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Sierra Leone

Beneficial Ownership Registry (SL0025)

Overview

At-a-Glance

Action Plan: Sierra Leone Action Plan 2019-2021

Action Plan Cycle: 2019

Status: Active

Institutions

Lead Institution: Corporate Affairs Commission

Support Institution(s): Transparency International Sierra Leone; Campaign for Good Governance; Society for Democratic Initiatives; Institute for Governance Reform; Centre for Accountability and the Rule of Law

Policy Areas

Anti-Corruption, Beneficial Ownership, E-Government, Extractive Industries, Fiscal Openness, Legislation & Regulation, Private Sector, Tax

IRM Review

IRM Report: Sierra Leone Design Report 2019-2021

Starred: Pending IRM Review

Early Results: Pending IRM Review

Design i

Verifiable: Yes

Relevant to OGP Values: Access to Information

Potential Impact:

Implementation i

Completion: Pending IRM Review

Description

What is the public problem that the commitment will address?
In 2016, the Extractive Industry Transparency Initiative
(EITI) established a requirement that all implementing
countries, of which Sierra Leone is one, should, by 2020,
require all mining, oil and gas companies to disclose the
identity of their beneficial owners. In addition, any
politically exposed persons (PEPs) who are beneficial
owners must be identified.
Furthermore, it is worthy to note that as Foreign
Investments are pivotal to Sierra Leone’s economic
development enormous effort is being made by
government to encourage foreign investments to boost
the country’s ailing economy. Notwithstanding, there is
the ardent need to ensure that there is integrity,
transparency, accountability and prudent financial
management in all foreign investments. To ensure this,
there is the need for adequate and transparent
information to be available of the nature of all foreign
investment ventures, to ensure that they are worthy,
credible and purposeful investments. This will go a long
way to forestall the unfortunate situations that the country
has faced regarding foreign investments that have
proved to be fraudulent, masterminded by politicians for
their personal benefit and these have ended up in
companies neglecting their corporate social
responsibilities and abuse the human rights of their
workers and communities in which they have operated
with impunity with dire consequences. In view of this,
there is the need for a more proactive beneficial
information disclosure regime in all foreign investments
in the country. This is of necessity as once this is
obscure it gives room for all negative consequences
faced so far in terms of foreign investments

What is the commitment?
Beneficial Ownership disclosure or Transparency has
become a growing interest at global and national levels.
This interest not only focuses on corporate beneficial
ownership information disclosure but also seeks to
expose conflict of interest among public office holders
otherwise known as Politically Exposed Person (PEPs).
It derives from the need to trace criminals who hide their
identities behind corporate structures to defraud
countries through corruption, tax evasion, undue
favoritism, money laundering and illicit financial flows.

How will the commitment contribute to solving the public problem?
Presently Sierra Leone does not have a Comprehensive
Law on Beneficial Ownership Disclosure not a
comprehensive database of all companies operating in
all sectors. To this end the Sierra Leone Extractive
Industry Transparency Initiative conducted a Legal and
Institutional Review of Beneficial Ownership Disclosure
in Sierra Leone. Action is yet to be taken to bring this to
fruition. As it stands, this will pose a challenge even with
Sierra Leone being regarded as compliant with the EITI
requirement specified above by 2020.

Why is this commitment relevant to OGP values?
Beneficial ownership disclosure is relevant because it will
help to promote transparency and credibility of foreign
business investments. It will safeguard against fraudulent
and self- seeking investments especially by public
official. It will ensure compliance with the local and
international laws and standards. Furthermore, it will
assist in promoting the anti-corruption and anti-money
laundering campaign.It will ensure that foreign
investments in the country contribute positively to growth
and sustainable development which will in turn help the
government deliver on its campaign promises and
ultimately fulfill the aspirations of citizens for effective
national development.

IRM Midterm Status Summary

4. Beneficial Ownership

Main Objective

Beneficial Ownership disclosure or Transparency has become a growing interest at global and national levels. This interest not only focuses on corporate beneficial ownership information disclosure but also seeks to expose conflict of interest among public office holders otherwise known as Politically Exposed Person (PEPs). It derives from the need to trace criminals who hide their identities behind corporate structures to defraud countries through corruption, tax evasion, undue favoritism, money laundering and illicit financial flows.

