Advancing collective action on beneficial ownership – OGP and EITI

When a country first joins OGP, and we speak with civil society and government for the first time, they are often surprised when they hear how many governments have included EITI commitments in their OGP action plans. Countries like Colombia and Ukraine have made commitments to join EITI, and others, like Liberia, Nigeria, Mongolia, Philippines, have made a range of national resource and beneficial ownership commitments in line with EITI requirements with support from key partners such as National Resource Governance Institute, Publish What You Pay, EITI country-based Multi-Stakeholder Groups (MSGs), and Open Ownership, among others. To many, it doesn’t make sense why countries would include EITI commitments in their plans when they already see EITI as an already effective multi- stakeholder platform with strong accountability measures.  From the perspective of the OGP Support Unit, we have seen how OGP serves as an additional advocacy and high-level political convening platform for several countries (notably the Philippines – the first country to reach compliance under EITI). However, with the 2016 EITI standard requiring all countries to implement beneficial ownershipDisclosing beneficial owners — those who ultimately control or profit from a business — is essential for combating corruption, stemming illicit financial flows, and fighting tax evasion. Technical... transparencyAccording to OGP’s Articles of Governance, transparency occurs when “government-held information (including on activities and decisions) is open, comprehensive, timely, freely available to the pub... More for extractives companies by 2020, the case for linking OGP to EITI has never been clearer.

On October 23-24, we attended the 2017 Beneficial Ownership Transparency Conference in Jakarta, hosted by the EITI and the Government of Indonesia.  Many of the people gathered were the practitioners from government agencies, who are charged with figuring out how they will implement a register of beneficial ownership for extractives companies within three years. The discussions were largely focused on how the Panama Papers leak in 2016 exposed the massive scale of the problem. Since the conference, the Paradise Papers leak has shown that anonymous companies can be used by otherwise respected firms to circumvent rules and exploit countries through bribes in order to win control of extractives licences, like in the Glencore case.  

These two leaks have highlighted the need for coordinated government action.  The 2016 London Anti-Corruption Summit, coming on the heels of the Panama Papers leak, sped up a global conversation at the highest levels on the urgent need to end anonymous companies.  At that Forum, many countries committed to beneficial ownership in some form, catalyzed by other global forums that have introduced guidelines – including the Financial Action Task Force (FATF), the EU’s Fourth AML Directive, the G7, G20 and EITI.  

Progress on OGP action plans is evaluated every year through the Independent Reporting Mechanism, providing a more frequent check point for countries working towards beneficial ownership and alerting government, civil society, international partners, and others when there may be an issue which support from partners can help the country overcome.  The 2015 UK progress report provides four pages of narrative detail on the UK’s progress in developing a register.  Starting in January, many of the countries who have committed to beneficial ownership in 2016 will begin to see reports with clear suggestions on how to make more progress on implementation.

The conference and ensuing conversations highlighted three key takeaways on the significant opportunity for the global OGP and EITI community to collectively catalyze ambitious beneficial ownership reform:

• Need for multi-country commitment on beneficial ownership – As the Nigerian Vice President Prof Osinbajo and the Indonesian Minister for National Development Planning (Bappenas) Minister Bambang Brodjonegoro both said at the EITI event, efforts to end abuse by anonymous companies will only be effective if there is a coordinated global movement around ambitious beneficial ownership reform and its effective implementation. They also highlighted how their countries are using OGP to integrate these reforms with their broader anti-corruption efforts.  OGP has now seen 15 countries commit to beneficial ownership reform, through cross-sector entry points like money-laundering and taxPlacing transparency, accountability, and participation at the center of tax policy can ensure that burdens are distributed equitably across society. Technical specifications: Commitments related to c.... In the coming year, as over 40 countries develop National Action Plans, there is a significant opportunity to galvanize support around getting additional commitments on beneficial ownership.  

• Coordination around implementation among a cross-sector community of practitioners – OGP’s vast community of stakeholders includes many officials with experience establishing beneficial ownership registers.  Many of those officials have worked on the rollouts of registers and faced the same issues countries just starting out are likely to consider – including challenges around harmonization of legislation and thinking through data infrastructure and verification, among others.  As one example, Steve Webster from the UK government’s Department for Business, Energy and Industrial Strategy (BEIS), who oversaw the establishment of the first publicly accessible register in the world, spoke about the questions they found themselves addressing during its roll out (for example, in setting data fields and the validation of that data). We are increasingly seeing those countries exchange lessons learned through the OGP platform and through events like the implementation workshop on beneficial ownership in Bratislava, co-hosted by the Government of Slovakia this past September. In addition to coordination between implementers, we also hope these efforts can facilitate greater coordination between funders for optimization and better targeting of financial and technical resources for implementation.

• Expanding beyond extractives – The EITI standard requires countries to implement beneficial ownership for extractives, but does not expand that requirement across industries or require public access to the register.  Beneficial ownership transparency already goes further in a few countries, and for the impact to be substantial enough to truly end anonymous companies, countries will need to expand to other, if not all industries. From the implementation perspective, government and civil society colleagues from the Philippines, Ukraine, and other countries noted that elevating the conversation to one that needed cross-agency political coordination as enabled by OGP was helpful, and thus including commitments in OGP action plans allows countries to move forward towards full transparency.   

With over 50 countries and subnational participants likely to be developing new action plans in 2018, this is truly the time to link EITI and OGP and help advance beneficial ownership transparency.  We hope this event in Jakarta will be one of many in the next few years, where countries will have the opportunity to learn, exchange ideas, and return home with a renewed commitmentOGP commitments are promises for reform co-created by governments and civil society and submitted as part of an action plan. Commitments typically include a description of the problem, concrete action... to advance beneficial ownership transparency and end anonymous companies.