The first companies were comprised of people working in company with one another, corporations were originally defined as people associating for a common purpose and acting corporately. In our day we must come to grips with certain oxymorons and especially any hop-skippety-jump logic behind certain concepts, like that of a “shell corporation.” Of course the morphing definitions don’t end there. Our business landscape is replete with so-called corporations that are comprised of what investors view as “low level functionaries.” Their senior managers are also controlled by outside string pullers.
A shell corporation is defined as one without active business operations or significant assets. And our courts have displayed such a lack of intellectual rigor in dealing with such fraudulent corporate entities they have thereby corroded the democracy underpinnings of our constitutional republic. Shell corporations are often used by large well-known public companies, shady business dealers, and private individuals alike. Faux corporations act as tax avoidance vehicles for otherwise legitimate businesses, that are intent on privatizing gains while socializing losses.
Tax avoidance is seen, by integrity challenged individuals, as a loophole facilitating tax evasion. A variety of other conceptual and legal sophistries are often brought to bear in distorting the public discourse. The “Harry and Louise” advertising campaign was one clear example that ran in opposition to executive and legislative health care reform proposals in 1993 and 1994. It was a fourteen to twenty million dollar year-long television advertising campaign that was funded by the Health Insurance Association of America, the predecessor to a health insurance industry lobby group now known as America’s Health Insurance Plans or AHIP.
The industry then bludgeoned the public’s collective intellect with messaging that highlighted potential problems with government run healthcare. The dollar skewed media ignored the fact that a financial services industry run healthcare system would prove to be far worse. They created so much confusion that, during a pivotal interview, one CNN anchor mischaracterized the group’s executive director as representing the insured.
Special purpose entities are often used by large business groups to achieve a specific goal, such as to create anonymity. The Supreme Court, in a series of anti-democracy decisions has bolstered the use of such dark money to insure that the consent of the governed is never a fully informed consent. In accordance with the most dumbed down legal definition, a Political Action Committee or PAC is considered a charity of all things, even though it may exist solely to support politicians that prostitute their offices in tilting the playing table for business interests. This involves intentional obfuscation affecting all three of the primary flows of commerce. These flows traditionally include the goods, the capital, and the information.
Tax havens make it possible to move profits to shell companies. For example, a United States company buying products from overseas would legally have to pay US taxes on the profits. Strategies to offload the ever increasing tax burden to the working poor include schemes to buy importable products through a non-resident shell company based in a tax haven. The US company is then described as an offshore company. That shell company would purchase the products in its name, mark up the products and sell them to the US company, thereby transferring the profit to the tax haven. Such products may not even physically pass through that tax haven, but are instead “drop-shipped” directly to the US based business.
Shell companies have also been used by broadcasting groups to circumvent FCC limits on television station ownership. The Sinclair Broadcasting Group forms local marketing agreements with stations owned by Cunningham Broadcasting and Deerfield Media. Cunningham Broadcasting stock is controlled by trusts in the name of the owner’s children. The Nexstar Media Group controls television stations owned by Mission Broadcasting and Vaughan Media.
Even though most younger voters get their news at their convenience via on-demand streaming services and podcasts, over the air television stations still exert tremendous influence among older cord cutters. However, since the Supreme Court has so recently and clearly demonstrated its contempt for any informed consent of the governed, the assaults on net-neutrality would ultimately allow the dark monied interests to advance or retard the information flow within any and all channels of essential communication. Right now, about seven hundred billionaires control the information flow to over three hundred and thirty million US citizens. And, while alternative currencies and networks are being built, the most self-serving are constantly scheming for ways to control those as well.
The definition of black and gray market activities needs to be expanded. It is important to be suspicious of any inauthentic corporation. While the addled Supremes remain aloof, and while the US Department of Justice obsesses over the activities of unregistered foreign lobbyists, it’s important to understand the various ways in which foreign potentates effectively control our elected representatives through unbridled corporate influence. As long as anonymous groups can funnel money to politicians, and as long as those politicians have the power to defang any regulating authority, our democratic republic is also inauthentic.