For Immediate Release
22 Investors Managing Over $505 Billion in Assets Sign Letter Calling on Congress to End Shell Company 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 - This week investors from across the country are gathering in Washington, DC to share the latest in sustainable investment strategies. An important topic will include the strong message sent to Congress by 22 institutional investors managing more than $505 billion in assets 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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