Webinar: “Beneficial Ownership Transparency: Why It Is Important For Extractive Companies”

Webinar “Why Beneficial Ownership Transparency is Important for Extractive Companies” organized by the EITI Indonesia Secretariat (KESDM) in synergy with the STRANAS-PK (National Strategy for Corruption Prevention), the Ministry of Law and Human Rights, and PWYP Indonesia.

The webinar aims to increase awareness of extractive companies on the Beneficial Ownership (BO) disclosure according to the laws and regulations and encourage the companies’ involvement to discuss the benefits and challenges in disclosing BO information. The webinar was attended by extractive industries stakeholders, including companies and cooperatives, by presenting resource persons from BP Tangguh, Hardi Hanafiah; Freeport Indonesia, Mukhlis Ishak; KUD SUPPME, Yahya Suffyan; and Open Ownership, Stephen Abbott. The presentations were responded to by speakers from Government entities, namely Fithriadi Muslim, the Legal Director of Financial Transaction Report and Analysis Center (PPATK); Santun Maspari Siregar, the Civil Director of the Ministry of Law and Human Rights; and Marlina Efrida, the Senior Executive Analyst on Anti-Money Laundering and Countering the Financing of Terrorism (APU PPT) of Financial Service Authority (OJK).

The availability of beneficial owner information can ease companies to negotiate business more transparently and conduct business investment due diligence at lower costs. However, not all companies know that beneficial ownership transparency reduces reputational and financial risks, said Sampe L Purba when opening the webinar.

Mark Robinson, the Executive Director of the EITI International Secretariat, said that the importance of beneficial ownership transparency could assist the government in increasing capacity in collecting taxes and mobilizing domestic resources for development and opening up extractive industry beneficiaries to build trust between companies and investors in an open, fair and competitive manner.

British Petroleum (BP) Tangguh adheres to the principle of compliance with applicable regulations in each country, including anti-corruption. BP Tangguh has used Counterparty Due Diligence (CDD) as a process to collect and evaluate relevant information about potential counterparties (e.g., on suppliers, customers, and partners) as an initial effort or risk mitigation in preventing anti-corruption, money laundering risks, Hardi Hanafiah conveyed in this webinar.

PT. Freeport Indonesia, represented by Mukhlis Ishak in this case representing the Indonesian Mining Association (IMA) as a member of the Multi-Stakeholder Group Forum, conveyed that the use of beneficial ownership transparency related to increasing investment and state revenues will have various answers because the investment climate will also be related to legal certainty. BO transparency will bring benefits to accountability and build trust between stakeholders. In addition to trust, it is also about financial capability. Apart from business actors, it is necessary to obtain information on beneficial ownership actors to take appropriate actions to carry out the engagement. Obstacles in BO transparency are the lack of understanding of the definition of BO to things that need to be reported.

KUD SUPPME, Yahya Sufyann, representing cooperatives in West Papua, manages petroleum in old Dutch wells, involving indigenous people for community prosperity. The cooperative is owned by the local community and is supported by the provincial government and Pertamina. It is hoped that there is a need for guidance on cooperatives from the Government to open access opportunities for conveying in business activities and financial problems other than licensing.

“Transparency of Beneficial Owners is important for a good investment climate and accountability. A quality BO data system can help authorized parties to unlock the economic potential behind this information,” said Open Ownership, Stephen Abbott.

Financial Transaction Report and Analysis Center (PPATK) initiated a regulation that encourages every company to know the beneficial owner and needs synergies across Ministries/Agencies to realize BO transparency. Extractive industry corporations are more prone to risk in money laundering than individuals or other sectors of industries, based on the PPATK National Risk Assessment results. Therefore, under Presidential Decree 13/2018, it is necessary to identify the ultimate beneficial owners. Despite the challenges in revealing the BO data, there is a mechanism to ensure the data when discrepancies occur, said Fithriadi Muslim, the Legal Director of PPATK.

The Director of Civil Affairs in the Ministry of Law and Human Rights,  Santun Maspari Siregar stated that the Ministry of Law and Human Rights under the Directorate General of General Law Administration (DG-AHU) encourages the increasing number of companies to fill out Beneficial Ownership data based on regulations and applications in the agencies following their duties. The data is gathered in one BO database at the Ministry of Law and Human Rights. There are three important things on BO transparency: avoiding money laundering, protecting the nation from acts of terrorism by corporations, guarding the nation against corruption, and Indonesia joining FATF membership. There needs to be a better awareness of the function of BO, considering only 23% of data collected is within three years after the regulation came into force.

Marlina Efrida, the Senior Manager of APU PPT in the OJK presented that OJK has regulated the BO data for the financial services sector, namely under PJOK Number 23/PJOK.01/2019 on the implementation of the APU PPT program in the financial services sector. Under the regulation, OJK can identify and verify BO data through CDD to ensure that the prospective customer or WIC that opens a business relationship or transaction is acting for himself or the interest of the BO.

At the closing remarks, the Head of the Center for Data and Information Technology (Pusdatin) at the Ministry of Energy and Mineral Resources, Agus Cahyono Adi, emphasized that all stakeholders have a role in improving the management of natural resources, including disclosure of Beneficial Ownership in the extractive industry in Indonesia. Furthermore, this is the digital era, where all data and information are increasingly transparent.

“The bottom line is that it’s more transparent because we can’t hide, we can’t erase digital traces; even if we hide it, anything that is covered up will make people suspicious. So in this forum, let’s show the public that the management of natural resources, the extractive industry can be accounted for. Because we manage God’s goods, which we must be accountable to God, and we are accountable to the community and our future generations,” concluded Agus.

Some key takeaways in this discussion are :

How to grow trust between stakeholders to improve investment and Indonesian economy from the extractive industry.
There are some challenges on the Beneficial Ownership disclosure so that synergies are needed between stakeholders and implementers in completing BO data.
Remapping data for inactive corporations, as one of the appropriate state beneficiary recordings parameters;