News & Events

Just the FACTs: September 2, 2016

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.

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State of Play


It is estimated that between $7.6 trillion and $32 trillion in global wealth is secretly stashed offshore in tax havens.  A black hole in the world economy, offshore tax haven abuses drain invaluable resources from each and every country and undermine the rule of law worldwide—hampering our ability to act collectively to solve problems.  This week the European Union indicated that they will no longer tolerate these abuses.

Last week the European Union (EU) sent out a loud and clear message that “all companies, no matter their nationality, generating and recording their profits in an EU country should pay taxes in line with national tax laws”.   This week they followed through by showing the EU is willing to take steps to address aggressive tax avoidance and tax haven countries that facilitate the problem—ruling that Apple must pay Ireland roughly $14.5 billion in back taxes.

While Europe is engaged in a constructive conversation around the issue, unfortunately, the Obama Administration and Congress decided to rush to the defense of the tax dodger.  FACT’s most recent blog confronts the U.S.’s misguided response calling on them to instead focus on the real problem—tax deferral. FACT’s Clark Gascoigne explains that, while the Administration and Congressional leaders are arguing in the media that they are trying to protect U.S. tax dollars, current proposals from both both ends of Pennsylvania Avenue amount to enormous tax giveaways to largest tax dodgers in the world.

Rather than protecting tax dodgers from paying their taxes in foreign jurisdictions, Congress and the Administration should focus on collecting the taxes that are owed here in the U.S.  If the dispute with the European Commission is really about U.S. tax dollars, they should be less concerned with the $14.5 billion in taxes that Apple owes Ireland, and more focused on the remaining $51.5 billion that Apple owes U.S. taxpayers.

The hypocrisy is rife.  “It’s remarkable to think that the administration has been flying over to Brussels on taxpayers’ dollars to lobby the European Union against collecting taxes owed in Europe when they’re not collecting the taxes owed here,” notes FACT’s Clark Gascoigne in The New York Times. “It’s terribly ironic.”

From the FACT Coalition and Its Partners

Incorporation Transparency

TRACEpublic: A Step Towards Beneficial Ownership Transparency

FACT Coalition Blog, August 29th, 2016

By Robert Clark, TRACE International (Guest Blog)

Anonymous shell companies are impressively flexible tools. They can be used to launder money, evade taxation, covertly channel the payment of bribes, stash away a nation’s stolen wealth, and facilitate trafficking in drugs, weapons, and human beings. It’s a challenge to grasp the scale of the harm they help bring about.

It’s also challenging to find an appropriately scaled response. One place to start is for governments to require all companies within their jurisdiction to disclose their beneficial ownership for inclusion in a central registry—a step already taken by the United Kingdom, Denmark, and Norway. Going further, data from such registries can be aggregated and combined with other public registration materials to produce a gigantic database of company information, such as the one maintained by the UK for-profit OpenCorporates’ project.

Read the full blog

60 Minutes: Anonymous, Inc.

CBS News (Global Witness), August 25th, 2016

The U.S. has become one of the most popular places for foreigners to hide dirty money. See what happens when hidden cameras capture American lawyers being asked to move highly questionable funds into the U.S.

Watch the full episode

Getting Rid of Anonymous Shell Companies Would Help Local Businesses

Next City (FACT and Main Street Alliance), August 25th, 2016

By Oscar Perry Abello

The implications of anonymous shell companies go far beyond unwittingly financing foreign governments under sanction.

Anonymous shell companies also tilt the playing field against small and local businesses.The most visceral example that Main Street Alliance’s members talk about is large multinational corporations using anonymous shell companies to minimize tax burdens, shifting all the tax burdens to smaller businesses. For example, a multinational company could send all the actual profits from one location or one state to an offshore bank account owned by an anonymous shell company that gets listed as a “consultant” to the multinational company. In reality, the anonymous shell company and the corporation are one and the same, but on paper, no reported corporate profits mean zero corporate taxes paid.

Anonymous shell companies also play a key role in procurement fraud. Large government contractors, particularly in construction, can use anonymous shell companies to bid on opportunities meant for smaller contractors or even for minority- and women-owned contractors.

