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Slovak Republic

Publish Beneficial Ownership Data (SK0129)

Overview

At-a-Glance

Action Plan: Slovak Republic Action Plan 2019-2021

Action Plan Cycle: 2019

Status: Active

Institutions

Lead Institution: NA

Support Institution(s): NA

Policy Areas

Anti Corruption and Integrity, Beneficial Ownership, E-Government, Private Sector, Records Management

IRM Review

IRM Report: Slovak Republic Transitional Results Report 2019-2021, Slovakia Design Report 2019-2021

Starred: Pending IRM Review

Early Results: No IRM Data

Design i

Verifiable: Yes

Relevant to OGP Values: Access to Information

Potential Impact:

Implementation i

Completion: Pending IRM Review

Description

The commitment is a follow-up to the previous action plan which implemented the measurein the adoption of the Counter-Pact Law 16 and takes into account the outcome of the transposition of the EU Directivesmoney laundering; AML (Anti - Money Laundering) Directives. The result of theseactivities is the existence of two official records of the end-users of the benefits, each of thempursues another purpose. The Public Sector Partners Register 17 is publicly available. Legal Registerpersons, entrepreneurs and public authorities, including registers from which they draw final databeneficiaries, it is non-public in the end user benefit data section 18 .In order to ensure greater transparency as well as the objectives of the new European DirectiveParliament and the EU Council against money laundering 19 , full publicity of data needs to be ensuredon end-users of benefits in the register of legal persons, entrepreneurs and public authorities.Because this Directive is not yet in preparation for the OGP 2019-2021 Action Plantransposed into the Slovak legal order, the task will be based on the validand effective legislation at the time of its implementation. The Slovak Republic is obligatory to the European Directiveto transpose the European Parliament and the Council against money laundering by 10 January 2020.In order to enhance transparency in the theme of the end users of the benefits of the Slovak Republicsigned the Declaration of National Commitment to Fulfillment of End User Benefit Principles 20 .It has thus become part of the coalition of Member States of the Open Government Initiative, which aims tothe development of a new global standard aimed at increasing transparency and reducing abuseresources for criminal activities. Information about the end users benefits to the Declarationsubmissions should be made publicly available in accordance with the End User Disclosure Policybenefits.In order to increase transparency, the USSR ROS will cooperate with the Statistical Office of the Slovak Republicwhen publishing end-user benefit statistics so that this information serves a wide rangepublic.

Specific milestone towards the goal:
8. Implement the Principles for Disclosure of End-Beneficiaries within Official Recordsend user benefits
Deadline: until 31 December 2021
Responsible: Minister of Justice of the Slovak Republic
Co-responsible: Chairman of the Statistical Office of the SR, Plenipotentiary of the Government of the Slovak Republic for Developmentcivil society

IRM Midterm Status Summary

4. Ensure full disclosure of beneficial ownership data

Main Objective

“Ensure full disclosure of beneficial ownership data in the register of legal entities, entrepreneurs and public authorities.” [40]   

Milestones

  1. Implement the Disclosure Principles for Beneficial Ownership Data into the framework of official registers on beneficial ownership.

Editorial Note: For the complete text of this commitment, please see Slovakia’s action plan at https://www.opengovpartnership.org/documents/slovakia-action-plan-2019-2021/.

IRM Design Report Assessment

Verifiable:

Yes

Relevant:

Yes

Access to Information

Potential impact:

Transformative  

Commitment Analysis

This commitment seeks to apply and implement international beneficial ownership standards to the data held in the Register of Legal Entities, Businesses, and Public Authorities, which currently does not provide beneficial ownership data. Broadening access to information on beneficial ownership has been a priority of previous Slovak governments outside of the scope of OGP, [41] so Commitment 4 is new to Slovakia’s OGP action plan.

The commitment is relevant to the OGP value of access to information because successful implementation will mean information on beneficial owners of all legal entities registered in Slovakia will be publicly available, not just those that receive public money.

