News & Events

Just the FACTs: March 24, 2017

Welcome to our “Just the FACTs” newsletter, which aims to highlight pertinent news stories and information related to our goals of curtailing offshore tax haven abuses, increasing the transparency of company ownership, and curbing the laundering of illicit money through the financial system.

Send feedback or items for future newsletters to Jacob Wills at

State of Play

The use of tax haven loopholes by multinational companies costs American taxpayers more than $130 billion per year.  Outright tax evasion by wealthy individuals drains an additional $35 billion annually.  At a time when budgets are being slashed and taxpayers are being asked to forgo much-needed services, Congress should be working to protect taxpayers with real tax reform that addresses the real problem.  Unfortunately, the proposed House tax reform blueprint doubles down on loopholes that facilitate the gaming of the tax code.

In an op-ed for The Other 98%, FACT’s Gary Kalman discusses the egregiousness of corporate tax avoidance schemes and tone-deaf proposals in Congress which could worsen them.  As U.S. citizens he explains, we pay taxes on all our earnings whether they are in “Des Moines or Dublin” but he adds, “if you are a multinational company, you divide yourself into parts (e.g. Goldman Sachs has 987 subsidiaries in tax havens), locate at least one part in a tax haven and claim profits were earned there.”

Even if the proposed House tax reform package were effective at ending the gaming — it isn’t — its effects on many would still be devastating.  According to the architect of the plan, Alan Auerbach, the blueprint’s currency adjustment will cause U.S. investments in foreign assets to plummet by 20%, at a cost of nearly $2 trillion.  Other researchers estimate the cost at nearly $5 trillion.

Before we assume that this would just be a tax on a few wealthy individuals, remember that anyone with a 401(k) or a pension would likely have at least a portion of those investments in foreign assets and — through the border adjustment scheme — those investments would lose roughly 20% of their value.  An acceptable loss according to the architect of the plan, but a very heavy burden to pay for many — especially those already at or nearing retirement.  Essentially, the proposed tax reform plan imposes a tax on the retirement savings of millions of Americans to help pay for a tax cut for multinational companies who already skirt their civic responsibility as taxpayers.

Forgetting the potential illegality of the Border adjustment plan, the crippling losses to American retirement accounts, and the reality that it does little to solve the gaming of the tax code, the plan has the very real possibility of creating instability throughout the world.  At the same time as it hits American retirement accounts, the plans key ingredient, currency adjustment, would have a severely negative effect on poor countries holding debt in U.S. dollars.  Essentially, if the currency adjusts at 20%, any nation with debt in U.S. dollars will see that debt rise at a staggering 20% — leading to a debt crisis in countries throughout the world.

Oxfam America’s president, Raymond C. Offenheiser, raised this very concern in a letter-to-the-editor responding to a recent op-ed in The New York Times authored by Auerbach and Michael Devereux. Offenheiser noted that poor countries “would be forced to choose between repaying creditors and fighting diseases, building schools and providing clean water and warned that “sooner or later, Americans would feel the consequences of this choice.”


 Foreign Bribery
Legislation Proposes Strengthening Foreign Bribery Safeguard

FACT Coalition, March 16, 2017

“Foreign Business Bribery Prohibition Act” Would Empower Private Sector to Assist in Combating Corruption

Rep. Ed Perlmutter (D-CO) introduced legislation Thursday to strengthen safeguards against foreign bribery in a move welcomed by anti-corruption advocates. The Foreign Business Bribery Prohibition Act (H.R.1549) would expand the Foreign Corrupt Practices Act (FCPA) — the world’s flagship anti-bribery measure — to include private rights of action.

Read the full news release

Incorporation Transparency

EVENT: One Year After the Panama Papers: Progress on Anonymous Corporate Ownership?

Brookings Institution Event, March 30, 2017

Thursday, Mar 30, 2017
2:00 PM – 4:00 PM EDT

Brookings Institution
Falk Auditorium
1775 Massachusetts Avenue N.W.
Washington, DC 20036

One year after the Panama Papers exposed the offshore banking activities of the clients of the Panamanian firm Mossack Fonseca, it is still legal and permissible for corporations in America to be anonymously owned. This practice continues to draw criticism in the face of mounting requirements for financial institutions to ‘know their customers,’ and among foreign policy experts who fear a growing kleptocracy. What is the proper policy response to an area where financial regulation, national security, foreign policy, and global business converge?

