Time Magazine goes to bat for batty bill

February 4, 2010

Ken Stier at Time Magazine has written an illogical piece of “journalism,” that reads like a lobbyist’s brief in behalf of S. 569, Carl Levin’s “incorporation transparency” bill that would supposedly help control terrorist financing.

Stier starts off his article by suggesting that nobody knew and no action could be taken against the Iran’s shell Alavi Foundation (which owns property in the United States to help funnel money back into Iran’s nuclear program) because we lack a law such as the one proposed by Levin.  But Rachel Ehrenfeld has been writing for years about the failure to crackdown against the Alavi Foundation.  The nature of its ownership was not unknown.  The delay in action against Alavi was a failure of reluctant law enforcement, not a failure of existing federal law.

From Time:

Managers of an Iranian charity started by the Shah faced a dilemma with its American properties, as Washington tightened a squeeze on all entities tied to the Islamic Revolutionary Government. But U.S. law allowed a simple solution for the renamed Alavi Foundation: disguise its properties’ real owners through the use of shell companies, multiple ones if need be.

So, its 36-story skyscraper in midtown Manhattan, registered as the 650 Fifth Avenue Company, was owned by Assa Corporation, a New York shell company, which listed its owner as Assa Company Ltd., a Jersey, Channel Islands entity. In most cases that’s as far as investigators get — but here authorities were eventually able to determine that Assa was in fact entirely owned by the state-owned Bank Melli, which is banned in the U.S. for supporting Tehran’s nuclear program.

Exposing this entirely legal labyrinth of ownership took years of interagency pick-and-ax work. In the end it demonstrated how nefarious activity — even as high profile as this — can go on for years, right under authorities’ noses. It’s also meant that tenants of the prestigious Manhattan property have been paying millions in rent to Tehran every year — $4.5 million in 2007 alone. Last November, more than 30 years after the Islamic revolution, U.S. officials moved to take over all of Alavi’s U.S. properties and bank accounts, spread over five states…

Other notable users of U.S. shell companies: Viktor Bout, the notorious Russian arms trafficker; the Sinaloa drug-trafficking cartel; and Semion Mogilevich, the “brainy don” of Russian mafia dons, recently named on the FBI’s Ten Most Wanted Fugitives List…

To halt these abuses Democratic Senator Carl Levin has reintroduced a bill he co-sponsored last year, with then Senator Barack Obama, that makes a seemingly simple new demand — that states add a single additional question to their incorporation application: Who are the beneficial owners? (Foreigners would also have to provide a copy of a passport-page photo.) The intent is to introduce the same standard — know thy customer — banks have had for years.

Notice that Stier even uses the example of Viktor Bout just like Levin uses in his press releases.

The most important point to make here is that the seizure of Bank Melli’s assets was possible under current U.S. law including the International Emergency Economic Powers Act.  The idea that Sen. Levin’s incorporation transparency legislation would have done anything to hasten the crackdown on Bank Melli is disingenuous.

Levin’s bill is actually payback for countries that help us pursue tax evaders, because it might help foreign law enforcement officials to identify businesses that are trying to evade taxes from their home countries.  The legislation really isn’t a measure that would impair terrorist shell companies from setting up shop in the United States.  The bill is also a federal intrusion into an area traditionally within purview of states (typically administered by elected secretaries of state).  If the Senate wants to pass this bill with the amendment I proposed in my post on Jan. 1, or if a particular state wants to require the disclosure of beneficial ownership, great.  But Levin and his media sock puppets should focus their efforts toward enforcing existing federal law.

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