Read the full article

In Fight Against Money Laundering and Terror Finance, ‘The Emperor Wears No Clothes’

The Hill, August 24th, 2016

By John A. Cassara

Unfortunately, the metaphor could well be used to describe our efforts against international money laundering.  The overwhelming majority of observers are unwilling to see what is obvious: our anti-money laundering efforts are just a percentage point away from total failure.

But, this is no fairytale.  The worldwide failure to combat money laundering has a dramatic impact.  Why?  Because outside of crimes of passion—for example, murder committed in a jealous rage—criminals, kleptocrats, and some unscrupulous companies are motivated by greed.

Read John Cassara’s Op-Eds

To Fight Opioid Deaths, Ban Anonymous Shell Companies

WBUR (Fair Share), August 23rd, 2016

By Nathan Proctor

Cartels commonly hide and move drug proceeds through anonymous shell companies because starting them requires less personal information than getting a library card.

The Office of National Drug Control policy estimates that of the $65 billion spent on illegal drugs each year, about $1 billion, or 1.5 percent, is seized by all federal agencies combined. That means some 98.5 percent of the profits from trafficking remain in the hands of the cartels.

In other words, costs are low, which helps lower prices and increase supply.

Conversely, if we were able to go after the money better, you would expect it to raise costs and lower supply.

Read the full article
Read U.S. Senate’s Report on International Narcotics Control


Yesterday, Outraged by Apple’s Tax Dodge. Today, by Its Tax Bill

The New York Times (FACT Quoted), August 31, 2016

By Alan Rappeport

“It’s remarkable to think that the administration has been flying over to Brussels on taxpayers’ dollars to lobby the European Union against collecting taxes owed in Europe when they’re not collecting the taxes owed here,” said Clark Gascoigne, deputy director of the Financial Accountability and Corporate Transparency Coalition. “It’s terribly ironic.”

The news that a corporate giant might have evaded billions of dollars in taxes could become another populist rallying cry.

“There’s a reason Donald Trump and Bernie Sanders did so well in the campaign this year,” Mr. Gascoigne, of the Financial Accountability and Corporate Transparency Coalition, said. “People are fed up with the kinds of back-room deals that are happening at the large multinational companies at the expense of the American people.”

Read the full NYT story.

Apple Ruling Puts Emphasis on Need to End ‘Deferral’—the Biggest Tax Dodge

FACT Coalition Blog, August 30th, 2016

By Clark Gascoigne

Today, the European Union (E.U.) signaled that it is engaged in a serious conversation and is willing to take steps to address aggressive tax avoidance and tax haven countries that facilitate the problem.

Unfortunately, the U.S. Administration and Congress have been less willing to do the same.  While saying they are defending U.S. tax dollars, current proposals from both the Administration and Congress to address the problem are more a giveaway to companies than a serious attempt to collect what companies owe.

Read the full blog.Read CTJ’s blog.
Watch interview with FACT’s Clark Gascoigne on “Rising Up with Sonali”.
Read Campaign for America’s Future blog (quoting FACT).
Listen to interview with FACT’s Gascoigne on UNeed2Know Radio.
Read ITEP interview with Fast Company tearing apart Tim Cook’s Apple letter, part by part.
Watch CTJ’s Richard Phillips discuss AppleTax on Al Jazeera English.
Read the statement from former Sen. Carl Levin on the Apple ruling.
The Washington Post article.

Why We Must Close the Pass-Through Loophole

Citizens for Tax Justice, August 24th, 2016

By Richard Phillips

While multinational corporations frequently avoid taxation by shifting profits to offshore tax havens, big businesses have increasingly exploited one onshore tax-avoidance trick: the pass-through loophole. By registering as S corporations and partnerships, businesses boasting revenues in the tens of millions of dollars can enjoy benefits originally reserved for C corporations while avoiding the corporate income tax. A new report released by the Center for American Progress (CAP) notes that the U.S. government lost as much as $790 billion of revenue from 2003 to 2012 from this loophole.

Read the full blog

Issues in the News

Incorporation Transparency

Panama Papers to Lead To Increased Enforcement of Financial Crime Regulations Globally

Deloitte, August 24th, 2016

As Panama Papers disclosures continue, more than half of respondents (51.3 percent) to a recent Deloitte Advisory poll expect global enforcement of anti-corruption, anti-fraud, anti-money laundering, and sanctions regulations to increase in the next 12 months.

