Global Financial Integrity

 

Tagged ‘Delaware’

Voices from Delaware Are Speaking Out Against Anonymous Company Ownership

Four Delaware Citizens Publish Letters in The News Journal of Delaware Urging their Congressional Delegation to Curb Anonymous Company Abuse

Our campaign to stop criminals using anonymous companies to cover their tracks is getting traction in some unexpected places.

Last month we wrote about how politicians in Delaware were starting to speak out about their state’s role as a corporate secrecy haven. Half of the state legislators had sent a letter to the Delaware Congressional Delegation, urging them to support bipartisan federal legislation introduced by Senators Levin (MI-D) and Grassley (IA-R) to deal with anonymous companies.

A few weeks ago we were invited to speak about this issue at a community forum organized by the Delaware chapters of Americans for Democratic Action and the National Association of Social Workers. I was on a panel with two Delaware state legislators, the head of a local social justice organization and the Deputy Secretary of State of Delaware.

Now we’re starting to see ordinary citizens from Delaware speak out as well. This week there have been a number of letters to the editor in the Delaware News Journal.

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Debate in Delaware on Tackling Anonymous Companies

Half of Delaware’s State Legislators Urge their Congressional Delegation to Support the Incorporation Transparency and Law Enforcement Assistance Act

Last November, a former special agent for the Treasury Department, John Cassara, wrote an op-ed for The New York Times with the headline “Delaware, Den of Thieves?” Cassara described how the state of Delaware (along with Wyoming and Nevada) has become “nearly synonymous with underground financing, tax evasion and other bad deeds facilitated by anonymous shell companies”. He told of his frustration as a law enforcement officer trying to get information out of Delaware about the real owners and controllers of companies registered in the state.

This week, a debate has started in Delaware about its role as a corporate secrecy haven. One-half of the members of the Delaware State Legislaturehave sent a letter to the Delaware Congressional Delegation, urging them to support bipartisan federal legislation introduced by Senators Levin (MI-D) and Grassley (IA-R) to deal with anonymous companies.

To understand why this is such a big deal, it’s important to understand the extent to which Delaware is a global hub for company formation. More than 1 million companies are incorporated in Delaware, which is more than the actual number of living residents. That number includes 50% of all publicly-traded companies in the U.S. and 64% of the Fortune 500. This is no accident; Delaware law grants attractive tax arrangements and other measures that attract businesses to incorporate there. These measures have paid off – in 2011 alone, Delaware collected roughly $860 million in taxes and fees from these companies – about a quarter of the state’s total budget.

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