Shell companies are the getaway vehicles for grand corruption, and contracts the escape route. It’s time to unmask the drivers.
Beneficial ownership and open contracting
Anonymous shell companies — whose real, controlling beneficial owners may be hidden under layers and layers of corporations — are the getaway vehicles for global financial crime and corruption. Three in four grand corruption cases involve anonymous shell companies, according to a landmark study by the World Bank, The Puppet Masters.
By masking the identities of criminals and tax evaders, shell companies inhibit the ability of law enforcement agencies, journalists and other civil society actors to investigate, expose and punish illegal activity.
Corruption schemes often rely on government contracts to conceal illicit money flows, because it can be difficult to see who the real winners of the contracts are and where the money goes. With businesses winning trillions in public contracts every year, the selection process must be fair and open to ensure these deals are based on prior performance, best value for money, and in the interest of the taxpayers. The more, and better quality, beneficial ownership data we have, the more expensive and difficult it will be for corrupt individuals to hide. Combining open contracting data and beneficial ownership, as done in Ukraine, can make it easier to detect corruption and money laundering risks as well as deter fraud.
The issue has rightly attracted global attention, with the G8, the G20, and the Financial Action Task Force all supporting the disclosure of beneficial ownership information. Several open contracting champions are linking their contracts to beneficial ownership data. Find out about their progress here.
Tools
Idiot’s Guide to Looting Public Procurement
Our handy Idiot’s Guide to Looting Public Procurement tells you how and why it is so important to know with whom you are doing business in public procurement. After all, it’s where governments spend their money and the number one corruption risk.
OpenOwnership
To help do that, our sister project OpenOwnership is creating a global open data standard for companies to disclose their beneficial owners. OpenOwnership drives greater corporate transparency across the world by making it easy to publish and access high-quality, linked data about who owns companies. By leading the development of an open, global beneficial ownership data and policy ecosystem, it aims to create a new set of norms and end anonymous company ownership. Open Contracting Partnership is part of the founding Steering Committee alongside Transparency International, Global Witness, ONE, the B Team and OpenCorporates.
