2014-03-18

Co.Exist

The $1 Million 2014 TED Prize Wish: Abolishing Corrupt Anonymous Companies

Charmian Gooch, co-founder of Global Witness, wants to stamp out shadowy, unaccountable companies by creating government-approved public registries, so you know exactly what every corporation is doing.

In 2011, during his satirical presidential campaign, comedian Stephen Colbert created an anonymous shell corporation--a 501(c)(4) corporation--to hide the identity of his donors.“Clearly, these (c)(4)s have created an unprecedented, unaccountable, untraceable cash tsunami that will infect every corner of the next election,” Colbert said at the time, according to The Hill. “And I feel like an idiot for not having one.”

He was joking, but anonymous companies are responsible in some way or another for much of the world's financial corruption, from money laundering to the funding of terrorist operations. Charmian Gooch, the winner of the annual $1 million TED Prize and the co-founder and director of Global Witness, an organization that ferrets out the links between natural resources, conflict, and corruption, wants to abolish anonymous companies permanently. And at this week's TED conference, she called on the business and technology communities to help her do it.

The TED Prize money goes towards a wish made by its recipient. This is Gooch's wish, as described in a press briefing before her TED talk: "My wish is for us to know who owns and controls companies so they can no longer be used anonymously against the public good," she says. "It's doable. There's already incredible momentum and recognition of the need to end corporate secrecy. It's a driver of conflict and corruption, and it keeps millions of the world's poor in poverty." She plans to use the $1 million to create a global movement focused on the abolishment of anonymous companies.

Gooch believes that corporate secrecy can be ended through loophole-free public registries of company owners, accessible by all (she's in favor of similar requirements for anonymous trusts, which also are used to funnel corrupt funds). If implemented, these registries would make it incredibly difficult for people to cover up misdeeds with anonymous companies--for example, to use an anonymous shell company to steal money intended to be used for developing world aid. Or, as Gooch described on the TED stage, to prevent incidents like what happened in Liberia, where an international predatory logging company used front companies as it attempted to grab a huge chunk of the country's forest.

The phrase "anonymous shell company" conjures up images of sunny offshore havens, but that's not necessarily the case. "The bigger problem is onshore and in the U.K.," says Gooch. The U.S., in fact, is the most popular country for launching corrupt anonymous companies. That's because it contains tax havens (or "secrecy jurisdictions") like Delaware, which make it easier to set up an anonymous company than to get a library card, Gooch says.

Gooch's wish is an incredibly difficult one, even if it is doable. Putting an end to anonymous companies can't be done without government help, and governments are notoriously slow at getting anything of significance done, especially if there is a technological component involved. Plus, there will be plenty of resistance from corrupt--and influential--politicians around the world. And then, there are more philosophical questions to deal with: does public good always trump privacy? What about legitimate businesses that set up anonymous shell companies?

To date, no country has created a public registry. That may change in the future. In the U.S., a bipartisan Senate bill would require states to ask about the real owners of a corporation in applications for incorporation (previous legislative efforts have failed). The European Parliament has voted in favor of creating a public registry, and David Cameron, the conservative prime minister of the U.K., has backed the idea of a public registry with support from two major parties.

While no one can single-handedly grant her wish--it will require cooperation from every country--Gooch hopes that individuals can at least help propel her wish forward. "I would like for business leaders in the TED community to get behind this wish, and for technology leaders to get behind the things we need to create--to create a prototype public registry," she says. "It could be open data so any developing country government could access and use that."

[Image: TED 2014 via Flickr user TED Conference, Photo: James Duncan Davidson]

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