The Charter sets out the principles and best practice G8 nations will follow to release more data, in standard formats, for the private sector to use in delivering digital services to the public. The Charter includes five principles which are aimed at ensuring that government data is made freely available as a means of boosting both transparency and innovation.
The five key principles of open data are:
- Open data by default
- Quality and quantity
- Useable by all
- Releasing data for improved governance
- Releasing data for innovation
The types of data for which there is expected to be greater transparency include crime statistics, weather data, health, housing, transport and education information. This approach has widely been attributed to a number of factors. Sir Nigel Shadbolt, chairman and co-founder of the United Kingdom’s government-backed Open Data Institute, stated, “We need this innovation because we face unprecedented challenges as a society: an increasing population with very different demographics in different regions, environmental security, economic stability, growth and more. We see open data as a crucial part of rising to these challenges. Quite simply, open data is an enabler of freedom … Open government data lets citizens hold government to account for what it spends and the contracts it places, lets us see the rates of infection in our hospitals … and drives transport apps that people use to make their way efficiently around cities. On tax, open data will demonstrate how companies are paying tax, in what jurisdictions and who owns what.”
One of the expected outcomes of this step is a flow-on effect to the private sector, with companies being more transparent on corporate data. The basic premise of open data is that when governments publish data sets online, in digital formats that can be easily imported into other software tools and under legal terms that permit anyone to reuse them (including commercially), those outside government can use that data. It is also anticipated that citizens will be better positioned to better scrutinise government and hold authorities to account. This, of course, is very much dependent on the types of data released.
What will this mean for due diligence?
Some of the key principles of the Charter will facilitate greater access to information on companies and individuals, which may have an impact on prospective business decisions. Many of the difficulties and concerns associated with conducting due diligence are likely to be negated by this open approach, particularly if other countries and private entities follow the lead of G8 countries. The impact on conducting due diligence in the near future can be exhibited by looking at the implications of three of the key principles of the Charter:
1. Open data by default
It is recognised that access to and use of data is of significant value to society and the economy. Currently when conducting due diligence on a prospective business partner it can be difficult to obtain certain information due to various privacy or security concerns, but with the introduction of the Charter the range of information available on individuals and entities will grow considerably. As an example, it is likely to provide greater visibility of former government employees who are now in the private sector, or even demonstrating direct links between public and private entities. This, of course, is information of extreme value to entities seeking to comply with Foreign Corrupt Practices Act requirements through the form of due diligence.
2. Quality and quantity
A common problem when conducting due diligence, particularly in developing countries, is the lack of depth of information provided from a government body. Establishing the trend of more detailed information in plain and clear language (rather than incomplete or unclear information) adds distinct value. One area where this will be of importance will be crime-related data, which can often be unclear and lack detail when it comes to information kept on individuals or entities.
3. Useable by all
This principal will hopefully lower perhaps one of the most significant barriers to gaining information for the purposes of due diligence. Often, the decision to obtain registry or corporate information is dictated by the cost and usability of such data. With no charges applicable and no limits to the reuse of such data by citizens obtaining salient information when conducting due diligence will be considerably easier and make the exercise much more commercially viable.
Whilst the direct results of the Charter are yet to become explicitly clear, one aspect which most commentators agree on is that the initiative has triggered a transparency revolution. G8 nations are likely to have set the precedent of best practice which other nations, and subsequently the private sector, will follow. This has immediate positive ramifications for the availability of quality, useful information that is essential in satisfying due diligence requirements.
Performing due diligence is an integral part of any organisation’s association with another business. Any steps taken to allow access to information and facilitate greater knowledge of another party will be of considerable value to any enterprise.