Public Disclosure of Beneficial Owners (MK0185)

Brief Description of the Commitment

In 2019, the Republic of North Macedonia established the Registry of Beneficial Ownership. These registries began to be established after it was discovered that many politically exposed persons "secretly" own companies that use public (state) money. Information about the actual owners immediately became one of the most important tools in the fight against corruption. Providing easy and widespread access to this information is the most effective way to enable all relevant users – from law enforcement institutions to investigative journalists and civil society organizations – to be able to use the information in the fight against corruption. This is especially important for companies that are granted public funding and for whom information about who owns and controls the companies is fundamental to oversight and accountability. Today, despite the recent judgment by the European Court, these registers are publicly available in about third of the EU member states and many other countries around the world. This is also a condition set by the International Monetary Fund (IMF) and the World Bank (WB) for granting financial aid to countries (such as the RSM uses). Public publication of the names of the actual/beneficial owners is also part of the United Nations resolution on this matter. Hence, it is very important that such data is finally publicly available in our country, in which, compared to all EU countries where these registers are publicly available, there is significantly more corruption, hence a greater need for this information. The commitment refers to enabling public availability of the data for the beneficial owners, firstly, for companies that use public funds, i.e. have concluded public procurement contracts, for concessions for the exploitation of mineral resources, contracts for the concession of detailed geological research, as well as those with concluded contracts for the establishment of PPP. Also, in the direction of even greater protection against corruption, and in accordance with world trends in this area, the commitment provides for the publication of the names of beneficial owners and of bidding companies in public procurement procedures.

Problem Definition

1. What problem does the commitment aim to address?

There are numerous examples of corrupt individuals exploiting the non-transparency of ownership structures of companies, either to enter into or obtain contracts with state institutions by favoring companies in which they have a vested interest. Official data from the world say that in 70% of cases of high corruption involve companies with anonymous owners (for which there were numerous cases in our country, before they were discovered in the investigations by the Special Prosecutor's Office and investigative journalists). Lack of transparency in the actual ownership of legal entities not only contributes to corruption, but also seriously hinders investigations and the ability to track, freeze and confiscate illegally acquired assets and enforce the law. In public procurement, corrupt individuals may try to exploit the non-transparency of ownership structures to be awarded with tenders, favoring companies in which they have a hidden interest. On the contrary, by enabling ownership transparency, the authorities and all other interested parties will be able to discover the actual owners behind the tender bidders, and on the other hand, it will be more difficult for corrupt officials to manipulate the procurement process for personal gain. Such transparency encourages fair competition and discourages corrupt actors from using complex ownership structures to conceal their involvement in deals. In addition, the combination of ownership and public procurement transparency improves the overall accountability of the procurement process, enabling identification of potential conflicts of interest and ensuring that contracts are awarded based on merit and not through favoritism or bribery.

2. What are the causes of the problem?

Insufficient transparency in the actual ownership of legal entities leaves room for corrupt activities during the conclusion of public procurement contracts, concession contracts for exploitation of mineral resources, concession contracts of detailed geological research, as well as those with concluded contracts for establishment of PPPs.

Commitment Description

1. What has been done so far to solve the problem? With several subsequent activities carried out in the last few years, preconditions have been created for the final solution of the named problem. First, all concluded public procurement contracts (and their annexes) must be published on the single Electronic System for Public Procurement (ESPP). Afterwards, also on ESPP, the Notice for concluded contract, contains publicly published not only the names of the companies with which the public procurement contract was concluded, but also of all the companies that participated in the procurement therein. Furthermore, the State Commission for Prevention of Corruption established and publicly publishes the Register of elected and appointed persons. But all these and other solutions are only partial and do not fully implement their idea - to be a powerful tool for preventing and detecting corruption. What is missing is publicly available data on the ownership of companies to cross-reference all this data and prevent the misuse of public funds. The last Open Government Partnership Action Plan 2021-2023 (NAP for OGP) made an attempt to start this process by adopting a commitment to publish the names of beneficial ownership of the companies that won a public procurement contract. Unfortunately, the commitment, although recognized as one of the best worldwide commitments by the OGP Secretariat, was not implemented mainly due to aspects related to the protection of personal data. Having regard that the efforts to implement the commitment have not stopped, now an attempt is being made to allow additional time for, allegedly, the necessary legal amendments so that the commitment can be implemented, but it also includes similar public procurement contracts, such as concessions and contracts for the establishment of PPPs.

