Mecklenburg-Western Pomerania Climate and Environmental Protection Foundation continues to omit its ties to the Russian state-owned gas company Gazprom in its entry in the Transparenzregister – Germany’s beneficial ownership register of companies – Transparency International Germany said today. The anti-corruption group first detected and reported this inaccuracy in March 2021 and then again in December 2021, but neither the state government nor the Foundation have corrected the record.
Transparency International joins its German national chapter in calling on the authorities to promptly verify and ensure that information on the Foundation’s true owners is recorded. The case also demonstrates the need for stronger verification mechanisms of beneficial ownership in Germany and beyond.
The Mecklenburg-Western Pomerania state government created the Climate and Environmental Protection Foundation in January 2021. It directly contributed over US$300,000 of taxpayer money and raised an additional US$24 million from Nord Stream 2 AG. Nord Stream 2 AG is owned by Gazprom International Projects LLC, a subsidiary of Gazprom – which leads on the Nord Stream 2 pipeline project to transport natural gas from Russia to the EU. While the stated goal of the Foundation is climate and environmental protection, it is actively supporting the construction of the pipeline. The statutes of the Foundation also allow Nord Stream 2 AG to appoint management and have significant control over its funds.
According to anti-money laundering regulations in Germany, any person who can directly or indirectly exercise a controlling influence over an organisation must be named in the Transparenzregister. In the case of state-owned enterprises, the manager responsible for the company should be identified. The Foundation must therefore include Gazprom’s CEO Alexey Miller and the Russian Federation in the Transparenzregister.
Stephan K. Ohme, financial expert of Transparency Germany, explained:
“An organisation that claims to protect the climate and environment but is in fact openly supporting commercial activities of a Russian state-owned company – to build a gas pipeline and bypass international sanctions – is abusing its legal designation as a foundation. Furthermore, this Foundation conceals its true control and ownership structure, likely in violation of the EU Anti-Money Laundering Directive and German law. It is very concerning that the state government, the Foundation and the Federal Office of Administration have ignored our appeal, especially given the current political climate.”
Such omissions in beneficial ownership registers are only possible because there is currently no verification mechanism in place. In Germany – and in a majority of countries with similar registers – information on the beneficial owners and on a legal entity’s ownership and control structure are recorded without any independent checks.
This is not the first time Transparency International found inconsistencies in the German register. Last year, a German subsidiary of the company Agrofert failed to list its real beneficial owner, but after Transparency International’s reporting, the error was corrected.
The Financial Action Task Force (FATF), the global anti-money laundering standard-setter, calls for independent verification of entries as part of its ongoing review of the global standard on beneficial ownership transparency. The European Commission also proposed new rules to ensure the independent verification of registry information in its July 2021 Anti-Money Laundering package, including a mandate to review and the provision of sufficient resourcing.
Maíra Martini, corrupt money flows research and policy expert at Transparency International, said:
“The public has the right to understand exactly who is in control of powerful organisations. Exclusions of links to influential interests, as seen in the case of the Climate and Environmental Protection Foundation in Germany, demonstrate that beneficial ownership registers without verified data are woefully insufficient. Ongoing reform efforts in the EU and globally must therefore provide clear guidelines and methodology for national authorities to substantiate entries.”
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Transparency International Secretariat