[News] Forget Panama: it's easier to hide your money in the US than almost anywhere
Anti-Imperialist News
news at freedomarchives.org
Wed Apr 6 16:03:15 EDT 2016
*http://www.theguardian.com/us-news/2016/apr/06/panama-papers-us-tax-havens-delaware?CMP=share_btn_fb
**Forget Panama: it's easier to hide your money in the US than almost
anywhere*
Jana Kasperkevic - April 6, 2016
One of the surprises about the Panama Papers – the largest leak from an
offshore tax adviser in history – is how few Americans have so far been
exposed. The reason? It may be because creating a shell company in the
US is easier than obtaining a library card.
What is Mossack Fonseca, how big is it, and who uses offshore firms? Key
questions about one of the biggest ever data leaks
About 200 people with US addresses have so far been revealed as clients
of Mossack Fonseca, the firm at the center of the Panama Papers leak.
Compared with countries such as China, Switzerland, Russia and the
United Kingdom, the number is small.
The anomaly may be because it’s so easy to create a vehicle to hide your
money and your identity in the US that there’s no need to mess with
Panama, according to Shruti Shah, vice-president of programs and
operations at Transparency International, an anti-corruption organization.
“You don’t really have to go to Panama or other tax havens. They are not
the only ones making it possible for corrupt officials and other
criminals to launder their money. You can do it in every state in the
US,” explained Shah.
Delaware is so synonymous with anonymous companies that it was named as
one of the most symbolic cases of corruption
“In every state in the US, you can incorporate an LLC – [a limited
liability company] – or another legal entity and you don’t have to
disclose who the beneficiary on it is. In fact, Delaware is so
synonymous with anonymous companies and ghost corporations that it was
named in Transparency International’s Unmask the Corrupt campaign as one
of the most symbolic cases of corruption.”
The term tax haven usually evokes an image of some faraway place like
Belize or the Cayman Islands. Yet in 2015, in a ranking of tax havens
most attractive for those looking to hide assets, the US came in third –
surpassing Cayman and Singapore. The two places that were even better
suited as tax havens for the rich were Switzerland and Hong Kong,
according to the Tax Justice Network that published the ranking.
What was Panama’s ranking? It was 10 spots behind the US, at 13.
hidden owners panama papers
A while back, Shah sent her husband to return an overdue book she had
borrowed from the library. When he returned, he told her her library
card was expired and that to renew it she would have to bring her
driver’s license showing her current address or a utility bill with her
address.
“If I were to open a shell company, I wouldn’t require any of those
things. I would actually need less information to open a shell company
in the US than I would need to get a driver’s license or a library
card,” pointed out Shah.
But financial secrecy index report notes if UK and affiliated tax havens
such as Jersey were treated as one, it would top the list
Is this in every state or just some like Delaware where the majority of
US companies are incorporated ? “No state in the US requires beneficial
ownership information. So it’s practically everywhere,” explained Shah,
who lives in Virginia. “Some states are easier than others. In some
states it’s more money than others, because they also have tax-friendly
laws. Delaware and Nevada and Wyoming are infamous – or famous, however
you look at it – [for their tax laws]. Texas and Florida are equally easy.”
There is nothing illegal about setting up a shell company. US states are
proud of their business-friendly policies. Delaware, for example, prides
itself on being the incorporation capital of the US. “More than
1,000,000 business entities have made Delaware their legal home,”
claimed the state’s Division of Corporations website. “More than 50% of
all publicly-traded companies in the US including 64% of the Fortune 500
have chosen Delaware as their legal home.”
In the wake of the Panama Papers, the number of shell companies
incorporated in the US could grow. Instead of stashing their cash in
Belize, Panama or the Cayman Islands, the companies and individuals
could turn to the US.
“They certainly could,” said Heather Lowe, director of government
affairs at Global Financial Integrity. “Given the lack of action in the
US to address this issue compared to, say, the European Union, it may
seem like a safe bet right now.”
I need less information to open a shell company in the US than I would
need to get a driver’s license or a library card
Shell companies have their uses; they can be used to buy land
anonymously, for example, without tipping off the competition. To create
an entity to protect future business rights, or a holding company for
various businesses. They can also be used to, legally, make political
contributions anonymously.
Just because some people or companies have chosen the state to form
shell companies and hide assets does not mean the entire system should
be to blame, argued Charles Elson, director of the John L Weinberg
Center for Corporate Governance at the University of Delaware.
“Delaware really is not a tax haven. Delaware is a place where most US
companies are incorporated, because of a very intelligent corporate law
regime,” he said. “Obviously, some companies that are problematic come
here, too, but that’s not the design of the system. That’s a collateral
effect … If someone uses the corporation for nefarious purposes, I don’t
think that’s the fault of the corporate statute, but of the individual.”
Shell companies, whether created abroad or at home, make it easy for
people to hide assets and commit crimes, said Shah. For example, in the
mid-2000s, former Louisiana congressman William Jefferson had created
eight different shell companies to hide hundreds of thousands of dollars
of bribes. Viktor Bout, an infamous arms trafficker known as the
Merchant of Death, had at least a dozen shell companies incorporated in
Delaware, Texas and Florida to cover up his weapons trafficking operation.
There is no reason, said Shah, why creating such shell companies should
be easier than obtaining a library card. Her group Transparency
International has called on the US Congress to pass the Incorporation
Transparency and Law Enforcement Assistance Act introduced by
congresswoman Carolyn Maloney and Senator Sheldon Whitehouse. If
enacted, the bill would require states to collect, maintain and update
information about beneficial ownership of all companies created in the US.
“Bipartisan legislation has been introduced in the House since 2008, but
it has never seen the light of day. It’s never been enacted into law.
Maybe now is the time,” said Shah.
Elson remains skeptical as to whether such a law would actually work.
“I don’t know how fixing the beneficial ownership rule would fix this.
If someone is devious enough to game the system in this way, they would
work their way around any single regulatory change. These are very
clever people,” he said.
In order for any legislation to pass, the US business community would
have to come out in support of it, pointed out Lowe.
“The US Chamber of Commerce has long opposed legislation to end
anonymous companies, and they must reverse that position and begin to
support honest and open business practices,” she said.
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