Beneficial ownership data in procurement

  • Publication date: 11 March 2021
  • Authors: Tymon Kiepe, Eva Okunbor

Use cases of beneficial ownership transparency in public procurement

BOT can have both direct and indirect benefits for procurement. [13] It can improve procurement directly by using BO data to enhance the information recorded by procurement systems about people and organisations, in order to help make decisions and conduct analysis. Indirectly, BOT strengthens procurement on a systemic level.

The BO data use cases for improving procurement directly can broadly be divided into three categories:

  1. preventing corruption and fraud by detecting actors (both buyers and sellers) trying to subvert existing legislation and the contracting procedure for personal gain;
  2. improving service delivery through increased competition and enhanced due diligence;
  3. verifying eligibility of suppliers for preferential procurement to meet horizontal policy objectives.

In all cases, BO data can be used to enhance information and help decision making to realise procurement policy goals. BO information, when combined with other datasets such as contracting and spending data, can also be used to analyse to what extent the implementation of a procurement policy has been successful.

Preventing corruption and fraud

“Corruption, the bane of public procurement” [14]

Huge sums of money are spent in public procurement, making it “the single biggest component of modern government.” [15] Due to the amount of money and multitude of stakeholders involved, the complexity of the process, and the close interaction between the private sector and public officials, [16] procurement is the largest corruption risk for governments. [17] Specifically, significant corruption risks arise from conflicts of interest between those who award contracts and those who receive them. [18]

Although there is usually a focus on corruption at the awarding and contracting stages of the procurement and contracting process – where it is most common – corruption and fraud can occur at each stage. [19] There are no set definitions of corruption and fraud in procurement, and there can be some overlap in how they are defined in law.

For the purposes of this briefing, we define corruption in procurement as involving the abuse of power of office to steer a contract to a specific bidder without detection. This can be done in numerous ways. At early stages in the contracting process, bids can be tailored to benefit specific suppliers, in some cases to the extent that procurement does not go to tender and is directly awarded. A tender period may be shortened to make it difficult for a range of legitimate bids to be submitted, or inside information may be shared with particular bidders. [20]

At the award and contracting phase, corruption can involve awarding the contract to a company that, according to the set objective criteria, should not win. It can also involve inflating contract values or including favourable contractual terms, such as removing repercussions for the failure to deliver. As corruption involves the abuse of power of those involved in the procurement process, there is always a link and a conflict of interest between those involved and the companies that win. This can involve the payment of bribes in exchange for contracts as well as links between those assigning contracts and the contract awardees (for instance, a right to profits of the winning company). Public procurement is the most common purpose of all bribes. [21]

Fraud

Fraud in procurement can be due to false representation, failure to disclose information, and abuse of position. [22] For the purposes of this briefing, procurement fraud is defined as efforts to subvert the procurement process without the knowledge and complicity of officials. This can be done by multiple bidders co-conspiring to rig a bid as a cartel. Most procurement legislation forbids collusion and canvassing in order to ensure fair competition. Companies can rig bids by, for instance, suppressing bids (thereby decreasing competition and likely inflating price), or by cover bidding (submitting fake bids in order to steer the selection towards a specific bid). Procurement systems should raise red flags when fraud is suspected, but fraud can be very difficult, as well as time and resource consuming, to detect. Red flags are not proof of wrongdoing, but suggest an investigation of the case is necessary. Companies can also fail to disclose information that allows procurement agencies to conduct proper due diligence, or misrepresent themselves to match the profile of the seller that a buyer is looking for (see Box 2).

All forms of corruption and fraud in procurement have negative effects on competition, value-for-money, and the delivery of services. Not only is this a waste of taxpayer money, but it can also mean collapsing bridges, fake medicines, or protective equipment for medical personnel that is not fit for purpose, undermining trust in government and democracy (see Box 1). [23]

Box 1: Red flags, corruption, and fraud in COVID-19 procurement

In the global rush for medical and personal protective equipment during the COVID-19 pandemic, many governments enacted emergency procurement legislation that prioritised speed of procurement at the expense of traditional safeguards. In the interest of speed, many countries replaced more time consuming tender processes – aimed at securing fair competition and price effectiveness – with direct awards. [24] Governments that dispensed with safeguards against fraud and corruption in their emergency procurement legislation sooner or later saw cases of fraud, corruption, and conflicts of interest. Dozens of procurement cases related to faulty or not-fit-for-purpose protective equipment have emerged during the COVID-19 crisis, many of which have been linked to previously unidentified conflicts of interest with politically exposed persons (PEPs). It is widely acknowledged that more could have been done to prevent fraud and corruption (for instance, by tracking the BO of contracted companies in an effort to “keep the receipts” [25] and that emergency procurement can be both fast and open). [26] At the time of writing, 40 countries accessing IMF COVID-19 related emergency funding mechanisms have made commitments to collecting and publishing BO information relating to COVID-19 procurement in order to “keep the receipts” and audit government expenditure. [27]

