Tue, Mar 31, 2009 - Page 9 News List

Dirty secrets in the US

By Nick Mathiason

Two million corporations and limited liability companies are formed every year in the US with no one knowing who the beneficial owners are.

“Right now, a person forming a US corporation or limited liability company provides less information to the state than is required to open a bank account or obtain a driver’s license,” Democratic Senator Carl Levin said last year.

Welcome to America’s dirty little secret: the states of Wyoming, Nevada and in particular Delaware, where financial disclosure requirements are minimal. Delaware has come under scrutiny from Swiss bankers, who argue it provides the same levels of secrecy as they do.

Washington insiders say that while there are problems with Delaware’s business disclosure laws, they are expected to be addressed soon. And they argue that, unlike Switzerland, Delaware does not have a history of touting for overseas business using its facility to avoid tax as a selling point.

But while Obama leads the fight to combat tax evasion in offshore centers, recent studies indicate he should be looking closer to home.

Jason Sharman, professor of the center for governance and public policy at Griffith University in Australia, tried to set up shell companies in 22 countries. Surprisingly, the easiest places to retain secrecy were the US and Britain.

Sharman attempted to set up anonymous shell companies 45 times. In 17 cases, the service providers provided the requested shell without bothering to check on the actual identity of the client. And it was not expensive: US$550 to US$1,900. Shockingly, seven shells were provided in Great Britain, four in the US, one in Spain and one in Canada.

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