Oregon lawmakers could hear as many as four bills related to anonymous company abuse during the legislative session that starts Wednesday.
Former Secretary of State Jeanne Atkins pre-session filed three of the bills and credited the Business Journal's reporting last year when announcing her intent to develop legislation.
The bills would address the problems illustrated in an October 2015 Business Journal investigation that connected an Aloha house to a California "corporation mill" and a global web of fraud.
House Bill 2352 is the most ambitious of Atkins' proposals. The bill would:
- Require that businesses incorporated in the state have an actual place of business here, not just a mail forwarding address.
- Authorize the secretary of state to investigate alleged shell companies. Currently, the office is ministerial, meaning it only processes paperwork.
- Permit the Department of Revenue to recommend the dissolution of companies that don't comply with tax laws.
- Make directors and officers liable for damages, which would prevent stand-in officers from side-stepping lawsuits.
- Give the attorney general the power to seek dissolution of businesses.
House Bill 2353 would require corporations, including shell companies, to declare whether its owners have been disclosed on a tax return. Many states, including Oregon, have incorporation laws that make it easy to hide ownership information and stifle law enforcement investigations. The bill also would require companies that don't file a tax return disclose who owns the companies.
Mark Hays, a senior adviser for Global Witness, an organization that won a $1 million TED Prize to combat anonymous companies, said the ownership caveat has "national implications."
"To my knowledge, there is no other state where that's required and there's no legislation in the works that would require such a disclosure," he said. "It would put Oregon in a leadership position on this issue."
House Bill 2354 would require those who accept legal documents on behalf of more than 50 people - known as commercial registered agents - to go through a licensing process. Convicted felons would be prevented from serving as commercial registered agents.
Oregon Attorney General Ellen Rosenblum supports the bills.
"Abusing the power granted to corporations and other entities harms Oregonians, and harms our reputation as a good place to do business," said spokeswoman Kristina Edmunson, in an email. "We regularly prosecute fraudsters—but we all too often run into the 'shell game.' We will receive complaints about a company that has bilked consumers, but then we find the company drained all its assets, and simply opened up a new entity to continue the problematic behavior. We are currently looped into the discussions around these bills, and we are happy to work with stakeholders to find a good outcome for Oregonians."
Each of Atkins' three bills has been assigned to the House Committee on Business and Labor, which pre-session filed House Bill 2191, which contains many of the provisions of Atkins' bills.
In 2006, the U.S. Treasury named Oregon one of four states"attractive to those persons seeking to hide illicit activity within the framework of shell companies."
Since then, Oregon lawmakers have taken a few minor stabs at addressing the issue. But critics have shot down the efforts, saying the various proposals would have infringed on privacy, unnecessarily slowed business formation and cost legitimate companies money because of added regulation.
In an October interview with the Business Journal, Atkins said she hoped her legislation would alleviate those criticisms.
“We want to ... make people accountable, but we want to continue to ... make it easy to start a business in Oregon," she said.
The publication last year of the Panama Papers, a blockbuster trove of leaked documents from a Panamanian law that specializes in forming anonymous companies, could give the Oregon legislation some early momentum.
"The Panama Papers have reinforced that you don't need to leave the United States to set up these anonymous shell companies," said Oregon Sen. Ron Wyden, at a press conference last year. "You can do it right in your own backyard."
The Democratic senator called the Panama Papers a "wake up call" and vowed to introduce federal legislation as well.
This story has been updated with comments from Global Witness.
The Portland Business Journal is a KGW News partner.