This must be the wakeup call for true corporate transparency

The Bell Tower of Saint Sophia Cathedral, Kyiv, taken on my visit to the city in August 2017, on a trip to help with the creation of a Beneficial Ownership Register for Ukrainian Companies

The world has watched the Russian invasion of Ukraine in horror over the past few weeks. In this blog post, OpenCorporates’ Co-Founder Chris Taggart explains why corporate opacity helped give Putin the confidence to carry out this devastating attack. He calls for the EU to make three immediate changes to bring genuine corporate transparency to Europe, which would help to prevent anything like this happening again. The blog is the first in our mini-series on the lessons we must learn from the crisis in Ukraine.

This is what failure looks like…

Nearly 3 years ago, the European Union passed the Open Data Directive, which promised to open up data on a wide range of critical official datasets, one of which was companies and company ownership. In just two years, by July 2021, when the directive was to come into force, company registers all around Europe would be available as open data, instead of being sold to a small number of brokers and agencies that gave access to the public and journalists only if they paid.

OpenCorporates played a significant role in this. We’d pioneered the campaign for open company data since our foundation, over 10 years ago, and indeed it’s a key part of our public-benefit mission. We’d also engaged directly with the EU: publishing reports showing the issues of access to company data in Europe, speaking at numerous Commission events, organising civil society and meeting MEPs.

The opacity that resulted from the current system, we explained, was a blocker to solving many of the key issues of our time – climate change, competition, ESG, fragile supply chains, tax. But there was one key issue directly related to lack of free and full access to official company data: protecting Europe’s economies and democracies from the corrosive effect of dirty money – from lobbying and campaign contributions, safeguarding critical infrastructure to inflated property prices.

The Open Data Directive therefore was a significant advance, which we celebrated at the time. And then July 2021 passed and…. nothing. Not a single new company register was made available as open data. Not only that, the Implementation Act, which would detail the minimum EU countries must do to comply with the directive had not even been published (and still hasn’t been).

This despite OpenCorporates, along with a number of NGOs and business groups, spending much of the intervening two years engaged in seemingly endless workshops and conference calls, to help inform the Act. And boy, was that a frustrating process, as we began to increasingly feel like window-dressing, some sort of kabuki show. Things that were agreed unanimously in workshops were quietly discarded. Cost-benefit analyses were skewed by arbitrary huge sums to account for ‘political costs’ (i.e. member states didn’t want to do it). Lost revenue by registers charging millions for the data were factored in, even though registers could easily replace this by increasing registration costs by a few euros per company.

Even after all this backtracking, nothing happened, not a single piece of company data has been published under the Open Data Directive which came into force over 7 months ago. And frankly I’m angry.

It’s not just that it’s impossible for journalists to analyse how many German companies are controlled by Russian oligarchs. Or NGOs to analyse the corporate webs woven by major Russian corporations. Or law enforcement to use network analysis to follow the dirty money that’s been flowing through the West for the past 20 years at least. Or business to work out which suppliers and customers they needed to cease relationships with.

No, I’m also angry because the political decisions to Just Do Nothing, to let the dirty money keep flowing under the cloak of opacity, gave Putin the confidence to launch his invasion of Ukraine, with millions of lives destroyed in the process.

Three essential and urgent steps

Well, now it’s time for Europe to step up, and act. First, all European member states not publishing their company registers must do so immediately (which Ukraine already does, by the way). There is no time to wait.

Second, they must also publish their beneficial ownership registers, removing the existing paywalls, and making them available as open data. Finding out who owns and controls companies should not be restricted to those who pay, or handed out on a piecemeal basis. In a data-driven corporate world, where understanding ownerships are critical to understanding power, this information must be available to all.

Third, Europe must get serious about corporate transparency – of course it needs to implement the Open Data Directive in full, following both its letter and spirit, without the political backsliding that we’ve seen up to now. But more than that it needs to bring registers into the 21st century, making them data-first, trusted sources of real-time fact. It must acknowledge that owning and controlling a company is a public act, and that, in today’s world, neither business nor society can operate well when this information is locked down.

A final reflection

In 2017 I went to Kyiv to meet with the government and civil society to try to help them make progress on a register of who ultimately controls and own Ukrainian companies (so-called Ultimate Beneficial Ownership). It was a fascinating trip, a nervous-making-one (even then it seemed like a matter of time before Russia found or created an excuse to invade), a frustrating one, and a pleasurable one. Not only was Kyiv a lovely city, it was great to meet so many people who genuinely wanted to make Ukraine a strong democracy, free of fear and corruption (which still held it back, and we got a glimpse of while we were there).

Since then I’ve watched with admiration as so many in the country carried on the fight – with determination, with hope, and with passion. Despite ongoing corruption, and the potential for weariness and cynicism amid the population, Ukraine did not quit the fight, and Zelensky was elected by a landslide on an anti-corruption platform. Progress was slower than many would have liked (although a law came in last year requiring beneficial ownership transparency), but nonetheless the need, the determination for reform was there.

We need to support that passion, that determination today by moving quickly to make open company data a reality, and with it, the transparency that free and fair societies and business needs.

Chris Taggart, Co-Founder, March 2022

Update: Over 120 organisations, including OpenCorporates, have signed an open letter to the European Commission demanding that it fulfil its promises, and open up company and beneficial ownership registers.

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