22 investors managing over $505 billion support efforts to end shell company secrecy
May 20th, 2016
May 20th, 2016
Washington, DC — Today 22 institutional investors representing more than $505 billion in assets under management sent a strong message to Congress calling for passage of bipartisan legislation currently before it that would require all American companies to disclose the real people who own or control them, and to keep that information updated.
“As an institutional investor, we expect good corporate governance business practices of the companies in which we invest,” said Lauren Compere, Managing Director from Boston Common Asset Management. “Corporate secrecy and a lack of transparency pose real risks to companies and investors alike and have real bottom line costs associated when it leads to corruption. This bipartisan legislation is a common sense solution and we call on Congress to take immediate action and for presidential campaigns to take a clear stance on this important issue.”
Global Witness and others, including investors spanning from across the US and Canada to the UK and Germany are backing bipartisan legislation that will help tackle the problem of anonymously-owned shell companies. By requiring updated disclosures about the real people behind American companies, law enforcement will have critical information that they need to combat all types of criminal activities. This includes fraud and scams that have targeted investors and have even destabilized entire companies or markets.
“We support this legislation because access to reliable and accurate information is a hallmark of well-functioning financial markets,” said Susan Baker, Vice President, Shareholder Advocacy at Trillium Asset Management. “Allowing opaque corporate structures to exist denies much needed transparency and accountability. This bill is a valuable law enforcement tool, and can help investors better examine and manage risks associated with corruption in corporate supply chains.”
In response to the homegrown problem of corruption and dirty money in secret US shell companies exposed by the Panama Papers and in anticipation of the international Anti-Corruption Summit in the UK, the Treasury Department released new draft legislation on May 5. Their proposal aims to increase transparency of the ultimate owner of companies formed in the US. Although the Administration once supported the bipartisan Congressional legislation, in 2014 it proposed an alternative approach to collecting information about US company ownership, but no specific legislation has even been put forth.
“To address the urgent problem of anonymous companies, we need robust policy solutions that effectively ensure we know who owns and controls American companies,” said Eryn Schornick from Global Witness. “As Congress and the Administration take action to do this, the test for any proposal will be whether it allows broad access to company ownership information, and that the right information is being collected at the time of incorporation and kept up to date. Otherwise, the US risks muddying the waters by offering half-measures, which could undermine more comprehensive solutions and put the country out of step with the rest of the world.”
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About Global Witness
Global Witness wants a better world — where corruption is challenged and accountability prevails, all can thrive within the planet’s boundaries, and governments act in the public interest. Many of the world’s worst environmental and human rights abuses are driven by the exploitation of natural resources and corruption in the global political and economic system. Global Witness is campaigning to end this. We carry out hard-hitting investigations, expose the facts, and push for change. We are independent, not-for-profit, and work with partners around the world in our fight for justice.