In the UK, research by the New York Times revealed that of USD22 billion spent in 1,200 published contracts, USD5 billion went to politically connected companies. The contracts analysed included a company receiving its first of nearly USD274 million in protective equipment contracts within three weeks of being set up, and a number of companies that delivered materials that were deemed unusable by the National Health Service. [28] A government audit report found many instances where departments “failed to document the justification for using emergency procurement, why particular suppliers were chosen, or how any potential conflicts of interest had been identified and managed.” [29] Due to the lack of transparency, it is unclear whether corruption has occurred, but it is clear that with so many companies involved in procurement with politically connected ownership, there should have been red flags raised to prompt closer inspection and documentation of potential issues.

In the Netherlands, the public prosecutor charged two men with defrauding the German government in a facemask contract. The pair had set up a website with false information about facemask production and received a deposit of EUR880,000 of a EUR4.4 million contract for 11 million facemasks, but delivered none. [30] The supposed supplier, when visited by the buyers, knew nothing about the contract. [31] The fact that the company’s ownership was different from that of the bank account should have raised red flags.

Using beneficial ownership data to prevent fraud and corruption in procurement

BO data can help prevent corruption and fraud in two key ways:

  1. detecting undisclosed or hidden conflicts of interest;
  2. raising red flags for potential signs of collusion and bid rigging.
Conflicts of interest

BO information can help check for conflicts of interests that may escape more superficial checks by identifying links between those holding positions of power, such as PEPs or procurement authorities, and the (hidden) ownership and control of companies. When a red flag is raised, signalling a bid may have a potential conflict of interest, additional checks can be built in to ensure contracts are awarded fairly. If the BO data is structured and machine-readable, these checks can be automated, saving procurement officers time and making procurement more efficient. For instance, it can be combined with PEP data to identify their involvement in supplier companies (see Box 1). [32]

This data can be used by governments to help make decisions on contract awards, and may also be published and used by the general public to hold the government to account (see Box 1). The publication of BO information of suppliers also serves as a deterrent. For its Social Fund and its Regional Development Fund, the EU uses ARACHNE, an “integrated IT tool for data mining and data enrichment” [33] for due diligence, which uses a commercial BO dataset but is not published for public oversight. Both Ukraine (see Box 6) and Slovakia (see Box 7) collect BO data themselves in central registers. Slovakia collects BO data specifically for procurement and publishes it for public oversight. Ukraine has implemented BOT across all sectors of the economy and collects BO information on all legal entities, and uses this data to check for conflicts of interest in procurement.

Collusion and bid rigging

BO data can also help detect certain forms of bid rigging. The submission of bids from different companies that share ownership is often not illegal. In the interest of fairness and non-discrimination, procurement officers are very unlikely to be able to make contract award decisions based on ownership – and may be legally prevented from doing so. In many cases, they do not collect or access ownership data at all. However, what is illegal under antitrust legislation in most jurisdictions, though certainly not all, is if companies are operating as a cartel, [34] artificially inflating prices, price gouging, [35] or colluding and canvassing with other companies. This can sometimes be difficult to prove, so a procurement system should be able to identify when multiple bids share (beneficial) ownership, and raise red flags for closer inspection of these bids.

The US Government Accountability Office’s (GAO) review of 32 cases of defence procurement identified cases of “price inflation through multiple companies owned by the same entity to falsely create the appearance of competition” [36] (see Box 4.1). If fake bids are submitted through firms with a common owner, this is much harder to detect without BO data. [37]

Improving service delivery through competition

Procurement frameworks aim to facilitate the purchase of the most appropriate services for taxpayers, aiming to achieve the highest quality for the lowest price through fair competition. This section outlines how BO data can help improve the delivery of services by governments fostering competition and leveling the playing field by:

  1. reducing and managing operational and financial risks through enhanced due diligence;
  2. diversifying suppliers and widening business participation;
  3. fostering competition by detecting shared ownership.