2. What solution are you proposing?

The proposed public announcement of the name of the actual, i.e. the beneficial ownership of the companies, will allow to cross-check the data from several publicly available databases and thus it will be possible to carry out a complete check of the selected and appointed persons - whether they are concealed from companies that are awarded tenders and concessions, that is, state contracts using the position and function to which they are elected or appointed to. However, the problem will be solved only partially because the data on the registered beneficial ownership of companies is also not publicly available in the country, so that North Macedonia is among the 15 countries in the world in which a fee is paid for obtaining this information about the companies (information as of October 2023, UNODC). There was a commitment for this in the past, which made certain basic data about the companies publicly available, but not the name of the company owners, as is the case in almost all countries of the world. This remains a problem for the full disclosure of companies’ connections and for the prevention and detection of corruption, which needs to be solved in the future. The public unavailability of this data, in a way makes the corruption possible because its discovery is prevented, which would occur if this data were publicly available. Also, the fact that all these data are not in the form of open data and thus their use remains difficult, which only works in favor of the corrupt, remains as a problem. In the near future, data on both ownership and beneficial ownership of companies should become fully publicly available to enable their wider use (eg. linking to data on property, court judgments, etc.). There are successful examples of this data application in France, the United Kingdom, Kenya, Malaysia, Ukraine, etc.

3. What results do we want to achieve by implementing this commitment?

By making public the names of the actual or beneficial ownership of companies, it will be possible to use the full potential of this data in the fight against corruption and crime. Namely, it will enable checking the data from the aforementioned publicly available registers and databases, which can lead not only to the discovery of corruption, but even more to its prevention. It is believed that the very fact that this data will be publicly available will deter those who intend to misuse public funds to do so, as the chances of being discovered will increase.

Commitment Analysis

1. How will the commitment promote transparency?

The commitment will actually mean a historic opening of data from the Register of Beneficial Ownership, which is now only available through an official procedure and payment of a fee. By implementing the commitment, these data will be publicly open, which will make them easily accessible to all interested parties, such as citizens, civil society organizations, the media, etc.

2. How will commitment help foster accountability?

Transparency of names of end users of legal entities will enable civil society organizations, media, citizens and all other interested parties to increase the supervision of public institutions, and thus the pressure for more responsible operation. This will not only discover possible political abuses in the use of public money for private benefit, but it will enable to prevent such occurrences in the future, which will directly affect the increase public institutions’ accountability in spending public money.

3. How will the commitment improve citizen participation in defining, implementing and monitoring solutions?

Having information and constant insight into who are the beneficial owners, i.e. end users of the companies, with simultaneously available other important data such as - who gets awarded tenders and concessions, will allow the citizens to get involved more intensively in the fight against corruption. Thus citizens, instead of just being passive observers and part of the problem, will be able to play their social role as active stakeholders in the fight against corruption, and protection of their own assets.

Commitment Planning (Milestones | Expected Outputs | Expected Completion Date)

1.2.1 Detecting the necessary prerequisites for public announcement of names of beneficial ownership, with a possible deadline for implementation | Drafted list with all prerequisites and a timetable for the implementation of the commitment | May 2024

1.2.2 Implementation of the detected prerequisites for public publication of names of beneficial ownership of the bidding companies and of the companies with concluded contracts for public procurement, concessions and PPP | Implemented necessary prerequisites for commitment implementation | December 2024

1.2.3 Public publication of names of beneficial ownership of the bidding companies and of the companies with concluded contracts for public procurement, concessions and PPP | Data on beneficial ownership of companies that have concluded contracts for public procurement, concessions for mineral resources and for establishment of PPPs are published publicly | May 2025