Publish Beneficial Ownership Data (SK0129)

• Publish Beneficial Ownership Data (August 1, 2020)

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

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/.

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 5^th 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 5^th 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.

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.