Reducing and managing risk

Knowing the BO of companies involved in procurement and their broader ownership structure collected as part of BO disclosures, helps manage operational risks (for instance, by checking for financial liabilities of other entities within an ownership structure, which could be used to hide debt or losses). [38]

This is illustrated by the case of Carillion, a company that delivered services for hospitals, schools, prisons, and transport and had around 450 contracts with the UK government. [39] In January 2018, Carillion went into liquidation. The true impact on the delivery of government services of Carillion’s insolvency was unclear due to the number of entities in its complex ownership structure who had been awarded contracts. This made it difficult to assess the full implications of the insolvency. [C] Therefore, arguably, a complete risk assessment could not have been possible. In June 2017, Carillion owed GBP2 billion [40] to its subcontractors and suppliers, leaving many small and medium-sized enterprises (SMEs) unpaid with outstanding debts. One mentioned that “the government continued to give them billion-pound contract after billion-pound contract and that said to me, as a small supplier, that the government had done their due diligence. We were following the government lead.”[41]

BO data and better visibility of ownership structures helps government buyers conduct better risk analysis for procurement decisions, and therefore deliver better services to citizens. In the case of Carillion, knowing how many companies in its ownership structure were contracting with the government would have helped to accurately assess the true risk posed by insolvency, and potentially help mitigate it.

Diversifying suppliers

Better managing risk can help to increase the pool of potential suppliers, thereby fostering competition. Because government buyers try to mitigate and manage risk, much like private companies do, many governments have tended to favour larger suppliers over smaller ones, with the assumption that this bears less risk. [42] This can be seen, for example, in IT procurement. Due to the risks involved in early IT projects, this assumption led to the saying, “nobody was ever fired for choosing IBM”, as the tech-giant’s size provided an extra level of assurances of delivery, albeit not necessarily within budget. This has likely contributed to the common crowding out of smaller suppliers. SMEs are often significantly cheaper and offer substantial savings and value-for-money for taxpayers. A 2013 UK government report showed a 90% reduction in cost by awarding a hosting and server contract to a smaller provider. The average savings from switching from incumbent and large suppliers to smaller suppliers were in the region of 30% to 90%. [43] Being able to better understand and manage risk allows governments to be more confident in doing business with newer suppliers. By increasing the range of potential suppliers, governments stimulate competition.

Opening up procurement to foreign suppliers can also help increase competition for government procurement contracts and therefore have a positive effect on the cost of goods and services domestically. [44] Looking at legal ownership alone cannot give an accurate picture of procurement from foreign suppliers, as these tend to register domestically. The EU uses a commercial BO dataset to be able to analyse the impact of cross-border penetration in public procurement. [45] By accurately understanding and analysing trade based on data, governments can make better evidence-based policies to promote trade and foster competition in procurement.

Detecting shared ownership

Finally, using BO data in procurement can help detect shared ownership between multiple companies in a bid. This is not problematic per se, and can be common, especially in emerging markets, but there are some cases where this has been associated with anticompetitive effects. [46] It is necessary to understand both ownership and control in order to assess potential (anti)competitive effects. [47] Any procurement system should be able to detect and monitor shared ownership and control for possible closer inspection. In order to truly assess both common ownership and control, it is necessary to analyse the BO of companies.

Box 2: The Stork’s Nest

In 2006, a Czech company whose shares were owned by a limited company subsidiary of Agrofert, the multinational conglomerate owned by businessman Andrej Babiš, started renovations on a dilapidated farm outside Prague. This company subsequently changed from being a limited company to a joint stock company with bearer shares. [D] After it changed its name in February 2008, all shareholders became anonymous. [48]

In August 2008, the farm received a EUR1.67 million EU subsidy intended for small businesses, [49] and in 2010, the farm opened as the Stork’s Nest hotel and conference centre. That same year, Czech media started making connections between the farm and Agrofert, making the point that at the time of receiving its EU subsidy it was considered a small business. This led to public outcry and mass demonstrations. In response, Babiš denied any connection to the business. In 2013, Agrofert took over the Stork’s Nest, which it said was “loss-making and overburdened with debt”.

In 2018, a leaked EU report stated that, it appeared, the Agrofert conglomerate staged a fake transfer of ownership of the Stork’s Nest to anonymous shareholders in December 2007 in order to feign eligibility for a grant intended for SMEs, which it would not have been eligible for as part of a bigger business. Babiš and Agrofert continue to deny all involvement with the Stork’s Nest at the time it received the subsidies, and Czech prosecutors dropped the lawsuit in 2019. This case illustrates how obfuscating a company’s ownership could potentially be used to disguise its size, and how BO data can be used to detect potentially hidden links between entities and their parent companies. [E]

Verifying eligibility in strategic and preferential public procurement

Preferential procurement is any procurement that gives preference to certain suppliers, thereby deviating from the traditional principles of public procurement of equality, non-discrimination, and competition. [50] Many governments in both developing and developed economies have introduced preferential procurement policies and programmes to achieve certain horiztonal policy objectives. This is also called strategic procurement.

As governments are the largest single buyer of goods and services in most economies, it is considered “a powerful force for change” [51] to realise other development and sustainability goals. Preferential procurement policies are numerous and diverse in their application (see Box 3). These include environmental goals (green procurement) and stimulating innovation, trade, and economic integration. [52] A key aim of strategic procurement is related to GESI. This includes preferential procurement to redistribute opportunities, choices, and resources. Often, this is done to improve the conditions of disadvantaged individuals and groups. [53] Inclusivity in procurement supports job creation. Governments can also procure with a national focus, for instance, to develop a sector or in defence procurement where domestic and trusted suppliers are often preferred for national security reasons.

