Governments should commit to company ownership transparency in their OGP National Action Plans
¿Quieres leer este blog en español?
A big corporation bribes public officials to get a lucrative contract. A government awards an important contract to a company that grossly overcharges them. An infamous drugs cartel launders its money. A Swiss bank helps customers hide their money from the taxman.
What do all these things have in common? The answer is that they all relied on the secrecy provided by anonymously-owned companies. Instead of opening a bank account in their own name, the bribe-receiver, 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... evader and fraudster incorporated a company in a jurisdiction where ownership details are kept quiet, and then secretly stashed the cash in an account belonging to the company.
There’s a growing international trend to make it more difficult for criminals to hide their shady money in this way. The UK has passed legislation that will require the names of the people who own and control British companies – the so-called beneficial owners – to be out in the open for all to see. It’s a change that Prime Minister David Cameron first suggested at the Open Government Partnership summit in London in 2013. Norway and Ukraine are doing the same. The European Union now requires all Member States to have to create a central registry of beneficial owners and to make that available to anyone who has a legitimate interest in finding out who’s behind a company.
The United States lags behind much of the rest of the world in company ownership transparency. Most U.S. states do not even collect the names of a company’s shareholders, let alone make shareholders and beneficial owners public despite the fact that a World Bank study showed that the U.S. is the most popular place to incorporate with the corrupt. A Global Witness undercover investigation, broadcast recently by the U.S. news programme ’60 Minutes’, showed that U.S. lawyers often suggest using anonymously-owned American companies as a means to get suspect funds into the country. There’s hope of some progress though. For example, the U.S. Administration has promised, via its OGP National Action Plan, to advocate for legislationCreating and passing legislation is one of the most effective ways of ensuring open government reforms have long-lasting effects on government practices. Technical specifications: Act of creating or r... requiring meaningful disclosure of company ownership,.
Governments should commit to create publicly-accessible registries of 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... More in their National Action Plans.
In addition, governments should also address company ownership transparency in sectors that are at a particularly high risk of corruption, such as government procurement. Around the world governments spend $9.5 trillion each year on public works, goods and services. According to research by the United Nations, corruption may amount to as much as 25% of this amount. Governments should require that a company bidding for government contracts disclose the real people that own or control them.
Companies exist for a good reason – to limit liability if a business idea does not work out. This is a very sound principle which allows business to flourish. What companies were never intended to be was a mask behind which people who have no interest in legitimate business can hide their identity.
Increased company ownership transparency is in the interests of businesses. The B Team, a group of business leaders founded by Richard Branson (Virgin Group’s Founder and CEO) and Jochen Zeitz (former Chairman and CEO of Puma) argue that being more transparent about company ownership would increase competitiveness, reduce risks, manage financial exposure and reduce impunity. Mark Moody-Stuart, the former Chairman of Royal Dutch Shell and Anglo-American said “Companies themselves recognize this as a common sense approach because they want more information on who they’re doing business with and what risks they are taking on.”
Company ownership should be out in the open for all to see. David Cameron said “when you have companies whose ownership isn’t known you allow a shroud of secrecy behind which people can do bad things, sometimes terrible things, with no accountability. The corrupt, the criminals, the money-launderers – they need anonymous company structures to hide, to move and to access their money”.
The names of the people who ultimately own and control the company should be made public. Doing this would help make it more difficult for governments to get ripped off, tax authorities to lose out and criminals to prosper.