Milestones

  • Implement Recommendations 1, 2 and 4 in the Sierra Leone Extractive Industries Transparency Initiative Report on Legal and Institutional Review of Beneficial Ownership Disclosure in Sierra Leone.
  • Recommendation 1: Amend the Companies Act (2009) to include beneficial ownership disclosure requirements for all corporate entities, including mining, oil and gas companies
  • Recommendation 2: Put the Corporate Affairs Commission (CAC) in charge of administering beneficial ownership disclosure requirements for all corporate entities, including mining, oil and gas companies
  • Recommendation 4: Arrange technical assistance and capacity building for the CAC, SLEITI, NMA, and Petroleum Directorate to strengthen beneficial ownership information collection and verification processes
  • Compile and make publicly available (including online) a Comprehensive Beneficial Ownership Register

Editorial Note: For the complete text of this commitment, please see Sierra Leone’s action plan at (https://bit.ly/3bPiqwh).

IRM Design Report Assessment

Verifiable:

Yes

Relevant:

Access to Information

Potential impact:

Moderate

Commitment Analysis

This commitment aims to strengthen beneficial ownership disclosure, and expose conflicts of interests among politically exposed persons. [45] Lack of beneficial ownership information can facilitate corruption, tax evasion, money laundering, and illicit financial flows. [46] The Panama Papers, for example, recently revealed that the opacity of corporate shareholding in Sierra Leone’s largest diamond mine facilitated the undervaluation of diamonds that cost the country millions in tax revenues. [47] Conversely, the availability of beneficial ownership information enables a state and its citizenry to know whether the ultimate controllers and financiers of a project have a track record of project success and social and environmental responsibility, and whether there is a real plurality of actors in a sector, not an oligopoly or monopoly. [48]

Commitment 4 focuses on strengthening beneficial ownership in Sierra Leone by amending the Companies Act, 2009; putting the Corporate Affairs Commission in charge of administering beneficial ownership disclosure requirements; establishing a publicly-accessible online Comprehensive Beneficial Ownership Register; and arranging technical assistance and capacity building.

This commitment is relevant to the OGP value of access to information, as it will make previously unavailable government-held information on beneficial ownership accessible in the public domain.

At the time the commitment was designed, Sierra Leone’s Companies Act, 2009 made no reference to beneficial ownership disclosure requirements. The 2018 Corporate Governance Code requires beneficial ownership information disclosure to the CAC, [49] but operates on a “comply or explain” model. If a company refuses to comply with the beneficial ownership requirements, the CAC had no ‘teeth’ to enforce compliance. [50] As a member of the Extractives Industry Transparency Initiative (EITI), Sierra Leone is bound by the 2016 EITI Standard, which requires member states to disclose beneficial ownership information in their mining, oil, and gas companies by 1 January 2020. In 2017, Sierra Leone EITI (SLEITI) prepared a roadmap detailing the steps to be taken to implement full beneficial ownership disclosure in the mining, oil, and gas sector. [51] An independent legal and institutional review of beneficial ownership in Sierra Leone, however, cautioned against a piecemeal approach and recommended amending the Companies Act, 2009 to include beneficial ownership disclosure requirements for all corporate entities. [52]

If fully implemented as written, the potential impact of this commitment will be moderate. The commitment is verifiable, with clearly identifiable and measurable milestones and activities. Making beneficial ownership information disclosure mandatory builds on the normative framework already established by the Corporate Governance Code. However, requiring the establishment of a publicly-accessible online Comprehensive Beneficial Ownership Register represents a change from existing practices. However, the commitment remains limited in scope by failing to expressly address public disclosure of information on the shareholding of PEPs.