Box 3: Strategic and preferential procurement examples in practice

  • Green procurement: The EU’s “Buying Green” procurement policy seeks to procure goods, services, and works with a reduced environmental impact throughout their life-cycle. [54]
  • Innovation: Mexico set up a “Public Challenges” fund which invited proposals for innovative digital solutions to address specific societal challenges. [55]
  • Stimulate economic growth by supporting SMEs: The EU’s procurement policy breaks tenders down into smaller lots, more manageable for smaller companies. [56] The World Bank’s 2017 Benchmarking Public Procurement report, which surveys 180 economies, shows that 47% of countries indicate they provide SME-specific public procurement incentives. [57]
  • GESI: In Chile, the government procures from “female enterprises”, which are companies where women own the majority of company shares and the CEO must be a woman. [58] In South Africa, the government aims to improve opportunities for Black people and women through its Broad-Based Black Economic Empowerment Commission (B-BBEE Commission) policy.

Certification

For public procurement to realise its transformative potential of addressing additional policy aims, accurate and reliable verification of supplier eligibility should form the backbone of a procurement regime. [59] Certification is the means by which governments are able to establish the eligibility of an individual or company in applying for preferential procurement contracts. Reliable information is critical for doing so.

Box 4.1: Certification challenges in US defence procurement

The US has relied on self-certification in defence procurement but, in doing so, the country has seen both financial and nonfinancial fraud. The Department Of Defense’s (DOD) vendor vetting programme must carry out investigations into contractor ownership, including BO, without access to a central BO register. In an audit, the GAO concluded that the lack of access to accurate information exposed the DOD to national security risks from contractors with opaque ownership structures, and saw individuals circumvent debarment and eligibility criteria for specific contracts.

Of the 32 cases reviewed, four cases involved individuals creating domestic shell companies for foreign manufacturers to bid on contracts specifically designated for domestic companies. One of the companies ultimately supplied the DOD with defective and non-conforming parts that led to the grounding of at least 47 aircrafts. Three of the companies shared sensitive military technical drawings and blueprints to foreign countries. In 20 of the 32 cases, GAO identified ineligible contractors using self-certification to fraudulently win bids set aside for companies with majority ownership by women, US citizens who are economically or socially disadvantaged, or service-disabled veteran-owned businesses. In these cases they either fraudulently used the names of eligible individuals or the figureheads did not actually hold the level of BO or control of the company required. [60]

In another case, the Pentagon discovered that the company it had procured security cameras from had circumvented domestic production requirements [61] by disguising its illegal importation of Chinese surveillance equipment through the use of shell corporations with anonymous ownership records. [62]

The main challenge in certification is the same challenge faced by central registers of BO: to establish and verify whether statements submitted by companies are accurate and reliable. Certification is typically done through self-certification, certification via private businesses, or registration via centralised registers based on demographic data.

Where a centralised register as a reference database is lacking, certification regimes can face issues with accuracy and reliability (see Box 4).

Box 4.2: Preferential procurement in South Africa

In South Africa, the B-BBEE Commission aims to increase involvement from Black and women-owned businesses, amongst other criteria. Scorecards are provided by private entities, which give a score according to the five B-BBEE criteria, two of which relate directly to percentage ownership and voting rights by Black people and women. Higher scores result in greater likelihood of winning tenders.

The most significant risk that private verification agencies face in verifying the ownership score is the overstatement of beneficial Black ownership and gaining an accurate image of complex ownership structures. [63] The B-BBEE Commission reported that less than 20% of transactions in 2018-2019 included complete certification documentation when first submitted. Follow-ups concerning incomplete information were often conducted without any success, having to draw on various documents with varying formats that lacked specific data requirements. [64] Despite hefty sanctions, the current system is highly susceptible to fraud. [65]

Ensuring eligibility with beneficial ownership data

Centralised and verified BO registers are a potentially valuable reference dataset that can be used to help verify bidder eligibility at the award stage of procurement regimes that define eligibility based on ownership or control. BO registers can help with simplifying and automating the verification of eligibility and auditing preferential procurement qualification procedures. [66] In South Africa, for instance, reliable BO information would be useful in verifying B-BBEE certification, which predominantly relies on affidavits. It would help create a more complete picture of ownership to more accurately achieve policy objectives. [67]

