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By Transparency International
This week marks one year since the tragic explosion at the Beirut port, which killed 217, injured 7,000, and left more than 300,000 people houseless. It soon became clear that Lebanese authorities had been aware of the danger posed by the explosive chemicals stockpiled in the harbour. The public could not help but suspect that corruption and negligence may have been behind the avoidable disaster – claims that the government promised to swiftly investigate.
And yet, a year later, no one has been held accountable. Reports that authorities continue to obstruct justice are particularly alarming, but not entirely surprising.
Investigative journalists and civil society have stepped up, however. Earlier this year, Lebanese journalist and documentary filmmaker Firas Hatoum pieced together some disturbing details about the explosion. His reporting connected the company that owned the abandoned ammonium nitrate to the businessmen sanctioned by the US over their ties to Syrian President Bashar al-Assad.
Allegedly, these businessmen tried to cover their tracks by not declaring themselves as the owners of the company. And while the open-source investigation would not have been possible without the UK’s register of beneficial ownership, it is still concerning that the ownership information provided by the company was not independently verified by the UK authorities.
Complex and opaque corporate structures are at the front and centre of major financial crimes. There’s overwhelming evidence that the corrupt and criminals benefit from corporate secrecy, and that legal structures such as anonymous shell companies enable them to hide, move or launder ill-gotten assets. This means that often the hardest part for the investigators is to track down the so-called beneficial owners – those who really own, control, and profit from suspicious companies.
If you’re a regular reader of our newsletter, then you already know that Transparency International has been calling for the global adoption of centralised beneficial ownership registers.
| Such registers – especially when set up properly and accessible to the public – allow authorities, journalists and civil society to investigate and uncover serious crimes.
In the case of Beirut, beneficial ownership data can also help identify corruption risks in the impending public procurement processes for rebuilding the city. The Lebanese Transparency Association, our chapter in Lebanon, is calling on the government to ensure that companies bidding for government contracts disclose their real owners. This is crucial for ensuring that government contracts to rebuild Beirut are awarded to the most qualified companies, rather than those that are well-connected. This would be much easier to accomplish if Lebanon had a public register of beneficial ownership. But the country is not required to establish one under the current global standard, set by the Financial Action Task Force (FATF). The standard, however, has proven concerningly ineffective. We have been calling on the FATF to review its recommendation and guidance to countries since 2019. Now, after years of powerful resistance, the FATF members are eyeing the revision of the global standard on beneficial ownership transparency. Civil society, businesses, academia and other organisations have until 20 August to provide suggestions and to make their voices heard. Transparency International will be making the case for the standard to require the adoption of central registers, among other urgent fixes. |
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