11 July 2023
by Kate Iida
A few weeks ago, at nearly 10 p.m., my plane touched down in Dakar, Senegal. My colleague Horlane and I had arrived in West Africa for the Extractive Industries Transparency Initiative (EITI) Global Conference, held only once every three years.
The EITI is the main organisation working globally to counter corruption in the oil, gas, and mining sectors. At the event, government officials from around the world came to meet with journalists, researchers, and anti-corruption advocates to discuss how to tackle widespread problems of corruption. We were there to learn about how to make anti-corruption reforms work better in practice.
One of the main strengths of the EITI lies in the organisation’s standard, which requires governments to strengthen a broad range of transparency and accountability mechanisms in the extractive sector. The standard is currently being implemented by over fifty countries around the world.
At the conference, sessions covered the complexities of advocating for transparency in a landscape of conflicting interests, including the powerful interests of companies who want to extract resources in a certain area, governments who want to encourage economic growth, and local communities who want their concerns addressed. One powerful statement came from the Hon. Awa Marie Coll-Seck, the Minister of State and Chair of the EITI National Committee in Senegal, who argued for the importance of including women and local communities into discussions about potential extractives projects, advocating for their voices to be better heard.
Other conversations at the conference centred around Beneficial Ownership Transparency, one of the reforms required in the EITI’s 2023 standard. To implement this requirement, countries must set up a publicly available register with information about the people who ultimately benefit from the work conducted by extractives companies.
These benefits can come in the form of salaries, but also shares in the company, other types of benefits, and decision-making power. The register must include enough information about the identities of these beneficial owners so that the people using the register can determine who they are. Names alone are often not enough.
According to Open Ownership, an organisation which advocates for beneficial ownership transparency, the reform has multiple benefits. It can help, for example, to reduce the incidence of shell companies, which exist only on paper but have no real operations of employees. These types of companies are often used for money laundering. According to the World Bank, 70% of grand corruption cases have involved the use of shell companies with anonymous owners.
Beneficial ownership transparency could also help in clamping down on corruption in the extractives sector. Having high quality beneficial ownership information available in public registers also makes it easier for investigative journalists, advocacy organisations and law enforcement to quickly see whether a person with political power is a beneficial owner of an extractives company, and how that might influence their decisions.
Beneficial ownership transparency is a fast growing reform. So far, over 30 countries have implemented public beneficial ownership registers, including the UK, Greenland, Ecuador, Sweden, and Ghana. Other countries including Canada, Mexico, Australia, Spain and Morocco have made commitments to build public registries, but have not developed them yet.
There are still, however, problems with the implementation of the reform around the world. Countries struggle to publish data which aligns with Open Ownership’s principles, which cover the disclosure, collection, storage, auditability, quality and reliability of data. As an example, though multiple countries around the world, including the U.S., have made commitments to develop beneficial ownership registries, they have not committed to making that information publicly available.
Though creating a register is an important first step, addressing these problems is also an essential part of effectively implemented beneficial ownership transparency reform. The public needs access to high quality and usable data on the beneficial owners of extractives companies. How else can journalists, researchers and anti-corruption advocates hold governments accountable?