Box 4.3: Procuring from indigenous-owned businesses in Australia

Australia aims for 3% of contracts to be delivered by businesses with more than 50% indigenous ownership. [68] Supply Nation is a not-for-profit organisation that holds a central database of majority indigenous-owned businesses. Whilst Supply Nation is a main source for this information, it is not the only one, nor are indigenous-owned businesses mandated to receive certification from them. If an enterprise states that it is an indigenous enterprise and is not listed with Supply Nation, procurement officers must take steps to ensure that the enterprise is 50% or more indigenous-owned. [69] The Australian Securities and Investments Commission (ASIC) has been criticised for not collecting and publishing businesses’ beneficial owners alongside directorship information. If they would do so, this would make it easier to verify the percentage ownership of indigenous-owned businesses and help the government to analyse how they are upholding their social procurement commitments. [70]

Collecting information in central registers has the advantage that information is checked and updated more regularly in the business lifecycle, as discussed later in this briefing. This could make verifying eligible bidders more efficient and provide better data for analysis, as governments could do so centrally in a standardised data format, making it cheaper to use and analyse. If the data is available in structured, machine-readable format, these processes can be automated to reduce costs.

Current BOT regimes do not typically collect demographic information for individuals, besides age (via date of birth) and location. It is possible to collect additional data, but countries would need to assess whether it would be appropriate to collect certain sensitive demographic data – for instance, race and ethnicity – as part of a broader BOT regime. Additional demographic information could be collected during the procurement process, and combined with BO data at a later stage.

Improving procurement systemically

Whilst the previous sections have focused on direct benefits of BO data to procurement, it is important to recognise the wider and systemic indirect benefits for the general environment from which governments procure. Broadly, BOT improves procurement in the following areas.

  1. Increase competitiveness between businesses by leveling the playing field – reducing corruption creates an environment where all companies play by the same rules. [71]
  2. Reduce risk and the cost of due diligence. Knowing who companies are doing business with and increasing supply chain visibility helps companies manage financial exposure and operational risks. [72] To illustrate, 84% of chief supply chain officers said the lack of visibility is the largest challenge in mitigating disruptions. [73] This benefits SMEs, as the costs of due diligence are relatively higher for smaller companies. [74]
  3. Foster a business culture of transparency and trust, between businesses as well as between business and society, and business and government. This, in turn, is good for investment. [75] BOT means that all actors have more confidence about who they are really entering into business with, increasing accountability of and trust in business and government, and closing loopholes for bad actors.

The systemic benefits of BO data for procurement were highlighted in a 2019 Adam Smith study, which stated that “registers may facilitate greater prosperity by contributing to a more open investment regime and by ensuring value-for-money in public procurement. This includes bolstering customer due diligence in the private sector, establishing a level playing field and fostering open competition”. [76]

The full range of systemic benefits of BOT in procurement can only be realised with centralised open registers. The review of the implementation of the UK BO register shows that of the companies that used the register for potential customer checks, due diligence checks, and looking up information on competitors, 64% said the information was useful or very useful. [77] Recent surveys show the use of public registers for due diligence is on the rise. [78]

Footnotes

[13] Jack Lord, “Connecting the dots between beneficial ownership and procurement data: improving processes and identifying risk”, Open Data Services, January 2020, https://medium.com/opendatacoop/connecting-the-dots-between-beneficial-ownership-and-procurement-data-improving-processes-and-2fd0df9d9653.

[14] “Preventing Corruption in Public Procurement”, OECD, 2016, 6, https://www.oecd.org/gov/ethics/Corruption-Public-Procurement-Brochure.pdf.

[15] Nick Davies, Oliver Chan, Aron Cheung, and Gavin Freeguard, “Government procurement: The scale and nature of contracting in the UK”, Institute for Government, December 2018, 35, https://www.instituteforgovernment.org.uk/sites/default/files/publications/IfG_government_procurement_web3.pdf.

[16] OECD, “Preventing Corruption in Public Procurement”.

[17] “OECD Foreign Bribery Report: An Analysis of the Crime of Bribery of Foreign Public Officials” OECD, (Paris: OECD Publishing, 2014), http://dx.doi.org/10.1787/9789264226616-en.

[18] “Report from the Commission to the Council and the European Parliament: EU Anti-Corruption Report”, European Commission, 3 February 2014, http://ec.europa.eu/dgs/home-affairs/e-library/documents/policies/organized-crime-and-human-trafficking/corruption/docs/acr_2014_en.pdf.

[19] “Procurement Corruption in the Public Sector and Associated Money Laundering in the ESAAMLG Region”, Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), (Dar es Salaam: ESAAMLG, 2019), https://esaamlg.org/reports/Report_procurement.pdf.

[20] “Fraud and Corruption Awareness Handbook : A Handbook for Civil Servants Involved in Public Procurement”, World Bank (Warsaw: World Bank, 2013), 7, https://openknowledge.worldbank.org/handle/10986/18153.