In the current system, [42] [43] any organization (other than a public administrative agency) that is in receipt of public money [44] is obliged to register in the Register of Public Sector Partners [45] and disclose their beneficial (real) owners. [46] The legislation includes robust sanction mechanisms if inaccurate information is provided, such as fines up to EUR 1 million, removal from the company register, and a ban on participating in public procurement. [47] The reform was well-received in Slovakia [48] and abroad. [49] Transparency International Slovakia (TIS) have reported that beneficial ownership information of companies participating in high-value public procurement contracts is publicly available. [50] It includes the name of the beneficial owner, their date of birth, address, and a unique identifier of the company. At the time of writing this report (April 2020), [51] more than 30,000 entities were registered in the Register of Public Sector Partners.

However, despite its benefits, CSOs, TIS in particular, [52] pointed to several deficiencies in the publicly available information, e.g., data inconsistency and a lack of interoperability and interconnectedness of government registers, and demonstrated there is room for improvement. As a member of the Beneficial Ownership Leadership Group, [53] Slovakia has signed up to the principle that beneficial ownership data should be available as high-quality open data. [54] These deficiencies could, therefore, be addressed by implementing the beneficial ownership transparency disclosure principles as foreseen in the commitment. 

This commitment to implement the Disclosure Principles means that Slovakia would go further than other EU countries in its implementation of the fifth EU Anti-Money Laundering Directive. Slovakia is due to complete transposition of the Directive, [55] which aims to broaden access to beneficial ownership information through publicly available central registers. In February, the European Commission sent the letter of formal notice to the Slovak government [56] “for not having notified any implementation measures for the 5th Anti-Money Laundering Directive”. [57] However, some steps had been taken already towards the Directive’s implementation. Government Resolution no. 496/2018 [58] appointed the Interior Ministry (in collaboration with the Finance Ministry and Justice Ministry) to submit the draft law that would ensure the transposition of the Directive by 31 March 2019. In May 2019, the government approved [59] the action plan to combat the use of the financial system for money laundering and terrorist financing for the period 2019-2022. [60] The resolution also stated that Article 32a of the 5th Anti-Money Laundering Directive, [61] which requires the EU member states to establish centralized platforms for the publication of the beneficial ownership information of all companies, has to be transposed by 10 September 2020. 

The commitment reforms, in particular, the Register of Legal Entities, Businesses, and Public Authorities, operated by the Statistical Office. As the commitment pledges to ensure full disclosure of beneficial ownership data in the Register of Legal Entities, Businesses, and Public Authorities [62] it could have a transformative potential impact as it will substantially increase access to information on beneficial owners. Based on the information provided by the Statistical Office, [63] the number of economic entities in the Register of Legal Entities, Businesses, and Public Authorities (regardless of their legal form) was more than 630,000 in 2019. At the time of writing this report (April 2020), public access to the information in the register was limited without registration and an advanced search was available for registered users only. [64] At that time, it was also unclear whether the Register of Legal Entities, Businesses, and Public Authorities will only be modified to allow full disclosure of beneficial ownership data or whether it will also be merged with the Register of Public Sector Partners.

Data from the Register of Public Sector Partners has been instrumental in documenting true beneficiaries of companies who were known for winning government bids under dubious circumstances. The register confirmed that one of the beneficial owners of Váhostav - SK, a.s. (a construction company) [65] is Juraj Široký, [66] who is an alleged sponsor of the ruling Smer-SD party. [67] Using data from the Slovak register, Transparency International Czech Republic found out -despite claims to the contrary- [68] that Czech Prime Minister Andrej Babiš [69] continued to hold a conflict of interest as the beneficial owner of Agrofert (an agro-food conglomerate), the controlling company of the Agrofert Group. This qualifies as a conflict of interest, [70] as companies owned by politicians are not eligible for European Structural and Investment funds (ESIF), and companies belonging to the Agrofert Group received EUR 42 million in 2013 to EUR 82 million in 2017 in ESIF funds [71] and also participated in projects subsidized by the Rural Development Program of the Czech Republic. At the same time, Babiš acted as a chair of the Czech Council for the ESIF. The revelations prompted the European Parliament to adopt the resolution on conflicts of interest and the protection of the EU budget in the Czech Republic, [72] which urged the European Commission to recuperate “all funds that have been illegally or irregularly paid out”. [73]

In light of the above, the commitment to “ensure full disclosure of beneficial ownership data” is important and might have a transformative impact. If fully implementedt has the potential to significantly increase the number of registered entities in Slovakia that must provide access to information on the real owners of companies. While not an aim of the commitment, it is worth noting its implementation could aid watchdogs like investigative journalists and anti-corruption CSOs in uncovering examples of money laundering or other hidden criminal activity.

