• Choose a category
• All
• Classic-Fiction

By Root 223 0

played in the latest financial crisis.37 The story examines the “dean of CDOs,” a retired University of Delaware finance professor who became the sole independent director of the Delaware-based corporations behind more than two hundred mostly subprime-backed CDOs, including ones underwritten by Goldman Sachs and Morgan Stanley. Independent directors are supposed to bring unbiased opinions to company boards and ought to be what one expert terms “the cornerstone of good corporate governance.”38 Janet Tavakoli, a Chicago-based structured finance consultant, said these independent directors “are basically there just as a rubber stamp.” We will see a lot more of Delaware’s role in the financial crisis later, but the point for now is that allowing toothless directors for securitization deals, just like Nevada’s tolerance for nominee directors who reinforce corporate secrecy, is offshore business.39

Richard Murphy of Tax Research UK captures the artificiality of these arrangements. “Offshore is used to repackage what happens elsewhere,” he said. “It is used to change the form, but not the substance, of a transaction.” A world-famous totem to this artificiality is Ugland House, in the Cayman Islands, which Barack Obama once criticized for housing over twelve thousand corporations: “either the biggest building,” he said, “or the biggest tax scam.”40 When Obama said that, Antony Travers, chairman of the Cayman Islands Financial Services Authority, fired right back. Obama would be better advised to focus his attention in Delaware, where, he said, “an office at 1209 North Orange Street, Wilmington, houses 217,000 companies.”

After Travers said that, I had to see the world’s biggest building.

This, as it happens, is the office for the Corporation Trust, a subsidiary of the Dutch firm Wolters Kluwer. It is just at the edge of Wilmington’s small financial center: a forgettable yellowish brick low-rise with a modest maroon awning: the kind you’d find outside a pizza restaurant. It sits between the scruffy little parking lot behind it and the unsightly six-story parking garage across Orange Street, and it is, legally speaking, the corporate home of Ford, General Motors, Coca-Cola, Kentucky Fried Chicken, Intel Corp., Google Inc., Hewlett Packard, Texas Instruments, and many more global corporate giants, including many of the specialized trusts and Special Purpose Entities (SPEs) that underlay the latest financial crisis. These corporations are not here for secrecy but for the corporate governance. The Corporation Trust will, as part of the service, also help your company serve and receive notices, subpoenas, summons, and the like. Delaware’s government website lists 110 registered agents—these, by the way, are not regulated.41 In 2008 Delaware hosted 882,000 active business entities: one for every man, woman, child, and baby in the state.42

Before visiting the building, I called repeatedly to request an interview with the management of the Corporation Trust. Each time I was promised a call back, which never came, until I eventually caught a new receptionist who put me through to the office manager, Cory Bueller. Evidently flustered, she agreed to see me. I turned up ten minutes ahead of time and was buzzed into a reception room about twelve by twelve feet, with an aging, scuffed gray-patterned carpet, two potted plants, and light-colored walls dotted with odd grease smears. Behind a glass window sat the receptionist, a slightly unshaven black man in a baseball jacket, who was replaced soon after I arrived by an attractive, well-dressed young woman in a vivid red coat, who smiled brightly and promised that Bueller would be out shortly.

Bueller came through the door in faded jeans, white sneakers, a white T-shirt, and a gray cardigan and said sheepishly that she couldn’t give me that interview after all. I asked if I could have a quick nose around. That would not be possible, she said, wringing her hands. I pressed again. “Just a quick peek?” A flush of color came to her cheeks, and she declined again. She would not give me her own card