[21] OECD, “OECD Foreign Bribery Report: An Analysis of the Crime of Bribery of Foreign Public Officials”.

[22] “Review into the risks of fraud and corruption in local government procurement: A commitment from the UK Anti-Corruption Strategy 2017- 2022”, UK Ministry of Housing, Communities and Local Government, June 2020, https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/890748/Fraud_and_corruption_risks_in_local_government_procurement_FINAL.pdf.

[23] “Why corruption matters: understanding causes, effects and how to address them”, UK Department for International Development, January 2015, 50, https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/406346/corruption-evidence-paper-why-corruption-matters.pdf.

[24] “Tackling Coronavirus (COVID-19): Contributing to a Global Effort”, OECD, n.d., https://www.oecd.org/competition/COVID-19-competition-and-emergency-procurement.pdf.

[25] “Keeping the Receipts: Transparency, Accountability, and Legitimacy in Emergency Responses”, International Monetary Fund (IMF), 2020, https://www.imf.org/~/media/Files/Publications/covid19-special-notes/en-special-series-on-covid-19-keeping-the-receipts.ashx.

[26] “Emergency procurement for COVID-19: Buying fast, smart, and open”, Open Contracting Partnership (OCP), n.d., https://www.open-contracting.org/what-is-open-contracting/covid19/.

[27] Transparency International, “IMF COVID-19 Anti-Corruption Tracker”

[28] Jane Bradley, Selam Gebrekidan, and Allison McCann, “Waste, Negligence and Cronyism: Inside Britain’s Pandemic Spending”, New York Times, 17 December 2020, https://www.nytimes.com/interactive/2020/12/17/world/europe/britain-covid-contracts.html.

[29] “Investigation into government procurement during the COVID-19 pandemic”, National Audit Office, 26 November 2020, 11, https://www.nao.org.uk/wp-content/uploads/2020/11/Investigation-into-government-procurement-during-the-COVID-19-pandemic.pdf.

[30] “Prison sentences of up to 4 years have been demanded for fraud with face masks”, Openbaar Ministerie, 17 June 2020, https://www.om.nl/actueel/nieuws/2020/06/17/celstraffen-tot-4-jaar-geeist-voor-fraude-met-mondkapjes.

[31] “Fraud with 11 million face masks, suspects detained longer”, RTL Nieuws, 22 April 2020, https://www.rtlnieuws.nl/nieuws/nederland/artikel/5099281/oplichting-mondkapjes-fraude-nederlands-duo-duitse-overheid.

[32] “Joining the dots with PEPs: cross-matching BO and FD data to identify red flags”, Extractive Industries Transparency Initiative (EITI), 20 December 2019, https://imfilab.brightidea.com/D361.

[33] “ARACHNE risk scoring tool”, European Commission, 2020, https://ec.europa.eu/social/main.jsp?catId=325&intPageId=3587&langId=en.

[34] “Cartels”, European Commission, 15 March 2017, https://ec.europa.eu/competition/cartels/overview/index_en.html.

[35] See, for example: Cherese Thakur, “Beneficial ownership disclosure is indispensable in the fight against procurement ‘hyenas’”, Daily Maverick, 21 August 2020, https://www.dailymaverick.co.za/article/2020-08-21-beneficial-ownership-disclosure-is-indispensable-in-the-fight-against-procurement-hyenas/ and “Public Procurement Transparency & Integrity: Ensuring Transparency in Emergency Procurement: Recommendations”, RECORD: Reducing Corruption Risks with Data, 2020, https://www.access-info.org/wp-content/uploads/RECORD_Transparency-in-Emergency-Procurement.pdf.

[36] “Defense Procurement: Ongoing DOD Fraud Risk Assessment Efforts Should Include Contractor Ownership”, United States Government Accountability Office (GAO), November 2019, 2,https://www.gao.gov/assets/710/702890.pdf.

[37] The following tutorial shows how shareholder data from a public register was used to identify common ownership: Dagoberto José Herrera Murillo, “Part I: Graph databases for journalists”, Medium, 30 April 2019, https://medium.com/neo4j/graph-databases-for-journalists-5ac116fe0f54.

[38] “Why Beneficial Ownership Data Should Interest You”, Spend Network, 17 December 2020, https://spendnetwork.com/why-beneficial-ownership-data-should-interest-you/.

[39] “Carillion declares insolvency: information for employees, creditors and suppliers”, GOV.UK, 26 January 2018, https://www.gov.uk/government/news/carillion-declares-insolvency-information-for-employees-creditors-and-suppliers. These figures cover direct contracts, joint ventures, PFIs, and sub-contracts (source: PQ 122758, answered 18 January 2018).

