22 Investors Managing Over $505 Billion In Assets Sign Letter Calling On Congress To End Shell Companies' SecrecyVW Staff
22 Investors Managing Over $505 Billion In Assets Sign Letter Calling On Congress To End Shell Companies’ Secrecy
Comes as Investors Convene in DC to Discuss Governance, Social and Environmental Risks to Investors and Companies and as the US government commits to corporate transparency measures at the international Anti-Corruption Summit in the UK
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.”
Read the full letter to the Senate below.
Read the full letter to the House below.
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.
View a fact sheet on recent Global Witness investigations HERE
For more information:
- See Global Witness’ most recent investigative report, and brief with recommendations for investors and governments, The Deceivers: Edmonds and Groves about how anonymously-owned companies can be used to scam pension funds, savings funds or any other investments that use stock exchanges
- See Global Witness’ reports exposing additional ways that anonymously-owned companies pose systemic risk to investors that can harm them: Shell and Eni’s Misadventures in Nigeria and press release (May 13, 2016), Eni’s board accused of misleading investors at AGM over “smash and grab” Nigeria deal under investigation in Nigeria, Italy, Netherlands and USA; Glencore and the Gatekeeper; Lords of Jade (referencing Caterpillar Inc and The Coca Cola Company); the blog, “Who are you really doing business with? Lessons learned from Coca Cola’s experience in Myanmar”
- See Global Witness’ report, The Great Rip Off on ways that anonymously-owned American companies harm national security, the vulnerable, poor countries and American taxpayers
- Watch how exposing anonymous companies could cut down on crime (Global Witness / TED)
- See Global Witness’ investigation featured on 60 Minutes, Undercover in New York – our hidden camera investigation reveals how suspect money can enter the US
- See Tackling corruption and promoting stability through beneficial ownership transparency for the business case for ending anonymous companies (The B Team)
- See Putting beneficial ownership transparency into practice for business use cases for corporate ownership information (B20)