The US has become the key cog in the machine
of modern kleptocracy worldwide. But it
didn’t start with Trump.
By Casey Michel
February 03, 2020 "Information
Clearing House" - Critics of President
frequently use the word
“kleptocracy” to describe his leadership,
administration, and imprint on American policy writ
Before 2016 — before Trump’s election
and presidency flipped assumptions about America’s
liberal democratic project on its head — the word,
which literally means “rule of thieves,” was mostly
only used by academics and foreign policy wonks.
Thanks to Trump’s reign, though,
“kleptocracy” is having an unprecedented moment.
It’s not hard to see why. As Vox’s Zack Beauchamp
argued in 2017, “Trump’s kleptocratic instincts”
share significant overlap with post-Soviet dictators
and autocratic strongmen elsewhere, from his
nepotistic corruption to his insistence on targeting
opponents with all the levers of power at his
disposal — as seen most obviously
in his attempt to strong-arm a foreign government
into trying to investigate a political rival.
All of that is, of course, true:
Trump’s illiberalism, and his predilection for
inserting and expanding corruption wherever he can,
is hardly a secret.
But this administration is merely the
culmination of the US’s decades-long slide toward
becoming the center of modern kleptocracy. The US
has become the world’s greatest offshore haven,
allowing the crooked and the criminal to launder and
stash their ill-gotten gains across the country
— money ransacked from
national treasuries and prone populations abroad.
For despots and their families, human
traffickers and gun runners, there’s no better
friend than the US, at least when it comes to hiding
their finances from prying eyes, both at home and
All told, the US has become the key
cog in the machine of modern kleptocracy worldwide,
allowing illiberal regimes everywhere to flourish —
and threatening America’s democratic experiment in
How US states became masters of the
The biggest single provider of
anonymous shell corporations in the world isn’t
Panama or the Cayman Islands. It’s not the financial
secrecy stalwart Switzerland, or a traditional
offshore haven like the Bahamas.
Delaware. And the main reason is federalism.
Thanks to the US’s federal structure,
company formation remains overseen at the state
level, rather than in Washington.
So if you’re a budding autocrat
interested in a bit of easy money laundering, you
don’t turn to federal officials in Washington.
Instead, you look to state officials in Dover,
Cheyenne, or Reno to help construct anonymous shell
companies to funnel and clean your illegitimate
And these states have taken full advantage. Since
there are no regulations in the US requiring that
shell companies identify their true owners — known
as “beneficial owners” – American states have been
under no compunction to try to peel back who may be
behind the anonymous shell companies mushrooming
across the country.
These states and their constituents
are raking in fees
— at last check,
Delaware made some $1.3 billion annually from
its company formation industry — so whenever, say, a
human trafficker or extremist network sets up an
anonymous company in Wilmington or Laramie or Carson
City, they have little incentive to try to figure
out who may be behind the companies.
Unsurprisingly, the anonymous company
industry has been staggeringly profitable for these
states. The revenues that Delaware, which
pioneered targeting corrupt officials as
potential clients for its anonymous shell company
industry, continues to make represent
about a quarter of the state’s annual budget.
Nevada, which actively marketed
itself as the “Delaware
of the West” in the early 1990s, directly linked
company formation fees to funding teachers’
salaries. And Wyoming, which
invented the limited liability company (LLC) in
1977, has been only too happy to capitalize on
allowing shell companies to flourish in the state,
generating millions of dollars for its general
budget — yet another small state all too willing to
participate in this “race
to the bottom.”
All you need is 15 minutes, a bit of
money — Delaware offers packages for around $100,
pocket change for the crooked and corrupt racing to
the state — and a willingness to
conceal your identity, and an anonymous American
shell company can be yours. It’s
easier than getting a library card.
And what better way to purchase
American real estate, perfectly anonymously — which
almost all of the US (outside of a few major metro
areas) continues to allow — than via an anonymous
American shell company?
The criminal and corrupt of the world
have taken notice. “Merchant of Death” Viktor Bout,
the most prolific illicit arms dealer of the past
used anonymous American shell companies to
smuggle missiles and rocket launchers to rebels in