[C] In January 2018, Companies House listed around 100 companies and partnerships with “Carillion” in their name. See: Federico Mor, Lorraine Conway, Djuna Thurley, and Lorna Booth, “The collapse of Carillion”, House of Commons Library, 14 March 2018, 30, https://researchbriefings.files.parliament.uk/documents/CBP-8206/CBP-8206.pdf.

[40] Ibid.

[41] “Carillion was left with just £29m before going bankrupt”, BBC, 17 January 2018, https://www.bbc.co.uk/news/business-42710795.

[42] Simon Wilcox, “The Public Procurement Scandal”, Business Matters, 31 July 2013, https://bmmagazine.co.uk/opinion/the-public-procurement-scandal/.

[43] Lord Young, “Report on Small Firms 2010 to 2015”, UK Department of Business Energy, Innovation and Skills, February 2015, https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/402897/Lord_Young_s_enterprise_report-web_version_final.pdf.

[44] “The role of government procurement in international trade”, OECD, n.d., https://www.oecd.org/trade/topics/government-procurement/.

[45] “Measurement of impact of cross-border penetration in public procurement” European Commission, (Brussels: European Commission, 2017), 11, https://op.europa.eu/en/publication-detail/-/publication/5c148423-39e2-11e7-a08e-01aa75ed71a1.

[46] José Azar, Martin C. Schmalz, and Isabel Tecu, “Anticompetitive Effects of Common Ownership”, Journal of Finance 73, no. 4 (10 May 2018), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2427345.

[47] Patrick Dennis, Kristopher Gerardi, and Carola Schenone, “Common Ownership Does Not Have Anti-Competitive Effects in the Airline Industry”, Social Science Research Network (SSRN), 26 June 2020, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3063465.

[D] Bearer shares are physical share documents where the person who holds the document is the legal shareholder to whom dividends are paid. As they are unregistered and their ownership can easily change, they lack effective regulation and control, and as a result can be used for illicit purposes. Due to their opacity, bearer shares have been banned in many countries.

[48] “Key Events in Babis’s Stork Nest (Capi Hnizdo) EU Subsidy Fraud Case”, Prague Business Journal, 31 January 2020, https://praguebusinessjournal.com/key-events-in-babiss-stork-nest-capi-hnizdo-eu-subsidy-fraud-case/.

[49] Jennifer Rankin, “EU antifraud office finds ‘irregularities’ in payments allegedly obtained by Czech PM”, Guardian, 5 January 2018, https://www.theguardian.com/world/2018/jan/05/eu-antifraud-office-finds-irregularities-in-payments-allegedly-obtained-by-czech-pm.

[E] For additional information on the Agrofert case and the impact BOT has had in Slovakia, please see: Tymon Kiepe, Louise Russell-Prywata, and Victor Ponsford, “Early impacts of public registers of beneficial ownership: Slovakia”, Open Ownership, September 2020, https://www.openownership.org/uploads/slovakia-impact-story.pdf.

[50] “Gender procurement”, European Institute for Gender Equality, n.d., https://eige.europa.eu/gender-mainstreaming/methods-tools/gender-procurement.

[51] Charlie Hart, “Public procurement ‘critical’ to reach development goals”, Supply Management, 22 January 2020, https://www.cips.org/supply-management/news/2020/january/public-procurement-critical-to-reach-development-goals/.

[52] OECD, “The role of government procurement in international trade”.

[53] “World Bank Group gender strategy (FY16-23): gender equality, poverty reduction and inclusive growth”, World Bank, 1 December 2015, https://documents.worldbank.org/en/publication/documents-reports/documentdetail/820851467992505410/world-bank-group-gender-strategyfy16-23-gender-equality-poverty-reduction-and-inclusive-growth.

[54] “Buying green! A handbook on green public procurement (3rd Edition)”European Commission and Local Governments for Sustainability (ICLEI), (Luxembourg: Publications Office of the European Union, 2016), https://ec.europa.eu/environment/gpp/pdf/Buying-Green-Handbook-3rd-Edition.pdf.

[55] “Public Procurement for Innovation: Good Practices and Strategies” OECD, (Paris: OECD Publishing, 2017), https://dx.doi.org/10.1787/9789264265820-en.

[56] “New EU public procurement rules: Less bureaucracy, higher efficiency”, European Commission, 19 November 2015, https://ec.europa.eu/growth/content/new-eu-public-procurement-rules-less-bureaucracy-higher-efficiency-0_en.

[57] “Benchmarking Public Procurement 2017: Assessing Public Procurement Regulatory Systems in 180 Economies” World Bank, (Washington DC: Bank for Reconstruction and Development/ World Bank, 2016), http://documents1.worldbank.org/curated/en/121001523554026106/Benchmarking-Public-Procurement-2017-Assessing-Public-Procurement-Regulatory-Systemsin-180-Economies.pdf.

