In uncertain times, transparency is a must for investors

  • Publication date: 16 February 2017
  • Author: Eryn Schornick

There are few things that companies, including their investors, dislike more than uncertainty, so given the state of politics in the U.S. and Europe these are unnerving times. But, there is one thing that the business community can be certain of: the criminal and corrupt will continue to hide behind their secretly-owned American companies in order to carry out unethical and illegitimate activities. This makes it very hard for responsible businesses to manage all types of risk, unless the U.S. Congress takes urgent action.

To date, global investors managing over $740 billion in assets are calling for Congress to require all American companies to report their real owners and to keep that information updated (see letters to the Senate and House of Representatives). According to investors, access to accurate and reliable information is a hallmark of well-functioning financial markets, and corporate secrecy and a lack of transparency have real bottom-line costs associated when they lead to corruption. Academics found that the Panama Papers, an investigation into the rogue offshore finance industry, led to a $135 billion loss of value among nearly 400 publicly traded companies that had direct links to the exposé.

Until this bipartisan law is passed and the U.S. joins a broader global movement toward company ownership transparency, the business community has an exciting resource underway in This project will provide an open register of company ownership information from around the world that businesses and investors can use to identify the ultimate owners of supplier and partner companies.

Chancing It: How secret company ownership is a risk to investors, a report by Global Witness and Global Financial Integrity, provides compelling examples of the importance of such transparency, as well as hidden dangers that anonymously-owned companies pose for businesses and investors. In one instance, an oil giant incorporated an anonymously-owned shell company to contract for the right to drill on hundreds of farmers’ land by promising bonuses that were never paid. Though the company admits no wrongdoing, it agreed to create a $25 million compensation fund.

In another, a telecommunications company allegedly paid an anonymously-owned company $250 million to bribe the daughter of the then President of Uzbekistan for a license to do business in the country. The scandal led to multiple, on-going legal investigations, the resignation of several company executives, and a proposal by U.S. and Dutch authorities that the company pay $1.4 billion in fines to settle the allegations.

I discuss this issue further in my podcast interview with Principles for Responsible Investment (PRI), Corporate Ownership Transparency. Tools to help the business community maximise the value of corporate ownership information through better risk management and the prevention of significant, negative financial impacts can also be found in Chancing it.

We at Global Witness look forward to expanding and strengthening these tools, as well as to elaborating on the value and importance of company ownership transparency. Please join us! Visit to learn how business leaders can take action in the following ways:

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