Financial Transparency Coalition

Yesterday, the World Bank committed to examine ways to collect and publish information about the real owners of companies (also called “beneficial owners”) participating in Bank-financed contracts. We welcome the Bank’s leadership as the impact of its new procurement policy stands to affect a portfolio of about US $42 billion invested in more than 1,800 projects in 172 countries.

When the Bank publishes its regulations to implement this new policy later this year, it is important that it makes the collection and publication of beneficial ownership information a full requirement. This is significant because, as I’ve explained in previous blogs, an easy way for a criminal to commit fraud and corruption in government contracting is to set up a company and hide the fact that he/she owns it. This point has been reiterated by our partners, including Open Contracting Partnership, Open Corporates and Transparency International. Global Witness is publishing cases on our online interactive map that show how fraudsters concoct different schemes to rip off public budgets, while remaining anonymous by hiding behind shell companies at the expense of those in the world’s poorest countries—those most in need.

With this positive step, the Bank is beginning to join a growing list of countries around the world that are addressing this problem. Places such as the UK, EU, France, Denmark, the Netherlands and Norway are contemplating creating public registries to house beneficial ownership information. Similarly to the Bank’s new policy, some countries such as the UK have gone further, and support the publication of this information in an open data format, which promotes the effective use of contracting data, helping users to “follow the money” and root out corruption.

Perhaps you’ve noticed that the U.S. is absent from this list of leaders. In fact, the International Monetary Fund released a paper this month critiquing the slow and inadequate U.S. response to the problem of anonymous company ownership. Despite this lack of action in its own backyard, U.S. legislators have pressed international financial institutions, such as the World Bank, to collect, verify and publish beneficial ownership information for companies that get contracts.

The Obama Administration hasn’t ignored the problem of anonymous companies completely. The Administration has endorsed broad and high-level principles on beneficial ownership transparency in the G8 and G20 and has committed to advocate for legislation through the Open Government Partnership (OGP). It is currently taking public comments and gearing up to make commitments in its third OGP National Action Plan.

The Administration should take this opportunity to advance its previous commitments to beneficial ownership transparency and to make a new commitment to achieve greater transparency and accountability in U.S. government procurement.

The Administration has the power to act without Congress to require that entities bidding on government contracts disclose the real people who own or control them. Open contracting must also be part of the solution. Information about the award, contract and related documents, as well as beneficial ownership, should be placed in the public domain in an open data format.

These simple steps would demonstrate the U.S. government’s leadership in the fight against corruption, and importantly, protect the government and taxpayers from real risk of waste, fraud and abuse.