[40] Office of the Plenipotentiary, Open Government Partnership National Action Plan of the Slovak Republic 2020 – 2021, https://bit.ly/3bhUmmu
[41] Mária Žuffová, Open Government Partnership, IRM Slovakia Design Report 2017–2019, http://bit.ly/2nOTrpw
[42] Slov-lex (Legal and information portal), Ministry of Justice, Zákon č. 315/2016 Z. z. o registri partnerov verejného sektora a o zmene a doplnení niektorých zákonov (The Act no. 315/2016 Coll. on the Register of public sector partners), http://bit.ly/2B71EbM (in Slovak).
[43] National Council of the Slovak Republic, Vládny návrh zákona o registri partnerov verejného sektora a o zmene a doplnení niektorých zákonov (Government Act on the register of public sector partners), https://bit.ly/3cLlKtj (in Slovak).
[44] The exact definition of public sector partner is set in the legislation. The threshold in the legislation was a receipt of more than EUR 100,000 in a single instalment or more than EUR 250,000 per calendar year in the case of repeated renumeration.
[45] Ministry of Justice, Beneficial ownership register, https://rpvs.gov.sk/rpvs (in Slovak). 
[46] The exact definition of public sector partner is set in the legislation. The threshold in the legislation was a receipt of more than EUR 100,000 in a single instalment or more than EUR 250,000 per calendar year in the case of repeated renumeration.
[47] The Slovak Spectator, Parliament adopts anti-shell law, https://bit.ly/2VVYC4j
[48] Labant, Juraj and Gabriel Šípoš, The Register of Beneficial Ownership in Slovakia: Revolutionary transparency, questionable implementation, unsure benefits. Transparency International Slovakia, http://bit.ly/2B73dGG
[49] Open Government Partnership, Lessons from reformers, https://bit.ly/3cohAHm
[50] Labant, Juraj and Gabriel Šípoš, The Register of Beneficial Ownership in Slovakia: Revolutionary transparency, questionable implementation, unsure benefits. Transparency International Slovakia, http://bit.ly/2B73dGG
[51] In particular, 30,409 public sector partners were registered on 24 April 2020.
[52] Labant, Juraj and Gabriel Šípoš, The Register of Beneficial Ownership in Slovakia: Revolutionary transparency, questionable implementation, unsure benefits. Transparency International Slovakia, http://bit.ly/2B73dGG
[53] Open Government Partnership, Beneficial Ownership Leadership Group, https://bit.ly/3cPGzUC
[54] Beneficial Ownership Leadership Group, Declaration of national commitment to meet the Beneficial Ownership Transparency Disclosure Principles, https://www.openownership.org/uploads/oo-disclosure-principles.pdf
[55] Official Journal of the European Union, Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018 amending Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, and amending Directives 2009/138/EC and 2013/36/EU, https://bit.ly/2xbvGgC
[56] European Commission, February infringements package: key decisions, https://bit.ly/3bOCoIc
[57] In February, the European Commission sent the letter of formal notice to the Slovak government  “for not having notified any implementation measures for the 5th Anti-Money Laundering Directive. In line with the EU law, member states have two months to provide a detailed response. If the Commission concludes that the country is failing to abide by the EU law, it may send a reasoned opinion (a formal request to comply with the EU law). This two-month period for the Slovak government to respond passed during the change in government and the COVID-19 pandemic.
[58] Government Office, Government resolution no. 496/2018 (10 October 2018), https://rokovania.gov.sk/RVL/Resolution/17313/ (in Slovak).
[59] Government Office, Government resolution no. 207/2019 (16 May 2019), https://rokovania.gov.sk/RVL/Resolution/17689/1 (in Slovak).
[60] Slov-lex (Legal and information portal), Ministry of Justice, Akčný plán boja proti legalizácii príjmov z trestnej činnosti a financovaniu terorizmu na obdobie rokov 2019-2022, (Action plan to combat the use of the financial system for money laundering and terrorist financing for the period 2019-2022), https://bit.ly/2YqKXFg (in Slovak).
[61] Official Journal of the European Union, Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018 amending Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, and amending Directives 2009/138/EC and 2013/36/EU, https://bit.ly/2xbvGgC
[62] The Register of legal entities, businesses, and public authorities, https://rpo.statistics.sk/rpo/#search (in Slovak).
[63] Statistical Office, Economic entities in Slovakia, https://bit.ly/36KNb4A (in Slovak).  
[64] The terms of use, https://rpo.statistics.sk/rpo/#login (in Slovak).
[65] Poracký, Marek (2017), Váhostav vyhral čudnú zákazku, rozhodoval o nej aj Širokého spoločník (Váhostav won a strange contract, Široký’s partner was one of the evaluators), sme.sk, https://bit.ly/2W9tsXF and Marek Nemec (2018), Váhostav ide na Hrad. Zinkasuje 16 miliónov (Váhostav goes to the Castle. It will collect EUR 16 million), hnonline.sk, https://bit.ly/2S5L8SD (in Slovak).
[66] Váhostav - SK, a.s. in the register of public sector partners, https://rpvs.gov.sk/rpvs/Partner/Partner/Detail/9678 and https://rpvs.gov.sk/rpvs/Partner/Partner/Detail/5539 (in Slovak) and The Slovak Spectator, Tycoon Široký is the real owner of Váhostav, https://bit.ly/2xV1NkP   
[67] The Slovak Spectator, Tycoon Široký is the real owner of Váhostav, https://bit.ly/2xV1NkP 
[68] Transparency International Czech Republic, Andrej Babiš is our beneficial owner, says Agrofert, https://bit.ly/2yzuns5
[69] Agrofert, a.s. in the Register of public sector partners, https://rpvs.gov.sk/rpvs/Partner/Partner/Detail/7859 (in Slovak).
[70] Jennifer Rankin (2018), Brussels urged to investigate Czech PM over business empire, The Guardian, https://bit.ly/3bEAius
[71] Ibid.
[72] Legislative Observatory of the European Parliament, 2018/2975(RSP) Resolution on conflicts of interest and the protection of the EU budget in the Czech Republic, https://bit.ly/3eYs1ns
[73] Ibid.