On March 30, the Center on Regulation and Markets at Brookings will host Sen. Sheldon Whitehouse (D-RI) for keynote remarks on efforts to end the use of anonymously owned corporations. A panel of experts and regulators will follow his keynote remarks. Participants will take questions from the audience, and the event will be live webcast.

Learn more and register…

Identity Crisis: Who is Receiving Federal Contracts and Grants?

Kleptocracy Initiative (The Hudson Institute), March 20, 2017

By Natalie Duffy

The General Services Administration—which is tasked with managing property and certain procurement functions for federal agencies—was criticized for this in a recent report (KI has also highlighted this issue). One of the most shocking findings was that it is impossible to identify the true beneficial owners of foreign-owned buildings used for about one-third of the federal government’s 1,400 “high-security” leases.

This means that agencies conducting critically sensitive work, such as the FBI and DEA, are possibly doing so in spaces owned by America’s enemies—and they don’t even know it. This is a gaping hole in the U.S. government’s due diligence and a clear threat to national security.

Read the full blog
Read FACT’s letter to GSA on Entity Identification and Validation Services

Public Beneficial Ownership Registries — A Shot In The Arm In The Fight Against Illicit Financial Flows

Tax Justice Network Africa, March 8, 2017

There is a quote that says – “it’s easier to lie in public”. As the world continues to work towards curbing illicit financial flows, it is acknowledged that transparency is a key ask in the fight. Related to this, the Anti-Corruption Summit 2016 was held in London and brought countries from around the world to discuss the ever growing and ever evolving menace of corruption as well as chart a way forward in terms of dealing with it. Out of the many issues the summit covered, beneficial ownership was one of the areas of discussion and commitment.

Read the full blog
Read Financial Transparency Coalition blog


Our Visit to a Little Known, but Highly Influential Body

FACT Coalition, March 23, 2017

By Gary Kalman

Financial Accounting Standards Board Considers Shining a Light on Corporate Tax Practices

On March 17, Richard Phillips of the Institute on Taxation and Economic Policy (ITEP) and I traveled to Norwalk, Connecticut to participate in a roundtable discussion at the Financial Accounting Standards Board (FASB). This is a little-known, but highly influential body that sets the accounting standards for U.S. companies. The morning discussion focused on a proposal to increase disclosures on corporate financial statements, including new disclosures on revenues and taxes on a country-by-country level. This information is critically important if we are to tackle the problem of offshoring profits in tax havens.

We heard several participants assert that, before any new disclosures are required, board members must ensure they know why it is being required and for what the users of the information will use it.  Fair questions.

Read the full blog

Legalized Cheating: Massive Corporations are Cheating Us Out of Trillions of Dollars that Our Infrastructure Desperately Needs. And None of it is Illegal

The Other 98% (FACT Coalition), March 10, 2017

By Gary Kalman

These companies earn money here, but say it’s earned there. Explain it to a child and even they can recognize – that’s cheating. But what if the law says it’s not? That’s legalized cheating.

It’s not just that these companies are dodging taxes; they’re dodging taxes while taking advantage of a boatload of benefits that are paid for with our taxes. These companies recruit from our colleges and universities, they move goods using our roads and ports and airports, they are protected by our laws and our military, have open access to our markets and they pay next to nothing for it.

Read the full op-ed

Oxfam Raises Concerns about Tax Reform Blueprint on Poor Countries

The New York Times (Oxfam America), March 13, 2017

By Raymond Offenheiser

Yes, the American Tax System is broken, but Alan Auerbach and Michael Deveraux’s border adjusted tax would further break it. Worse yet, it could have drastic effects on the poorest people in the world.

If the dollar appreciated in response to the new tax, then debt held in dollars by developing countries could catapult them into a debt crisis.

Read the full article

#LuxLeaks Appeal Verdict: Tax Justice Heroes Convicted Again

Tax Justice Network, March 15, 2017

The #LuxLeaks whistleblowers appeal verdict is in and once again it demonstrates what an upside down world we’re living in, when whistleblowers on the frontline of tax justice find themselves convicted for a second time for exposing information that was so clearly in the public interest. Disclosure of such information can be decisive for driving political change, and this is exactly why tax deals in Luxembourg were brokered behind closed doors. Now it’s time to swing the spotlight onto accountancy firm PwC not only for the disgraceful way they treated these whistleblowers, but to hold them to account for their role the whistleblowers exposed in siphoning off tax revenue from so many EU member states.

