Official company data is difficult to access as data in many EU countries, most notably Spain, Italy and Germany. Our recent report on access to company data in the EU, ‘EU Company Data: State of the Union 2020’, identified 15 areas where the lack of company register data as open data frustrates, impedes or otherwise has a negative impact on EU policy.
Our last post showed 5 crucial ways that a lack of access to official company data undermines public policy, disadvantages business and widens inequalities.
But that’s not all: here are 5 further ways Europe’s citizens and businesses suffer from lack of access to this critical data.
- Corruption and the rule of law
A fundamental tenet of the EU is the rule of law. Yet this is being threatened through a number of vectors — inequality in tax, particularly around corporations, unequal application of the law, lobbying and the revolving door, and of course corruption. This was highlighted by a Eurobarometer survey last year, with 89% of all respondents saying that action on corruption needs improvement in their country. As the World Bank Puppet Masters report illustrated, most large-scale corruption uses companies as the vehicle for the crime. The importance of company register data in this area — and the lack of access to it — was highlighted by a report by the Organised Crime and Corruption Reporting Project and Access Info Europe. It is interesting to note that many of the worst scoring countries in this report also scored badly in the Eurobarometer survey.
- Financial crime
Financial crime is a serious problem in Europe, highlighted by the Danske Bank scandal, in which an estimated €200 billion was laundered through the Estonian branch of Danske Bank. A failure of Danske Bank to join the dots between entities in different European jurisdictions is central to this whole scandal; similarly it is by using official company register data, investigators have been able to follow the money, and show how those dots could and should have been connected.
- Lobbying & declarations of financial interests
Lobbying in the EU is big business, and the past 10 years have seen many improvements in transparency, at least at the EU level. However, from a practical perspective, even something like the Transparency Register, which is relatively well structured and available as open data (neither of these conditions apply to national registers), is essentially a siloed disconnected dataset. Want to know more about the company concerned from its incorporation documents? This is generally not possible, as there is no identifier for the company. It is not even a requirement to list its legal name or to say where it is incorporated. There are similar problems for elected representatives’ disclosures of interests in companies, whether as consultants or shareholders, as these are not explicitly linked to the companies concerned. Nor can civil society solve this, for example by matching to potential companies, as they don’t have access to the underlying dataset of EU companies.
- Disaster response, as highlighted by the Covid-19 pandemic
Any disaster, from environmental to health to economic is going to significantly affect companies, and require their help to tackle it. While this may seem fairly straightforward on the surface, contacting them using tax or procurement records, in practice this is undermined by siloed datasets, unlinked to official legal entity data, particularly for those companies incorporated or controlled outside the territory. More than this, we are seeing an unprecedented transfer of cash from member states to companies, as a pragmatic way to keep the economy running. Yet while employees and economies are benefiting from this, so are those owning and running companies. It will be important that there is seen to be equity in who subsequently pays for the crisis recovery, otherwise we will see populism once again step in to fill this inequity.
- EU company law
There are a significant number of EU directives that specifically target information collected on companies for a statutory purpose. However, few consider the mechanisms for the reuse of that data, at least not from the perspective of our increasingly automated, data-driven world. Instead they assume that information today is only needed on a record-by-record basis, rather than the structured data that powers insight, innovation and applications today. The result is an increasing asymmetry between those creating and running companies, and those seeking to understand them, whether they be journalists, civil society, investors, partners or regulators. This has serious problems relating to the rule of law, allowing easy use of companies by organised crime, money launderers, and fraudsters, who use the cover of opacity to act with a high degree of impunity. New regulations brought in last year mean that it will be easier than ever to automatically create companies by computer program, leading to so-called Firefly companies — those in existence for a very short window — just enough for them to execute on their purpose.
We’ll look at some of the practical factors that make this situation possible, as well as the benefits of open company data, in future posts.
Want to learn more? Read the full report:
‘EU Company Data: State of the Union 2020’
Interested in the US perspective? Read our recent report:
‘US Company Data: State of the Nation 2020’