Bill Moyers: Why are there so many anonymous corporations in Delaware?
From the Federal Election Commission’s suggestion that it might finally begin scrutinizing donations to super PACs from mystery limited liability companies (LLCs) to the revelations in the Panama Papers, LLCs are very in right now. The leak of the Panama Papers reportedly shows the use of offshore shell companies to hide cash by many high-profile foreign figures, from highly-paid soccer star Lionel Messi to the prime minister of Iceland, but the lack of Americans implicated in the investigations has raised eyebrows in the international community.
We’d all like to believe that it’s because most Americans are law-abiding folks; but there might be another answer: Americans don’t need offshore companies in tiny island nations to hide their money. America has Delaware.
Delaware is home to more than a million companies, meaning it has more companies than actual human residents. In 2012, The New York Times reported that a single building in Wilmington was the legal address of over 285,000 separate businesses. About 65% of Fortune 500 companies are incorporated in Delaware. Many companies choose to incorporate there because of the “business-friendly” climate and extensive body of corporate law, or because Delaware has much lower corporate taxes than most states. The New York Times says incorporating in Delaware “has enabled corporations to reduce the taxes paid to other states by an estimated $9.5 billion.” But it also happens to be one of the easiest places in the world to set up an anonymous company, making it a great place to establish an LLC to do business that you don’t want anyone to know about or you don’t want to be easily connected to.
The New York Times quotes the chief executive of a registration agent — a company that registers companies — as saying Delaware has “the most secret companies in the world and the easiest to form.” A senior researcher at the Tax Justice Network quoted in its piece concurs, calling Delaware “the biggest single source of anonymous corporations in the world.”
Even though it’s the easiest place to set up an anonymous company, Delaware isn’t the only state whose laws allow corporate anonymity. Several states — like New Mexico, Wyoming and Nevada — don’t require public disclosure of a company’s owners, though they may compel the release of more information through subpoena. And even if these states don’t provide complete legal protection through anonymity from lawsuits or federal investigation, they can make it significantly more difficult for law enforcement or the public to look into who’s behind these business entities. That matters a lot when those LLCs are, for example, making big donations to super PACs.
As long as any US state has rules this lax, it affects the entire country — just look at how many impossible-to-trace LLCs we found donating to super PACs, contributions that the public will never know the true source of.
At: http://billmoyers.com/story/why-are-there-so-many-anonymous-corporations-in-delaware/
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