Data privacy concerns stall unmasking of secret firms

Conflicting privacy requirements have been blamed for the delay in unmasking the owners of companies involved in government and public-private partnership tenders.

Publication of beneficial ownership is the only “structural benchmark for 2021” remaining as part of the stringent conditions for a multi-billion-shilling loan Kenya inked with the International Monetary Fund (IMF) last year.

“Fiscal governance and transparency will be bolstered by the authorities’ action plan to address legal impediments that prevented the publication of beneficial ownership information related to public procurement and by planned audits of Covid-19 vaccine spending and of 2020-21 financial year expenditure with a focus on Covid-19-related spending,” said the global lender in its Kenya country report last week.

IMF called for “more proactive efforts” to strengthen fiscal transparency and governance and seek to address the legal impediments to begin publishing beneficial ownership information for awarded public tenders in early 2022, proceed with planned audits of Covid-19 spending and promptly act to follow up on previous audits.

“Beneficial ownership (BO) information is not yet reflected on the public procurement portal due to conflicting legal and privacy requirements (not met,” it said.

“However, a clear roadmap has been established to allow the adoption of a new bidding document by the end of March 2022 that will require consent from beneficial owners to publish BO information in the portal for all awarded contracts.” 

The privacy concerns might have become an impediment owing to the Data Protection Act that could have seen government set itself up for lawsuits.

This comes after reports that the government, through the Attorney General, has started amending the Beneficial Ownership regulation which would help reveal the identity of people doing business with the government.

Currently, the government can only do so with a court order, with tenderpreneurs hiding behind secret accounts and lawyers and nominees while trading with the State. 

Under the current law, firms are only supposed to disclose to government names, phone numbers and addresses of investors owning over 10 per cent stakes in companies through secret accounts.

Kenya said it was addressing privacy impediments.