The Extractive Industries Transparency Initiative (EITI) reports that anonymous ownership of companies can be used to facilitate corruption across many sectors, including the extractive industries.

Those in developing countries are hardest hit, with Africa losing about £88.6-billion in illicit capital flight every year, according to the United Nations.

At a time when the continent faces costs of more than $200-billion to deal with the Covid-19 crisis, citizens and governments can ill afford to see such wealth sent abroad, the EITI states.

The EITI has partnered with beneficial ownership promotion organisation Open Ownership to implement Opening Extractives – a $7-million programme supported by the BHP Foundation – to address this problem by providing sustained support to over a dozen countries seeking to bring data on company ownership into the public domain.

The five-year programme will build on progress made by governments, companies, civil society and other stakeholders to establish the legal reforms and technical systems required to make ownership data public and promote its use. Evidence and insights from the programme will be shared globally to scale impact, says the EITI.

“Billions of dollars should be going into infrastructure and investment to make life better for many millions of people, rather than into the pockets of corrupt officials or businessmen. Managed responsibly, the extractive sector can be a source of wealth. Making the ownership of companies transparent and promoting the use of beneficial ownership data can help make this a reality,” comments EITI chairperson and former New Zealand Prime Minister Helen Clark.

More than 100 stakeholders will join a virtual “Implementers’ Forum” on September 8, to mark the inception of Opening Extractives.

To date, seven resource-rich countries across three continents have agreed to take part in the programme. These countries – Ghana, Indonesia, Mexico, Mongolia, Nigeria, the Philippines and Zambia – will be represented at the forum.

In parallel, large companies in the extractives sector, including BHP, Rio Tinto, Anglo American, Newmont, Glencore and Repsol have signed a commitment to support ownership transparency, disclose information on the beneficial owners of companies and subsidiaries, and assess data on company ownership as they undertake due diligence on partners and suppliers.

These companies, alongside representatives from accounting firms, are meeting this week to assess how the industry can lead the way in disclosing beneficial ownership in open data format.

Given the necessity of minerals for the energy transition, transparency will be essential to ensure that revenues from the sale of minerals to power the transition are not also fuelling corrupt practices, states the EITI.

“Concealment of company ownership is a root cause of corruption, which can deny the rights of citizens to benefit from their country’s natural resource wealth.

“By raising the bar for responsible investment, Opening Extractives will improve the quality of life of millions of people in resource-rich countries. But to be successful it requires governments, industry and civil society to work together – which is why this initiative is so essential in driving momentum on this important agenda,” adds BHP Foundation president and executive officer James Ensor.