Although the United States’ corporate transparency compares poorly with its international peers, some states, like Washington, stand out for their “better practices” on corporate disclosure. As LLCs become an increasingly common vector for anonymous political donations – due to their unusually lax requirements on disclosing owner names, unlike corporations that must name a corporate board – Washington’s required reporting of LLC manager and member names has been a boon to campaign finance transparency. But other states still engage in dismal corporate transparency practices, counteracting the progress made by states like Washington and weighing down the U.S.’ OpenCorporates transparency ranking to 26th place worldwide. What state is most responsible for negatively skewing this nationwide ranking?
Ringing in at dead last in OpenCorporates’s internal U.S. ranking is Texas, with an impressively bad score of 0/100. The state’s corporate registry is shrouded behind an account system that not only requires personal information like one’s name and address, but also their credit card information. Even temporary and one-time accessors have to put forth this information. The online registry requires this information not to charge a periodical access fee, but to charge for copies of corporate documents on a case-by-case, download-by-download basis.
There is no other state that locks up its corporate data behind this barrier. Texas needs to join the other 49 in taking a critical step toward free corporate data and to stop requiring a credit card in order to access this data. To improve our ability to track private influence on public decisions, corporate records must be free and easily available to the public.
Texas’ non-disclosure of corporate data is especially ironic for a state that’s previously been rocked by the circumvention of campaign finance laws. In 2010, Tom DeLay, former House Majority Leader and Republican representative for Texas’ 22nd District, was convicted of illegally funneling corporate donations to state legislative candidates. Through his PAC, Texans for a Republican Majority, DeLay accepted $190,000 in corporate donations, which he promptly passed onto the Republican National Committee. With his donation trove, DeLay also sent a list of state candidates and a prescribed donation amount. The RNC complied, donating DeLay’s corporation-sourced funds to his desired state candidates in the 2002 elections. DeLay’s handing-off of corporate donations violated the Texas state code, which prohibits corporate donations in Texas state races. The open disclosure of corporate names, however, facilitates the tracking of corporate donations, so roundabout corporate contributions cannot surreptitiously end up in some candidate pockets.
Texas should provide barrier-free access to its corporations database, as well as its corporate governance database, to help citizens track the flow of money into politics. This is especially true for a state that’s facing a hotly contested gubernatorial election. State attorney and Republican candidate Greg Abbott faces the Democratic state Senator Wendy Davis in what observers believe could be one of the most expensive races for a Governor’s mansion this fall.
Through PACs, Texas LLCs have already poured campaign funds into this upcoming election. Roundabout LLC donations especially seem to have benefitted Texans for Greg Abbott, which now has has $30 million in its campaign war chest. Texans for Greg Abbott’s massive stockpile eclipses that of the Texas Association of Realtors Issues Mobilization Political Action Committee, the next largest PAC in the state with a comparatively humble $7.5 million in funds. One of its largest donors, Q PAC, has provided nearly $400,000 from its donation cache, significantly funded by Renegade Swish, LLC. In Washington, we were able to use state corporate data to trace back such LLC donations to a specific, named group of members and managers. But in Texas, people interested in the source of those donations will be unable to find out more than this LLC name, unless they register their name, address, and credit card information in order to access the state’s corporate records.
The rest of the states have set a precedent for more open corporate data, and in turn, improved campaign transparency – a critical step in providing some clarity in a donation ecosystem increasingly affected by ambiguously owned LLCs. In anticipation of a gubernatorial election that may become a magnet for corporate money, it’s time for Texas to fall in step with national corporate disclosure norms and provide this critical data without restrictions to access.