China, Russia beat US in new corporate transparency report
For journalists and researchers pursuing cross-border and global investigations, access to information on companies is a basic need, but one that is not always easy to fulfill.
Unsurprisingly, different jurisdictions have substantially different rules, methods, and levels of public availability of corporate data.
But what may be surprising is that countries like China and Russia provide better access to corporate information than the United States and Canada, according to a new report.
The Open Data Compass report and website was released earlier this month by the UK-based Arachnys Information Services. The report analyzed and ranked 215 countries and territories for availability of corporate registrations and ownership, accessibility of litigation information and size of the news media industry. The three metrics derived from the Arachnys methodology are combined for an overall score.
Open and closed books
At #215, the Arachnys Open Data Compass reveals that Turks and Caicos “live up to their reputation as an opaque and high-profile tax haven, with a total lack of corporate and litigation information.”
And who is #1? New Zealand. “Full court records are available for almost every court and detailed corporate records are searchable and thorough,” the Arachnys Open Data Compass states. Rounding out the top 10 are the UK, Australia, France, Germany, Croatia, Netherlands, Finland, Estonia and Hong Kong.
The United States comes in at number 26 on the list, while Canada is 70th, a long way behind countries like Albania (ranked 11), China (20), Venezuela (21), and Russia (23).
What's the big deal for journalists and researchers?
With increasing focus on transparency and anti-corruption campaigns, this basic information is crucial for businesses conducting due diligence and for reporters compiling profiles, seeking corporate connections and following the money. Where is company X registered, who are its owners, has the company or its owners been involved in litigation or debarment or sanctions? Is it under investigation or rumored to be?
Here in the U.S., the search for public records, corporate registration and potential litigation is a challenge, even in the era of online access. Companies can be registered in any or several states, each with its own regulations, system of record keeping and variations of access, free or fee, online or behind the counter or microfilm machine at a records office in a distant state capital. Lawsuits can be filed at the federal level, in the states, or even at a county courthouse. In Texas alone, there are 254 counties!
And when my search takes me across borders, the difficulties multiply in relation to my lack of local expertise, minimal language skills and the distance between my office and the documents. I struggle to find out whether that information is publicly available, or can be located online via search or can be obtained in person. Which countries offer public access and where are the black holes, where basic company records don’t exist? When can I give up the search?
The Compass website provides the rankings overall, and focused rankings for geographic regions, OECD, Offshores, and BRICs/MINTS, sortable by score or by country name. There’s a page for each country, with details on the scoring, and “key indicators” like percent of Internet users, Transparency International score, World Bank Doing Business Score, and Reporters Without Borders Censorship score as context. You can see the whole world on a map, color coded for “Good” to “Failing.”
As I mentioned above, the colors and analysis show some surprising results, described in more detail in the complete report. For example, in the breakdown of scores, Canada is shown to be failing in access to corporate information (ranked 137th out of the 215 countries), while the U.S. struggles when it comes to litigation records (135th out of 215).
The problems in the U.S. are no doubt compounded by not just the number of jurisdictions (as mentioned above), but also the fact that so many of these jurisdictions are using systems that are now more than a decade old. When compared to countries that are only just now putting information online, the old American systems just can’t keep up with the newer technology used by rising nations.
For example, Eastern Europe is making “huge progress,” according to Arachnys, and the report suggests that EU memberships or aspirations have encouraged that improvement. Croatia, Estonia, Albania and the Czech Republic rank in the top 15. “The investment in online infrastructure to open up official [corporate] data in the years leading up to accession has paid off,” the report concludes.
The analysis also reveals that “intrusive, bureaucratic and authoritarian states often perform quite well in providing open, business-critical data,” with China (20), Venezuela (21), Russia (23) performing well in pushing information online and into the public domain,
Even among the 50 jurisdictions designated as offshore centers by the IMF, a few rank high on access to corporate records, including Hong Kong, Ireland, Cyprus and Bahrain. But the value of information, even when available online, may be less than informative. This is true, I find, for the records in the state of Delaware which is known as a US tax haven.
Another issue pointed out are the “paywall nations,” where corporate and litigation data is “essentially privatized” behind subscription paywalls, which diminishes public access. Arachnys points to Singapore and South Korea as examples, but here in the US we also see this in several of the county courthouse services.
The Compass site is a useful survey of the current state of access to business information. Its source, Arachnys, is a subscription-based platform that uses innovative technology to monitor open source information from news sites and online official records sites. ICIJ is a subscriber to the service. I find it is unique in the ability to access information within official databases and in its use of translation tools to run searches across language barriers and retrieve translated results.
The Arachnys research blog displays the quality of their research staff. A recent post about Politically Exposed Persons (PEP) screening lists is an excellent briefing on the topic . In fact, I was tempted to keep this new resource to myself but I can’t be so selfish. Check it out.