Read the full news release
Financial Transparency Coalition news release

Read Politico article

Tackling Inequality: The Potential of the Sustainable Development Goals

Center for Economic and Social Rights, March 2017

Growing economic inequality is a crucial factor in the rise of nationalist and populist politics in the US and elsewhere—with alarming implications for inclusive democracy and the broader human rights project. However, despite growing concern, expressed even by governments and elites, wealth inequality continued to rise in 2016, with the world’s top 1% now owning half of all global assets. According to Oxfam, eight men own as much as the poorest half of the world’s population—some 3.6 billion people.

Read the full blog

Issues in the News

Foreign Bribery

The FCPA: One of the US’s Greatest Gifts to the Global Economy is Under Threat From Trump

Quartz, March 13, 2017

By Max de Haldevang & Heather Timmons

The Foreign Corrupt Practices Act is the jewel in the crown of America’s fight against international business bribes and corporate favors. Intended to promote American business and foreign-policy ideals around the world, and give US companies a tool to battle corruption abroad, it has also helped other countries crack down on bribery, and has extracted billions of dollars in fines.  But under US president Donald Trump, it may lose its bite, according to anti-corruption activists, Democrat lawmakers, and legal experts. At worst, some worry, he could try to repeal it altogether.

Read the full article

Incorporation Transparency

The Russian Laundromat Exposed

OCCRP, March 20, 2017

Three years ago, OCCRP exposed the “Russian Laundromat” – an immense financial fraud scheme that enabled vast sums to be pumped out of Russia. The money was laundered and moved into Europe and beyond through bribery and a clever exploitation of the Moldovan legal system.

Recently, OCCRP and Novaya Gazeta obtained detailed banking records for more than 120 accounts that made up the Laundromat. We shared the data with dozens of reporters from around the world who tracked down the money locally. The results are “The Russian Laundromat Exposed” – a new project which reveals far more about how the scheme worked and where the money went. The stories below explain how more than $20.8 billion was taken out of Russia and laundered, who got the money, and why some of the world’s largest banks failed to shut the scheme down.

Read the full stories

Tackling Kleptocracy: Combating kleptocracy on a global scale.

Commentary Magazine (AEI), February 15, 2017

By Michael Rubin, resident scholar at the American Enterprise Institute

Vladimir Putin in Russia. Recep Tayyip Erdogan in Turkey. North Korea’s Kim Jong-un. Iraqi Kurdistan’s Masoud Barzani. Equatorial Guinea’s Teodoro Obiang Nguema Mbasogo. The late Ali Akbar Hashemi Rafsanjani and Muammar Qadhafi in Iran and Libya respectively. Each has leveraged their political positions into vast fortunes ranging from hundreds of millions to tens of billions of dollars for themselves and their immediate families.

That dictators loot and steal to enrich themselves, their families, and their political cronies is nothing new. Transparency International regularly monitors corruption across the globe (Alas, it gave no country a perfect score in its most recent report). But as America looks inward, it is worth asking: Do foreign kleptocracies pose any risk to the United States by virtue of their corruption? After all, the risk posed by Russia, Iran, and North Korea has less to do with the corruption surrounding their leadership and more to do with the ideologies they hold. Relations with Equatorial Guinea are cool but cordial, except when its government crosses the line and accuses the U.S. ambassador of witchcraft. Iraqi Kurdistan is as corrupt as Russia and Equatorial Guinea but remains an ally.

Read the full article

Why big banks want a ban on anonymous shell companies

American Banker, March 7, 2017

By Kevin Wack

The biggest U.S. banks are throwing their considerable weight behind proposed legislation that would force shell companies to identify their owners in state government filings.

In a report issued last month, a trade group for the nation’s largest banks recommended that Congress prevent the 50 states from allowing the anonymous ownership of corporations. The report was written by The Clearing House, whose owners include JPMorgan Chase, Citigroup, Bank of America and Wells Fargo.

Greg Baer, president of The Clearing House, said that conducting due diligence on corporate customers can be challenging for banks when little information is available from the government.

“At a lot of banks, that’s a substantial effort. And then of course, they are always running the risk that they are missing something,” he said.