Read the full press release
Deloitte recent advisory poll

Special Report: How Delaware Kept America Safe For Corporate Secrecy

Reuters, August 24th, 2016

By Suzanne Barlyn

In 2009, a global coalition was pressing governments to lift the veil on corporate secrecy. Its members – U.S. President Barack Obama’s administration, influential senators, international law enforcement agencies, anti-corruption activists and major American allies — presented a formidable front in their campaign against money laundering and tax evasion.
A proposed U.S. law would have required states to track the true owners of the companies they register. The global pushback against shell companies was threatening to dim Delaware’s longstanding appeal as a secretive corporate domicile.

Read the full article

Documents: Delaware LLCs Tied to Malaysian Embezzlement

Delaware Online, July 20th, 2016

By Karl Baker

Eight Delaware limited liability companies were named by federal prosecutors Wednesday as part of a scheme to embezzle hundreds of millions of dollars from the Malaysian government with the help of a Hollywood producer who made the film “The Wolf of Wall Street,” according to a civil complaint filed in court.

The U.S. Justice Department said several Malaysian officials diverted money from a government-owned economic development account called 1MDB and used a complex web of shell companies and bank accounts in Singapore, Switzerland and the U.S. to buy expensive real estate and artwork, as well as fund various projects.

Read the full article
United States District Court for the Central District of California: Eight Named Delaware LLC’s
The United States Department of Justice News
Economic Development Account 1MDB

Deutsche Bank’s $10-Billion Scandal: How a Scheme to Help Russians Secretly Funnel Money Offshore Unravelled.

The New Yorker, August 29th, 2016

By Ed Caesar

Almost every weekday between the fall of 2011 and early 2015, a Russian broker named Igor Volkov called the equities desk of Deutsche Bank’s Moscow headquarters. Volkov would speak to a sales trader—often, a young woman named Dina Maksutova—and ask her to place two trades simultaneously. In one, he would use Russian rubles to buy a blue-chip Russian stock, such as Lukoil, for a Russian company that he represented. Usually, the order was for about ten million dollars’ worth of the stock. In the second trade, Volkov—acting on behalf of a different company, which typically was registered in an offshore territory, such as the British Virgin Islands—would sell the same Russian stock, in the same quantity, in London, in exchange for dollars, pounds, or euros. Both the Russian company and the offshore company had the same owner. Deutsche Bank was helping the client to buy and sell to himself.

Read the full article

The Stolen War: How corruption and Fraud Created a Failed State in Iraq—and Led Directly to the Rise of ISIS.

New Republic, August 22nd, 2016

By Ken Silverstein

The year before Obama was elected, the chief investigator for the Commission of Integrity, Salam Adhoob, fled to the United States. Adhoob had received death threats, and more than 30 of his co-workers had been murdered. Appearing before the U.S. Senate, he testified that “corruption and waste” were widespread throughout the Iraqi government, especially at the defense ministry, “where cronyism, party favoritism, nepotism, and the lack of even minimal financial controls resulted in the embezzlement, theft, and waste of billions of American taxpayer dollars.”

In one case of fraud among hundreds, Adhoob discovered a shell company called Al Aian Al Jareya that was controlled by Nair Mohammed Ahmed Jummaily, the brother-in-law of Iraq’s defense minister. Jummaily had gotten rich by taking kickbacks from American companies that received contracts from the Iraqi government.

Read the full article

The Rich Are Getting More Secretive With Their Money

The Business Insider, August 25th, 2016

By Rachael Levy

You might think the Panama Papers leak would cause the ultrarich to seek more transparent tax havens.

Not so, according to Jordan Greenaway, a consultant based in London who caters to the ultra-wealthy.

Instead, they are going further underground, seeking walled-up havens such as the Marshall Islands, Lebanon, and Antigua, Greenaway, who works for the PR agency Right Angles, told Business Insider.

Read the full article


Ending the Biggest Tax Rip-Off — Tax Deferral

Real Clear Politics, August 17th, 2016

By Ron Wyden

Over the last few weeks Americans have heard lots of talk that the economic system is rigged and corporations don’t pay their fair share when it comes to taxes. At the heart of this mess is the big dog of tax rip-offs – tax deferral.

This is the rule that encourages American multinational corporations to keep their profits overseas instead of investing them here at home, and it does so by granting them $80 billion a year in tax breaks. This policy is as foolish as it is unfair. It simply defies common sense.

Read the full article