so far. Overall, the Open Extractives Programme forms a productive partnership in achieving a commitment around beneficial ownership over the next three to five years. Ime noted that Open Ownership will host BO symposiums where Liberia could showcase what it is doing under BO, thus positioning itself for additional funding. [19]

Recommendations shared by Ime, [20] the Scoping Study Report, [21] and Dee [22] could inform the drafting of a commitment around beneficial ownership:

• It was clear from the engagement and awareness-raising sessions that CSOs and citizens across the country were involved in the process and received information on what was happening. However, there is a need to involve more private companies in the process. This is something the Open Extractives Programme plans to do in testing the BO forms and receiving feedback as the draft forms and regulations are finalized. [23]
• The BO online registry is not yet up. Interviews noted that the Government of Liberia has mandated LBR to work with LEITI, Liberal Petroleum Revenue Authority (LPRA), and other relevant government agencies to develop, design, and establish the register. [24] LPRA has purchased software for the BO register. [25] It will focus first on the extractives sector and subsequently everything else. A key recommendation from the Liberia Scoping Report is to use rollout and use of the extractives BO register as a pilot. This will allow LBR to include learnings in the rollout of the complete BO register. This worked in Nigeria and Armenia.
• With the online register not up and running, a hybrid approach will likely be adopted—paper and online forms to fully transition to online forms. Recommendations around this include accompanying paper forms and a Data Submission Manual with guidance on how to fill in the forms to support data verification. Involving companies in developing and testing the forms will also facilitate user-friendliness and requests for information that companies are reasonably expected to have. [26]
• Consider how can the BO portal link with the procurement portal, under development? How can LBR bring PPCC into the conversation? [27]
• There is progress in pulling together the portal, and the draft regulations and forms are in the process of testing and finalization. With this progress, LBR will need to ensure that staff is available to manage the portal and process. Samson Dee mentioned that staff had been identified for this, [28] and Favour Ime shared that there are plans to have targeted training of individuals and departments over the next couple of months. [29]
• The IRM recommends simplifying and being specific in commitment milestones (e.g., approval and rollout of the draft regulations and forms); sensitizing the approved forms and regulations to private sector, CSOs, and government actors; finalizing contracting for the development of the data portal; using the paper BO forms and validating the verification process; staffing; and training and equipping of dedicated staff.