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TRANSPARENCY INTERNATIONAL LATVIA HIGHLIGHTS THE IMPORTANCE OF OPEN DATA IN SECURITY RISK AND CORRUPTION INVESTIGATIONS

On April 26, 2024, Transparency International LATVIA (Delna) presented a prototype of a digital tool that helps to identify companies that import goods from Belarus and Russia and participate in public procurements in Latvia at the same time.

The event was organised in cooperation with project partners from Transparency International Estonia (TI Estonia) and Transparency International Finland (TI Finland) and further explored the role of open data in preventing security risks and combating corruption in the Baltic region.

 

COMPANIES PARTICIPATING IN PUBLIC PROCUREMENT AND SIMULTANEOUSLY IMPORTING GOODS FROM RUSSIA AND BELARUS

 

The findings of Hackathon revealed that there are a total of 33 companies that imported various goods from Russia and Belarus in 2022 or 2023 and simultaneously won public procurements in those years. The total amount of money paid to these companies through public procurements in 2022 and 2023 is estimated at around €400 million. The number of such companies fell in 2023.

Key areas for imports from Russia and Belarus include medicine and medical equipment, gas, spare parts and electrical goods. The Hackathon group observed that the analysis of this data makes it clear that it would be advisable for the responsible authorities to set up a mechanism that would allow for more extensive monitoring of certain procurements than others, in particular those related to technology procurement and/or critical infrastructure, as they may have additional security risks.

Examination of individual companies and specific laws and regulations lead to the conclusion that the Register of Beneficial owners does not necessarily include all citizenships. A specific case was found where the beneficial owner of a company participating in public procurement for technology provision to the State border Guard is a Belarusian citizen, owning 40% of the company’s stake. Another 40% of the shares are held by an Israeli citizen, but according to available data, it is unclear whether this person may have a dual nationality with Russia or Belarus.

 

PROGRESS AND CHALLENGES IN ACCESSING DATA IN LATVIA, ESTONIA AND FINLAND

 

Open data is an important source of information for journalists and researchers who need to uncover hidden facts and potential violations. Public authorities have a vast amount of potentially useful data in different registries and databases, but the data accessibility differs from country to country.

For example, the Register of Beneficial Owners in Latvia is available to everyone for free. In Finland, public fees for important documents have been identified by investigative journalists as a significant problem to access information. For example, in one case it was necessary to pay several hundred euros for investigation protocols, paying a rate per page for one protocol on 1660 pages[1]. The problem raised in Finland regarding the costly acquisition of large amounts of data is not alien to Latvia. In both Latvia and Finland, such costs arise mainly due to additional processing of the documents by the public institution, i.e. printing or copying. Anonymised court decisions are publicly available in Latvia electronically, but access to the full court material is either in physical form, which requires paying for printing, or in-person reading, because they are not available in electronic form. At the same time, it should be noted that older rulings cannot be found electronically and can only be consulted in anonymised form in person and/or when paying for printing.

During the event, experts from Estonia and Latvia emphasized an observed negative tendency for governments to opt for closure of open data. In the case of Latvia, older data should also be available in the database of political organisations’ financing, as they may be particularly important in cases investigating corruption and where the link between a political organization and the positions held by a natural person, needs to be investigated for specific periods of time.

The problem should also be noted with declarations of public officials, the closure of which would weaken public oversight. Estonia also has noted a political willingness to restrict the availability of data, including in the area of judicial documents, while Finland has not observed such a tendency. Panelists offered a solution to the problem – if the General Data Protection Regulation restricts access to data and if public authorities have legitimate reasons to not publish data – opportunities should be created for journalists and researchers to sign a non-disclosure agreement, foreseeing an opportunity to report on data showing corruption.

Lists of sanctioned companies, persons and assets are relatively available in Finland, Latvia and Estonia, but during the event the experts mentioned a problem that countries tend not to include people who are actually related to the sanctioned. According to the experts, the “Rotenberg files” published in 2023 and the case of the Latvian citizen involved in hiding the properties of a Russian oligarch led to the conclusion that it is easy for sanctioned persons to set up shadow structures to evade sanctions by transferring properties and ownership, for example, to the civil spouse.

 

Recommendations:

 

  • In the case of Latvia, if the beneficial owner has several citizenships, it would be necessary to indicate all of them in the Register of Beneficial Owners. Currently in accordance with the requirements of regulatory enactments (see Section 4.10 of the Law on the Enterprise Register of the Republic of Latvia. The Right of Persons to Use Information of the Enterprise Register), it is necessary to specify only one of them. This should be corrected as non-disclosure of all citizenships may potentially allow participation in public procurement for companies whose beneficial owners are sanctioned/potentially associated with sanctioned persons. Publication of all citizenships would make it easier for the Financial Intelligence Service to verify the relationship with sanctioned persons;
  • Keep current open data available. To create solutions to access earlier data, for example by providing access to official declarations and/or data on the financing of political organisations on the basis of a reasoned request in cases when the data has been created before establishment of electronic databases or when the data has been closed in accordance with normative regulation. The capacity of the databases must be taken into account, but it must also be ensured that this data does not completely disappear. These datasets may be of particular importance when evidence has to be found in the investigation of past corruption cases and irregularities;
  • Review the possibility of publishing the datasets of members of political organisations. Estonia is the only one of 3 countries to make the data set of members of political organisations publicly available. The experience of this country indicates that these data can help detect nepotism, cronyism and/or political favouritism;
  • Changes should be made to the Cabinet Regulations No 417 “Regulations Regarding the Submission and Publishing of the Information of Political Organisations (Parties) Regarding Joining Fees, Membership Fees, Gifts (Donations), Declarations of Income and Expenses of Elections, and Annual Reports” in order to ensure greater transparency of political party financing. Existing regulations require political parties to provide information regarding joining fees and membership fees, if the total amount of membership contributions exceeds one minimum monthly wage (700EUR in 2024). We propose to abolish the minimum monthly wage limit and request political parties to provide information on joining and membership fees regardless of the amount, on the basis that in individual cases the undisclosed amount of political party funding is significant.
  • Separate datasets would require the cancellation of fee payments to registered journalists and registered non-governmental organisations engaged in research or on the basis of reasoned requests. For example, the acquisition of ownership data from the Land Register is subject to payment both in Latvia and Estonia. Finland is required to pay a fee to access the public information contained in the Business Register. Cancellation of such fees for specialists in specific fields would potentially increase the efficiency of investigative journalism and reduce financial constraints on journalists’ work by exposing publicly relevant information, including corruption and illegal conduct.
  • In the case of Estonia and Latvia, a national anti-corruption data strategy and vision for the development of the anti-corruption data infrastructure and the possibilities for the use of datasets should be developed. Constitutional law and anti-corruption experts as well as personal data protection professionals, civil society, researchers and journalists should be involved in the development of the strategy in order to strengthen a common understanding of the balance of data protection and anti-corruption work. This strategy may need to be framed as part of a national anti-corruption strategy. The identified datasets should be made available in the central open data portals in accordance with the strategic priorities.
  • A public procurement dataset can provide an optimal starting point for cross-border open data analysis. Based on the comparative analysis of the three countries, data quality indicators have been highly evaluated for all public procurement data sets.

 

[1] https://www.hs.fi/mielipide/art-2000010223634.html

 

This publication has been produced with the financial support from the Nordic Council of Ministers. The content of this publication is the sole responsibility of the coordinators of this project and do not necessarily reflect the views or policies of the Nordic Council of Ministers.

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