Ann Marlowe

Originally published by OCCRP, January 26, 2021

https://www.occrp.org/en/37-ccblog/ccblog/13722-opinion-time-for-a-free-public-registry-of-corporate-beneficial-ownership-in-the-u-s

In the tumult of recent weeks, a major legislative milestone in the American fight against kleptocracy has sneaked by almost unnoticed. It demands our attention, especially because its work is only half done.
On Jan. 1, the Corporate Transparency Act (CTA) was signed into law, when Congress overrode then-President Donald Trump’s veto of the National Defense Authorization Act, to which it was attached.

The CTA mandates that the incorporators of new corporations or limited liability partnerships will have to file annually to the Financial Crimes Enforcement Network of the Department of the Treasury (FinCEN), listing the names, dates of birth, addresses, and official identification numbers of the beneficial owners of such entities.

But the CTA is a half measure, because the new legislation doesn’t include the formation of a central, searchable database to help get this crucial information out into the open. The public has the right to know the names behind these corporations, which have the same legal privileges as humans. The public in this case includes individuals who may have been defrauded, the divorcing spouse who suspects a partner is concealing assets, and journalists investigating possible criminality.

Those of us who have researched companies in the U.K. know just how far the CTA falls short, and how much better things could be if the U.S. copied the British model.

One night in November 2011, sitting at home in New York, I went to the U.K.’s Companies House website and typed in the name of a company I suspected was a criminal enterprise. I was doing this in my capacity as an investigative journalist, but the information I sought was accessible to anyone, and it was inexpensive.

Companies House is a self-financing U.K. government agency staffed by civil servants, its primary purpose being to enable British citizens to register companies and file annual returns. Currently, every one of the 4.3 million companies spanning England, Wales, Scotland, and Northern Ireland, be they private or public, big or small, must file information on their directors and controlling shareholders annually with Companies House, in addition to their annual account filings.

Because of this comprehensiveness, Companies House also serves a secondary function: It allows citizens to research companies they are suspicious of. As a result, Companies House is the first stop for any journalistic investigation involving U.K. entities.

As I searched that night in New York, I soon found not only the address of the company I was looking into — a private house — but also the names of the company directors. Within an hour I knew that these directors had between them started more than 40 companies from the same house. After one particular name piqued my interest, a private banker was immediately able to tell me it belonged to the former infrastructure czar of an Arab country.

This was the first step in the discovery of a giant transnational kickback and money laundering ring later detailed in the international press, but it would not have been possible without Companies House.* To this day it would not be possible at all in the U.S., where no equivalent database exists.

In the U.S. there is no central national registry of companies; this function is instead handled by the secretaries of state of the 50 separate states. Many states, like Delaware, offer no public information about these companies, other than their incorporation dates and registered agents. More than 1 million corporations are registered in Delaware, partly because tax is not collected on the portion of Delaware corporations’ income that is generated out of state.

Five companies related to the scandal-plagued consulting firm Cambridge Analytica LLC were registered in Delaware, but it was only after a leak to the New York Times that it became apparent that the hedge fund manager Robert Mercer was among its main investors. We still don’t know the other shareholders, but we know that former Trump adviser Steve Bannon was a director, because he had to file White House disclosure forms.

Most state registries are cumbersome to use and low on information. They are also often expensive: Delaware charges $10 or $20 for a corporation’s status or history. Commercial aggregators are available to the public, but they, too, are pricey. The closest thing we have to a free, transnational registry is the excellent opencorporates.com, but it offers no more information than the original reporting jurisdictions. Another great resource is the website of the International Consortium of Investigative Journalists, but again there are limitations on what can be found in a single place.

In comparison, it’s hard to overestimate just how useful Companies House is. Each director’s birth month and year is noted. Changes of company name or address are also tracked, which can be extremely helpful when it comes to tracing criminal companies, which often change addresses and names. In addition, Companies House maintains a list of disqualified directors, and persons who have declared bankruptcy. A few years ago, all Companies House filings were made available to download free of charge.

The U.S. has long had the best enforcement capabilities in the world. But to end the concealment of the fruits of kleptocracy, you need information, plus enforcement, plus political will. An American version of Companies House could be phased in gradually, starting with newly formed companies. Ideally, ownership information from individual state registries could be scraped and folded into this central database, offering the public a vital resource.

The U.S. effort could begin with a requirement to file details on beneficial ownership, before moving on to the annual filing of accounts, to reduce the initial regulatory burden. Ultimately, the database could be integrated with federal-level taxation, to ensure that accounts filed by companies to the Internal Revenue Service tally with those being reported to America’s Companies House.

