As the OpenLux scandal unfolds, leading transparency, anti-corruption and open data organisations today reiterated their call to the European Commission and national governments to open company registers with high quality data in order to prevent the corruption, fraud, tax evasion and organised crime that has once again come to light thanks to the work of investigative journalists.
On 9 December 2020, International Anti-Corruption Day, over 100 organisations from across Europe urged the European Commission to ensure the full publication of company registers and company ownership as open data under the 2019 Open Data Directive.
A response received on 11 January 2021 from Vera Jourová, Vice President for Values and Transparency, and Thierry Breton, Internal Market Commissioner, stated that this issue was still being considered because, in spite of the multiple social and economic benefits to having fully open company data, there are two obstacles: the actual cost of making the data public and the personal data protection consideration for company owners.
“OpenLux has shown once again how wrong these arguments are: we need to know the names of the owners of companies in order to address another huge cost, that to society of corruption and crime. This latter cost runs into many many millions, and far exceeds the cost of gathering, checking, and releasing this data,” said Helen Darbishire, Executive Director of Access Info, one of the letter’s signatories.
The letter from Commissioners Jourová and Breton specifically states that the benefits include “fighting crime, increased public engagement and understanding of economic processes” as well as enabling financial sector activity, including business analytics services and facilitating access to finance for SMEs.
“OpenLux is another demonstration of the disastrous effects of secrecy on society. More than $11 trillion has already been spent by governments all over the world urgently responding to the COVID-19 pandemic, and reliable information on who controls anonymous companies is central for identifying where this money goes and for preventing financial mismanagement, fraud and corruption,” said Laure Brillaud, Senior Policy Officer, Transparency International EU.
Addressing the importance of the open company data for investigative journalists, Drew Sullivan, Editor and Publisher of the Organized Crime and Corruption Reporting Project said: “The EUs plan to water down the Open Data Directive is a gift to organized crime and corrupt actors. Half-hearted transparency leaves loopholes which invite dark money into your system, undermining democracy, and ultimately promotes plutocracy. As a European directive, you need a rock hard standard that can serve as a bedrock for democracy.”
“High-quality and readily-accessible company ownership information is essential to carry out proper due diligence on potential fraudulent or false companies, and therefore is essential for both governments and other businesses operating in the European space,” said Robin Hodess, Director of Governance & Transparency at The B Team.
Emily Wigens, EU Director of The ONE Campaign, added: “Developing countries lose more than $1 trillion each year as a result of secrecy and shady deals. The public, including journalists and civil society organizations, plays a critical role in exposing corruption and bad deals, so must have full access to open company ownership data for the EU’s company registers to be effective.”
“We see that most big cases of fraud, corruption and tax evasion are uncovered by journalists and civil society. Unrestricted access to these data is essential for these organizations to play their part,” stated Serv Wiemers, Director Open State Foundation.
Partial progress has already been made towards this goal, according to Jesse Renema Senior Project Lead of the Open State foundation: “We are halfway there as the European Union’s 5th Anti Money Laundering Directive (AMLD5), already requires open registers of beneficial owners of companies. To complete the anti-corruption package, it is essential to commit to fully open company registers.”
Addressing the concern that opening up company data will have an associated cost for national company registers, Thom Townsend, Executive Director, Open Ownership, stated: “It is evident that the cost of publishing this essential information is minimal compared to the significant economic savings and invaluable societal benefits that accrue from avoiding fraud and corruption.”
Chris Taggart, of the business OpenCorporates, added: “This data is essential for entrepreneurs across Europe. If the EU is serious about supporting open data for entrepreneurship, they should start with pivotal data sets such as company registers. In a financial crisis and risks of increasing unemployment, the way ahead is to act on the EU’s digital strategy promises and keep this data open.”
The signatories to the letter call for the following company structure and ownership information to be the absolute minimum made public under the Open Data Directive:
- Name of the company owner;
- Month and year of birth;
- Owner identifier;
- Names of shareholders;
- Country of residence of shareholders/owners;
- Company insolvency status;
- All updates to the information submitted, including the date of the most recent update.
They note that standards have already been set in the UK and Denmark, with the information in these company registers available as open data.
The letter concludes by arguing that the European Commission and Member States should now guarantee full publication of companies and company ownership information as a high-value dataset in implementing the Open Data Directive, under a genuinely open licence without additional restrictions: “Anything less than full publication, would ultimately foster an environment where corruption is allowed to persist. This is the time for more transparency and accountability, not less.”