[45] Sierra Leone’s OGP Action Plan, 2019–2021, Open Government Partnership, p. 18, https://bit.ly/3bPiqwh.
[46] “Beneficial ownership roadmap 2016–2020”, Sierra Leone Extractive Industries Transparency Initiative (SLEITI), p. 2.
[47] Mathew Nyaungwa, “Panama Papers: Steinmetz undervalues Sierra Leone diamonds”, Rough Polished, 21 April 2016, https://www.rough-polished.com/en/news/102278.html.
[48] “Beneficial ownership roadmap 2016–2020”, Sierra Leone Extractive Industries Transparency Initiative (SLEITI), p. 2.
[49] According to the 2018 Corporate Governance Code, all organizations regulated by the CAC must set out all the beneficial owners of that organization in the annual report, and at the point of incorporation or submission of annual returns. The beneficial ownership section must include information on state-owned enterprises and politically exposed shareholders, regardless of the level of shareholding (National Corporate Governance Code, Sierra Leone, 2018, p. 17).
[50] Ms. Michala MacKay, former CEO and Registrar of the Corporate Affairs Commission, interview with IRM researcher conducted on 11 June 2020.
[51] “Beneficial ownership roadmap 2016–2020”, Sierra Leone Extractive Industries Transparency Initiative (SLEITI), p. 2. The country became a member of the Extractives Industry Transparency Initiative (EITI) in 2008. It has made “meaningful progress” in complying with the EITI Standard, publishing its latest EITI report in December 2019.
[52] Alexandra Readhead, “Beneficial ownership disclosure in Sierra Leone: A legal and institutional review”, https://eiti.org/document/beneficial-ownership-disclosure-in-sierra-leone-legal-institutional-review.

Commitments

  1. Expanding Community-Based Justice Services

    SL0022, 2019, Access to Justice

  2. Improving Access to Secondary School

    SL0023, 2019, Education

  3. Tax System Transparency

    SL0024, 2019, Fiscal Openness

  4. Beneficial Ownership Registry

    SL0025, 2019, Anti-Corruption

  5. Improve Implementation of Right to Access to Information

    SL0026, 2019, Access to Information

  6. Advancing Gender Equality

    SL0027, 2019, Access to Justice

  7. Open Parliament

    SL0028, 2019, Capacity Building

  8. Records and Archives Management

    SL0029, 2019, Access to Information

  9. Gender

    SL0012, 2016, Capacity Building

  10. Foreign Aid Transparency

    SL0013, 2016, Access to Information

  11. Waste Management

    SL0014, 2016, Capacity Building

  12. Fiscal Transparency and Open Budget

    SL0015, 2016, Access to Information

  13. Audit Report

    SL0016, 2016, Anti-Corruption

  14. Climate Change

    SL0017, 2016, Access to Information

  15. Elections

    SL0018, 2016, Access to Information

  16. Record Archive Management

    SL0019, 2016, Access to Information

  17. Access to Justice

    SL0020, 2016, Access to Justice

  18. Open Public Procurement Contracting

    SL0021, 2016, Anti-Corruption

  19. Publish and Revise 70% of Mining and Agricultural Lease Agreements and Contracts

    SL0009, 2014, Access to Information

  20. Starred commitment Right to Access Information Law

    SL0010, 2014, Access to Information

  21. Open Data Portal for Transparency in Fiscal and Extractive Transactions

    SL0011, 2014, Access to Information

  22. Public Integrity Pact with 5 Ministries, Departments, and Agencies

    SL0001, 2014, Anti-Corruption

  23. Archives and Records Management Act

    SL0002, 2014, Access to Information

  24. Scale up Performance Management and Service Delivery Directorate

    SL0003, 2014, Public Participation

  25. Compliance with Audit Measures

    SL0004, 2014, Anti-Corruption

  26. Starred commitment Single Treasure Account

    SL0005, 2014, Anti-Corruption

  27. Extractive Industry Revenue Act

    SL0006, 2014, Anti-Corruption

  28. Scaling up Extractive Industry Transparency Initiatives

    SL0007, 2014, Anti-Corruption

  29. Local Content Policy (LCP) Linkages with MDAs

    SL0008, 2014, Capacity Building

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