Implementing beneficial ownership transparency in the Kyrgyz Republic extractives sector — findings and recommendations

Executive Summary

The Kyrgyz Republic has the potential to become a leader on beneficial ownership transparency in the extractives sector among Extractive Industries Transparency Initiative (EITI) countries, following the passing of legislation that mandates an online public beneficial ownership register of companies holding mining licenses. This puts the Kyrgyz Republic on course to implement the beneficial ownership requirements in the EITI Standard during 2019, and does so in a manner that generates usable and useful data to detect and deter corruption and strengthen the business environment.

This report summarises findings from Open Ownership’s scoping visit to the Kyrgyz Republic in September 2018, and the research surrounding the visit. It makes recommendations for improvements to the legal and regulatory environment, business process and technical tools that will enable the Kyrgyz Republic to fulfil its policy objective and generate useful beneficial ownership data. The issues and recommendations in this report will also be relevant to other EITI countries implementing beneficial ownership transparency commitments in line with the EITI Standard.

The report is informed by meetings with leadership and staff at the State Committee on Industry, Energy & Subsoil Use (SCIESU), lawyers appointed to assist with beneficial ownership matters, the EITI International Secretariat and EITI Kyrgyz Republic, and mining company representatives through the EITI Multi-Stakeholder Group. We would like to thank all participants for their willingness to provide information and assist with this process.

We found there to be a clear commitment within SCIESU to implementing beneficial ownership transparency in a manner that results in genuinely useful data, and significant work has been undertaken to develop regulations and a disclosure form. Some of the processes that SCIESU has established, and the database currently used to record and publish information, are helpful foundations for implementing beneficial ownership transparency.

However, we found the regulations pertaining to beneficial ownership disclosure to be inadequate with respect to implementing the beneficial ownership provisions in the law and meeting the EITI Standard. They lack detail about what information is required and the requirements for updating information. In addition, SCIESU’s reliance on hard copy and scanned PDF documentation means that only a limited amount of information is stored in it as structured data, making it difficult to use.

Our recommendations centre around collecting and publishing beneficial information with the needs of users of that information firmly in mind. Ultimately, a beneficial ownership register that is user-focused is synonymous with a beneficial ownership register that is fit-for-purpose in tackling corruption: using the data helps identify errors and improve data quality, creating positive feedback that will have genuine impact for government, society and the extractives sector.

Our recommendations to SCIESU include:

  • Developing a data model for beneficial ownership information based on the Beneficial Ownership Data Standard, which ensures high-quality, granular data that is useful for users.
  • Amending the legal and/or regulatory framework to enable all required beneficial ownership information to be published, including disclosure of politically exposed person (PEP) status, and include a requirement for companies to submit updated information when there is a change to their beneficial ownership.
  • Digitalizing the submission process as much as possible and storing more information as structured data rather than PDFs and paper files, improving data usability and quality.
  • Working with companies, other Government departments, and potential data users to better understand how they can use the data, and how beneficial ownership information can complement other datasets.

As an outcome of the Open Ownership Pilot Programme, beneficial ownership data from the Kyrgyz Republic will be shared with the Open Ownership Register, an initiative to build a global register of beneficial ownership information and enhance the utility of the data to deter and detect corruption. Open Ownership will support SCIESU in testing and refining its data model for beneficial ownership information, resulting in data that is both accessible and useful to a range of users, and can act as an example of effective beneficial ownership transparency in a national extractives sector.

We hope these draft recommendations set out a foundation for an extractives sector beneficial ownership regime in the Kyrgyz Republic that meets policy goals and provides a solid starting point for further technical discussions within the Open Ownership Pilot Programme.

This report has been compiled on a best efforts basis, and whilst we believe it to be an accurate reflection of the evidence reviewed as of January 2019, it should not be used in place of professional legal advice.

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