[58] Trinidad Inostroza, “Una herramienta estratégica para la eficiencia del Estado”, ChileCompra, n.d., https://www.wto.org/english/tratop_e/womenandtrade_e/s02_01_trinidad_inostroza.pdf.

[59] Katrina Crocker, Felix Moser-Boehm, and Laura Rowe, “Trade and Gender in Public Procurement” (Kingston: TradeLab, 2018), 2, https://georgetown.app.box.com/s/sv40lfd29gft2eeaqbqghr0ctfc2u4ov.

[60] GAO, “Defense Procurement: Ongoing DOD Fraud Risk Assessment Efforts Should Include Contractor Ownership”.

[61] “Aventura et al Complaint”, Department of Justice, Eastern District of New York, n.d., https://www.justice.gov/usao-edny/press-release/file/1215951/download#page=8.

[62] Rachael Hanna, “Shell Corporations Facilitate Contracting Fraud at the Department of Defense”, Lawfare, 21 April 2020, https://www.lawfareblog.com/shell-corporations-facilitate-contracting-fraud-department-defense.

[63] “SASAE 3502: Assurance engagements on Broad-Based Black Economic Empowerment (B-BBEE) verification certificates”, Independent Regulatory Board for Auditors (IRBA), November 2012, https://www.irba.co.za/upload/SASAE%203502%20Assurance%20Engagements%20November%202012.pdf.

[64] “Major B-BBEE Transactions Analysis Report: 2018/2019”, B-BBEE Commission, March 2020, https://www.bbbeecommission.co.za/wp-content/uploads/2020/08/ALIGNED-FINAL-MAJOR-TRANSACTION-REPORT-23-MARCH-2020.pdf

[65] Simone Liedtke, “Fronting still a major issue in delivering on economic transformation, says commission”, Engineering News, 22 October 2020, https://www.engineeringnews.co.za/article/fronting-still-a-major-issue-in-delivering-on-economic-transformation-says-commission-2020-10-22/rep_id:4136.

[66] “How to empower women-led businesses and make public procurement more inclusive”, OCP and Value for Women, July 2020, https://www.open-contracting.org/wp-content/uploads/2020/07/OCP2020-Insights-WLB-procurement.pdf.

[67] “Beneficial ownership and public procurement systems”, mySociety and Spend Network, June 2020, 49. WP1845 discovery report, June 2020, https://www.digitalmarketplace.service.gov.uk/digital-outcomes-and-specialists/opportunities/11371.

[68] “Indigenous Procurement Policy overview”, National Indigenous Australians Agency (NIAA), 15 April 2020, https://www.niaa.gov.au/resource-centre/indigenous-affairs/indigenous-procurement-policy-overview.

[69] “Commonwealth Indigenous Procurement Policy”, Commonwealth of Australia, 1 July 2015, https://www.niaa.gov.au/sites/default/files/publications/indigenous-procurement-policy.pdf.

[70] “Beneficial Ownership Transparency”, Open Government Partnership Australia, 2020, https://ogpau.pmc.gov.au/consultations/phase-2b-deliberation-drafting/beneficial-ownership-transparency-accuracy.

[71] “Ending Anonymous Companies: Tackling Corruption and Promoting Stability through Beneficial Ownership Transparency”, The B Team, Issuu, January 2015, 8, https://issuu.com/the-bteam/docs/bteam_business_case_ report_final.we?e=15214291/11025500.

[72] Spend Network, “Why Beneficial Ownership Data Should Interest You”.

[73] “Building a Smarter Supply Chain: The power of AI and Blockchain to drive greater supply chain visibility and mitigate disruptions” IBM, (USA: IBM Corporation, 2019), https://www.ibm.com/downloads/cas/EYZ5BG4R.

[74] Petrus van Duyne, Jackie Harvey, and Liliya Gelemerova, The Critical Handbook of Money Laundering (Palgrave Macmillan, 2018), 254.

[75] Matthew Davis, “Transparency Encourages Foreign Investment”, National Bureau of Economic Research, March 2003, https://www.nber.org/digest/mar03/transparency-encourages-foreign-investment.

[76] “Towards a Global Norm of Beneficial Ownership Transparency”, Adam Smith International, March 2019, https://adamsmithinternational.com/app/uploads/2019/07/Towards-a-Global-Norm-of-Beneficial-Ownership-Transparency-Phase-2-Paper-March-2019.pdf.

[77] “Review of the implementation of the PSC Register”, Department for Business, Energy and Industrial Strategy (BEIS), March 2019, 31 https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/822823/review-implementation-psc-register.pdf.

[78] Dow Jones and SWIFT, “Global Anti-money Laundering Survey Results 2017”, 25.

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