The big banks’ report states that the current federal regime makes it easier for money launderers and terrorist financiers to obscure their identities from both law enforcement agencies and financial institutions.

Lilly Thomas, a senior vice president at the Independent Community Bankers of America, said that her group has not taken a position on whether the states or the federal government should collect information on a company’s ownership.

But she added, “We totally support that information be collected at the government level.”

Read the full article (Subscription)

EU Battle Over New Anti-Money Laundering Law Enters Final Phase

Bloomberg BNA, March 23, 2017

By Joe Kirwin

EU member countries and the bloc’s Parliament faced off on final terms for amending the EU Anti-Money Laundering Directive, a day after a report alleged that more than $20 billion from Russia was laundered through anonymous shell companies between 2010 and 2014.

The debate revolves around the European Union’s commitment, made in the wake of year-old Panama Papers revelations, to crack down on shell companies and trusts, with member countries and the central government seeking common ground on key issues concerning company beneficial owner transparency rules and mandatory public registries of trusts accounts.

Read the full article

Russian Elite Invested Nearly $100 Million in Trump Buildings

Reuters, March 17, 2017

By Nathan Layne, Ned Parker, Svetlana Reiter, Stephen Grey and Ryan McNeill

During the 2016 presidential campaign, Donald J. Trump downplayed his business ties with Russia. And since taking office as president, he has been even more emphatic.

In the United States, members of the Russian elite have invested in Trump buildings. A Reuters review has found that at least 63 individuals with Russian passports or addresses have bought at least $98.4 million worth of property in seven Trump-branded luxury towers in southern Florida, according to public documents, interviews, and corporate records.

Read the full article


Tax Avoidance Costs The U.S. Nearly $200 Billion Every Year

Forbes, March 23, 2017

By Niall McCarthy

Tax avoidance costs the world’s economies billions of dollars every year. Estimates of the scale of losses fluctuate widely but the IMF believes that somewhere in the region of $600 billion is lost due to profit shifting every year. A new paper published by UNU-WIDER takes a closer look at the situation at country-level.

In absolute terms, the United States experiences the highest annual tax losses of any country by far with an estimated $189 billion unaccounted for every year. That’s 1.13 percent of GDP. China comes second with $66.8 billion while Japan also records substantial losses of about $47 billion.

Read the full article
Read the United Nations University report

Elizabeth Warren and Joe Donnelly: Trump’s SEC Chairman Must Look Out for American Families — Not Big Corporations

The Washington Post, March 22, 2017

By Elizabeth Warren and Joe Donnelly

Elizabeth Warren and Joe Donnelly, Democrats from Massachusetts and Indiana, respectively, are members of the U.S. Senate.

American families need an SEC chairman who will watch out for their interests — not short-term corporate profits. That’s why we’ll be asking Clayton about his willingness to be more vigilant and increase oversight of stock buybacks. We also want to know if Clayton will be willing to help investors identify companies that choose to invest in the U.S. economy and American workers. If the SEC would require publicly traded companies to disclose more detailed information about jobs moved overseas — and jobs brought back home — investors could choose to invest in companies that make our economy stronger. Additionally, requiring public, country-by-country disclosure of profits stashed overseas would reveal to investors the companies that rely on tax havens to avoid U.S. taxes.

Read the full op-ed

Ending Tax Avoidance An Alternative to Federal Funding Cuts

VOA News, March 16, 2017

By Cecily Hilleary

President Donald Trump’s blueprint budget calls for a dramatic increase in defense and homeland security spending, offset by deep cuts to foreign aid and federal agencies like the Environmental Protection Agency.

But could there be another way to build up the military without taking money away from other valuable programs? Americans for Tax Fairness (ATF) thinks so.

“American multinational corporations owe $700 billion in U.S. taxes on profits they are holding offshore – much of it earned in the United States,” said ATF spokesman Ron Eckstein. “Before cutting spending on important services that affect people’s lives, President Trump should make these giant corporate tax dodgers pay what they owe.”

Read the full article

UMD MaryPIRG’s New Campaign Takes Aim at Corporations that Abuse Tax Loopholes

DBK News, March 2, 2017

By Natalie Schwartz

University of Maryland MaryPIRG members are launching a campus campaign to support legislation that would close corporate tax loopholes in the state.

Read the full article