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What government must do to know real extractive firms’ owners
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According to a report that the Extractive Industries Transparency Initiative (EITI) Indonesia published late last year, 71 oil and gas companies and 61 mining companies had submitted some information, even though the information had not been checked for accuracy. (Shutterstock/File)
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ix ministries signed an agreement in July to collaborate on data integration as part of the government’s effort to disclose data on beneficial ownership — the identities of the people who own the companies with which the government conducts business.
The signing marks a new milestone for transparency and accountability activism in Indonesia since the government passed a presidential decree on corporate beneficial ownership disclosure in March 2018, which mandates all companies to submit information on their beneficial owners to the government.
Together with the decree, the recent agreement forms a significant foundation for future efforts to track down illicit money that is laundered or used to finance terrorism.
It is also an important step toward developing policies that aim to crack the opaque structure of corporate ownership.
This is especially relevant to the multibillion-dollar oil, gas and mining sectors that are vulnerable to corruption, highlighting the importance of scrutinizing corporate and government compliance with conflict of interest rules that ensure against financial misconduct.
A secretive ownership structure is among the ways by which oil, gas and mining companies evade tax. The method can also conceal government officials’ interests in the companies that they regulate, leading to conflicts of interest and transactions that may be based on personal relationships rather than competency.
Beneficial ownership disclosure, when coupled with identifying the politically exposed persons involved in business transactions and screening for the risk of basic conflicts of interest, is an important step toward deterring such practices.
