Newsletter

This past week, FACT Coalition member Global Financial Integrity released a report with a comprehensive state-by-state comparison of what information is required to set up a company versus obtain a library card.  Astonishingly, in every state, far more personal information was needed to set up a library card than a company. This is especially startling when you realize the extent to which a company—without an accountable individual attached—could be used to commit crimes with impunity.

This report came just a week after the House Financial Services Committee’s subcommittee that covers national security issues held a hearing on corporate transparency and efforts to fight money laundering.  In the lead up to the hearing Representative Carolyn Maloney (D-NY) released a discussion draft of the Corporate Transparency Act of 2019, which would require the collection of beneficial ownership information.  All the witnesses at the hearing supported the collection of beneficial ownership information as an important anti-corruption, anti-money-laundering tool. In fact, all but one witness who testified at hearings in this and the previous Congress in which corporate transparency was discussed have said that beneficial ownership disclosure was an important anti-money-laundering measure.  In a blog discussing this month’s hearing, FACT’s Gary Kalman encouraged lawmakers to this time listen to what the witnesses have to say.  Anti-human trafficking, faith, and law enforcement organizations also encouraged the committee to take action on anonymous companies.

When the Panama Papers were released just a little over a year ago it sent shockwaves throughout the world.  The massive scale of the leak and the VIP’s that it implicated outraged a public that had already seen the wealthy and corporations as not paying their fair share.  Though, with all that the leak revealed, an important question was on everyone’s minds, where are the Americans?  This past week, it seems, we found them.

The Paradise Papers—a leak of 13 million documents from Appleby, a large offshore law firm—contains details on tax avoidance techniques of at least 31,000 U.S. citizens, residents and companies. This includes household names like Apple, Nike, and Uber.  While governments have moved to crack down on tax avoidance schemes, documents in the leak show how Apple and Nike were able to outrun regulators by exploiting gaps between differing tax codes.

Just a few days before the leak, House leaders released a tax plan that rewards companies for creating complicated tax avoidance structures like those found in the leak.  It is, in effect, a gift to the multinational companies that have dodged taxes for years by offshoring profits and jobs with an estimated $458 billion tax giveaway on the profits that are currently offshore.  In 2004, a similar measure was used in an effort to create jobs yet the multinationals who benefited most from the repatriation holiday slashed 20,000 U.S. jobs over the next two years.

More corrupt officials face consequences as reverberations from the Panama Papers continue. Pakistan’s Supreme Court has indefinitely disqualified the prime minister, Nawaz Sharif, from public service after the prime minister and his children were implicated in dubious real estate transactions in London. A subsequent investigation showed his family owned luxury real estate properties through anonymous companies. Based on their income, it was unlikely they could afford the properties, suggesting they were potentially hiding stolen assets and engaging in illicit financial practices. In a blog responding to the action taken by the supreme court, Global Witness’ Naomi Hirst noted this as an example of how anonymous companies are used to embolden corrupt officials and called on leaders to fulfill their promises to eliminate them.