The reputation of 'business' has taken a mauling recently; think of Fred Goodwin, horsemeat or GlaxoSmithKline. But most business people I know are proud of their role in creating jobs, contributing to government revenues and powering growth.
Businesses work within the frameworks set by people like myself - politicians - and it is important that we make sure those frameworks support rather than hinder companies in their efforts to avoid harm. The Government is currently consulting on whether to make a public register of those who actually own and benefit from companies rather than nominee directors. This would bring much greater transparency to the private sector, an important foundation for any positive business environment.
NGOs have been vocal about the advantages such a register would create for developing nations - helping to stem the illicit flow of capital estimated to outweigh aid spending by a ratio of nearly 10 to one. But we should also remember that many of the best reasons to create a public register relate to advantages for companies here at home.
Small businesses lose huge amounts of money each year when enterprises with whom they work disappear without a trace. A register, searchable by anyone, anytime would help SMEs recover their assets and know exactly with whom they are dealing when entering a business relationship.
Indeed, knowing your partners is important for companies of any size. When firms contract with complex webs of corporate entities they open themselves to serious risks. US oil firm Cobalt International Energy partnered with two local companies in Angola whose ultimate owner was not known. After allegations arose of a connection to senior Angolan government officials Cobalt was investigated by the US under their Foreign Corruption Practices Act.
The rule would also help financial firms comply with existing anti-money laundering regulations. Banks could spend much less time and energy undertaking their mandated due diligence checks on potential customers if they had access to a searchable database listing all the companies from which an individual benefits. No doubt this is why the European Banking Federation and the International Banking Federation - representing over 18,000 members - supports creating these registers and making them public.
Why public? It is the only way to make such a register effective. One that can only be viewed by officials could easily be undermined by criminals simply lying about their business interests. When the police do not have sufficient resources to check all such information, a 'many eyes' approach to accountability utilising the resources of investigative journalists, NGOs, academics and others is much more valuable.
Katja Hall, Chief Policy Director of the CBI, has rightly said that requests for regulation must be proportionate to the outcomes they seek to gain. This move certainly will be. Declaring your beneficial owners will not be difficult for the 99% of businesses for whom it is the same as their shareholders. Of the remaining 1%, many are larger publicly-traded companies already required to list their beneficial owners by a number of stock exchanges.
Ultimately, businesses want a positive, transparent environment for their work. When forced to function in opacity, decent business people share space with those for whom this shadiness is a requirement not a backdrop: organised criminals, terrorist financers and those who steal from their drudgingly poor nations. Making public registers of beneficial owners is an effective way to combat all these problems. I hope the business world will get behind it.
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