Legislator: Wyoming Laws About Shell Corporations Are Good For The Rich
Wyoming's business-friendly laws about shell corporations, now under scrutiny in light of the Panama Papers, don't affect most of us in terms of wages and economic diversification, a Cheyenne legislator said Thursday.
But the rich like them because of their secretiveness, Rep. Dan Zwonitzer, R-Cheyenne, said.
"(Will) the average, everyday person in Wyoming, feel the effects of these types of laws? No," Zwonitzer said.
"But certainly the wealthy, a lot of people who live in Teton County or people who invest in large corporations in mineral interests, in the natural resource sector who put large amounts of money on the line to invest in certain projects appreciate that anonymity," he said. "It's just kind of been the historical practice."
Wyoming citizens value a live-and-let live philosophy, Zwonitzer said. They like to keep their affairs private and business regulations minimal, and the laws reflect that. So besides the corporations laws that shield assets from public view, Wyoming also keeps private the names of lottery winners, he said.
Zwonitzer is co-chairman of the Joint Interim Corporations, Elections and Political Subdivisions Committee, which will conduct its next meeting in Lander on May 10.
The committee will revise its agenda to consider the state's laws about registered agents and shell corporations in light of the international Panama Papers scandal, with its link to Wyoming, he said.
The initial stories about the Panama Papers — 11.5 million leaked files in 2.6 terabytes of documents — were published Sunday by the International Consortium of Investigative Journalists about the Panamanian law firm Mossack Fonseca that has set up 214,000 shell corporations to hide billions of dollars in assets of world leaders, their associates and the super-rich. Many shell corporations -- companies that have few if any assets but manage money — have legitimate purposes such as assisting business start-ups. But the Panama Papers reveal a system that shields the wealth of world leaders, drug and terrorist organizations, and rogue nations.
Monday, the Wyoming Secretary of State's Office audited M.F. Corporate Services and found 24 companies registered with it, and also found it failed to maintain the required information for performing as as registered agent. Officials demanded the required information, and M.F. Corporate Services complied.
Wyoming has strengthened its laws in the past decade about registered agents and shell corporations, but it and Nevada still appear attractive to companies like M.F. Corporate Services Wyoming, LLC.
Zwonitzer said the Joint Interim Corporations, Elections and Political Subdivisions has been in contact with the Secretary of State, and they have been reviewing what, if anything, may need to be changed in the state's corporations laws
"The mantras that we are 'business friendly and not fraud friendly,' but in being a business-friendly in a very tax-favorable climate, the opportunities for some fraud still exist," he said.
What that means for everybody else is an open question, Zwonitzer said.
"Is it a bad thing that Wyoming is a tax haven for the wealthy around the world? Some would say yes, some would say no," he said.
"As long as they're operating within the bounds of the laws, there's not a major problem that I see we need to go fix. But if in some ways some transparency and a higher audit function may be warranted."