With a new focus on information gathering, a central public registry, and the backing of a Biden administration truly committed to cleaning house, consequential change is possible. It’s time the U.S. stopped being an attractive home for dubious companies.

*Disclosure: I worked on this matter as a paid consultant.

Ann Marlowe is a writer and businesswoman in New York. She has worked on stolen asset recovery using Companies House.

Originally published in The Bulwark January 6 2021

https://thebulwark.com/the-narcissists-coup/

Afew days ago, a Libyan friend asked me, “Will Joe Biden really become President of the United States?”

Until recent years, I would have been a bit arrogant in responding. I would have felt it was like asking an Italian if they have good pasta. You’re suggesting a weakness in our democracy? It’s our best-known product. But by January 1st, this had become a question it was at least conceivable to ask. We had become a lot more like Libya than we were before Trump.

And that was before the Trumpist putsch today.

From 2002 to 2012, I spent a lot of time visiting Afghanistan and Libya. People in both countries love to vote. So, they would seem to accept the philosophical basis of democracy. However, they are less keen on accepting the results if the opposition wins. They like the action of voting but don’t understand the culture behind voting.

Libya has been engulfed in a civil war since 2014 for this reason. For much of this time they have had two establishments, each claiming to be the legitimate government. They have what I call “democracy until the other side wins.” Afghanistan has “democracy until my cousin asks a favor.” Neither is the same as the rule of law.

On an individual level, almost no Libyan official will accept his dismissal until he is physically blocked from entering his office or they change the locks. That is why there have been as many as three men at the same time claiming to be head of the Libyan Investment Authority (LIA), and often two men (yes, it’s always men) claiming to be Libyan diplomats in the same posting. These officials always have an excuse for why they should stay, and usually it’s pretty convoluted, but that doesn’t bother them.

The issue in Libya is confusing legalism with the rule of law. It is what philosophers call a category mistake, like walking around Oxford’s campus, looking at individual buildings, and asking, “but where is the university?” The answer is that Oxford University is the sum total of colleges, administrative buildings, laboratories, libraries, sports facilities, and so on.

The rule of law is a way of life. Libyans have had hardly any experience of this way of life. As a result, what they’re doing is understandable, to an extent.

What’s America’s excuse?

Podcast episode cover image
PODCAST · JANUARY 22 2021
Bill Kristol: The GOP Has Learned Nothing
On today’s Bulwark podcast, Bill Kristol joins Charlie Sykes to discuss why the GOP has learned nothing during the Trump…
As many have pointed out, the problem is not Donald Trump, it’s much of the Republican Party and the 74 million Americans who voted for Trump, almost all of whom still seem to stand by him today. Those 74 million people had might as well be living in what is called an emerging democracy where you put your cockamamie ideology or your family loyalties above the rule of law.

For almost two-and-a-half centuries, American identity included living under the restraints of our Constitution—not as a burden but as a badge of honor. So how did we become a country where half our citizens don’t understand the glory of living under the rule of law?

We lost our pride in living under the rule of law, just as we have lost our acceptance of living under other restraints. This pride eroded, along with trust in government, but also with many other conventions. It’s been some time since our culture valued any sort of deference, including to scientific expertise or to the vulnerable. (You see both in the right-wing response to the pandemic, which has cast doubt on the work of scientists while also suggesting a few hundred thousand people dying is merely the cost of doing business.)

Enacting one’s narcissism became the only rule, and, as Stuart Schneiderman said, narcissism is always enacted at someone else’s expense. We elected a president who acts like a big baby. Those who voted for him said things like “it was time to shake things up” and “I’m tired of political correctness” and “I’m tired of being told what to do.” They wanted to let their id out. They were tired of hypocrisy.

But Trumpism is not the opposite of political correctness; both are aspects of the same illness. The collective sickness we’re suffering from is an inability to see oneself as one person among others with no larger or smaller claim on the universe’s attention. The desire to force one’s opinions and preferences on the rest of the world is just the mirror image of the desire to burn it all down. Neither one shows a respect for freedom. Polarization is not the problem in the United States right now so much as the selfishness that generates it. Freedom is only possible when both sides realize that it’s possible for others to disagree with them—and occasionally you’re going to be on the losing side of that disagreement. A respect for the feelings of others makes freedom possible. Sometimes it looks like what adolescents call hypocrisy.

The putschists in their infantile cosplay getups are devotees of narcissistic self-expression. When some of them referred to Congress as “our house” they didn’t mean that metaphorically; they literally put their feet up on the desks. That’s something only children and boors do. It is too soon to really absorb the events of today, but the corrective to the riot in the Capitol will include a return to the civility of classic liberalism. Let’s hear it for restraint, mutual respect, and pride in following rules.

And let us hope for justice under the law for those who perpetrated the events of today.