IRM End of Term Status Summary

4. Ensure full disclosure of beneficial ownership data

No evidence available

There is no clear evidence of progress on this commitment, which sought to apply and implement international beneficial ownership standards [34] to the data held in the Register of Legal Entities, Businesses, and Public Authorities. [35] It also sought to ensure data interconnectedness from this register with the Register of Public Sector Partners (the main beneficial ownership register). [36]

While the EU Directive has been transposed, [37] there is no evidence of implementing beneficial ownership standards. The data published in the Register of Public Sector Partners [38] does not fully follow the standards. As can been seen from the register, while the beneficial ownership data is available as open API, [39] it is unclear if other standards are upheld (e.g., if protocols for identifying and investigating red flags in the data were developed and involve collaboration with law enforcement authorities). [40] In addition, the Register of Legal Entities, Businesses, and Public Authorities does not publish publicly available beneficial ownership data. A representative of the Plenipotentiary stated that they have no information from the ministries on how the commitment is being implemented. [41] The Ministry of Justice, [42] which is formally responsible for this task, did not answer requests for information.

A CSO representative stated that interconnectedness of the two registers would improve the work of investigative journalists and activists. [43] She also stressed its importance for public authority contracting, as it would enable faster verification that companies are eligible for public contracts.

[34] Beneficial Ownership Leadership Group, Declaration of national commitment to meet the Beneficial Ownership Transparency Disclosure Principles [draft] (Open Ownership, 2020) https://www.openownership.org/uploads/oo-disclosure-principles.pdf.
[37] Financial Stability, Financial Services and Capital Markets Union, “Anti-money laundering directive V (AMLD V) - transposition status” (European Commission, 3 Nov. 2021) https://bit.ly/3iVEYli.
[39] Ministry of Justice, “Open data” (accessed Jan. 2022), https://bit.ly/30FpZWV.
[40] Beneficial Ownership Leadership Group, Declaration of national commitment.
[41] Lacika, interview. 
[42] IRM researcher, emails to the Ministry of Justice, 22 Oct. 2021 and 10 Nov. 2021.
[43] Xénia Makarová (Zastavme korupciu Foundation) email to IRM researcher, 4 Nov. 2021.

Commitments

Open Government Partnership