March 19, 2014; National Public Radio
Ukraine’s deposed president, Viktor Yanukovych, is one of the several Ukrainian and Russian politicians subject to economic sanctions imposed by the U.S. and the member nations of the European Union. These sanctions against Yanukovych and his colleagues involve freezing their access to funds and economic resources in the EU and the U.S. The problem is that people like Yanukovych are likely to have hidden their ownership of accounts and properties under other names, corporations, or other structures as camouflage.
The nonprofit Global Witness, supported significantly by George Soros, has long been a leading entity in campaigning against corruption through “anonymous shell companies, which are open to abuse by drug lords, sanctions-busters, kleptocrats and their cronies.” Last week, Global Witness became this year’s recipient of a $1 million annual prize from TED, the nonprofit group known for its sponsorship of elite talks meant to discuss stimulating and important ideas. Global Witness helps reveal who is behind these anonymous Potemkin companies that shield the identities of people like Yanukovych.
The problem isn’t just with the likes of Yanukovych, who made himself and his family extraordinarily wealthy while he lived in the presidential mansion. The problem is that Yanukovych and other tycoons hide their money behind veils of corporate secrecy. The UK and other nations are pledging to develop registries of corporate owners, but one nation is still resisting—the U.S.
According to the Economist, “corporate secrecy is particularly strong in America. Registration agents aren’t even required to collect and hold ownership information in states like Delaware and Nevada.” It is due to groups like Global Witness that nations are slowly taking down barriers to finding out who’s really behind the corporations that are often used by politicians like Yanukovych and the oligarchs and their supporters. Global Witness’s co-founder, Charmian Gooch, told a TED conference the other week that “anonymous companies are making it difficult and sometimes impossible to find out the actual human beings responsible sometimes for really terrible crimes.”
Gooch gave the TED conference participants a snapshot description of Global Witness’s functions:
Sign up for our free newsletter
Subscribe to the NPQ newsletter to have our top stories delivered directly to your inbox.
“We investigate, we report, to uncover the people really responsible for funding conflict—for stealing millions from citizens around the world, also known as state looting, and for destroying the environment. And then we campaign hard to change the system itself. And we’re doing this because so many of the countries rich in natural resources like oil or diamonds or timber are home to some of the poorest and most dispossessed people on the planet. And much of this injustice is made possible by currently accepted business practices. And one of these is anonymous companies…. Anonymous companies are great for sanctions busting too…but for every case that we and others expose, there are so many more that will remain hidden away because of the current system. And it’s just a simple truth that some of the people responsible for outrageous crimes, for stealing from you and me and millions of others, they are remaining faceless and they are escaping accountability and they’re doing this with ease, and they’re doing it using legal structures.”
The all-too-typical U.S. posture of lecturing other countries backfires when it comes to anonymous corporate owners. Due to the intervention of entities such as the U.S. Chamber of Commerce and the American Bar Association, the U.S. has been resisting efforts to require states to reveal the “beneficial owners” (meaning the real or true owners) of corporations, which the Federal Law Enforcement Officers Association describes as “the corporate foxholes that criminals cower in.”
It isn’t just a matter of just doing better research; the crooks in the foxholes are experts at covering their tracks. As Gooch points out, “You can use one company being the owner of another company being the owner of another company. And you can create webs of ownership that makes it very difficult to find out who is ultimately benefiting from those companies.”
The lesson of the TED award for Global Witness is that legislation is needed, especially in the U.S., which is increasingly the repository of international wealth. Senators Charles Grassley (R-IA) and Carl Levin (D-MI) have proposed legislation and joined together in a statement to support the work of Global Witness.
But the U.S. remains resistant to this vital transparency legislation. “In some states across America,” Gooch notes, “you need less identification to open up a company than you do to get a library card, like Delaware, which is one of the easiest places in the world to set up an anonymous company.” The U.S. has gone overboard on secrecy and confidentiality. Maybe the TED prize for Global Witness will be the event that moves the U.S. to rethink its function as one of the absolutely best and easiest places for private and public sector crooks to set up anonymous corporations for hiding what they have plundered from unsuspecting and powerless citizens.—Rick Cohen: