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Trump Vetoed the NDAA to Protect His Shell Companies

3 min read

Taggan Goddard of Political Wire has an interesting theory about why Trump decided to veto the National Defense Appropriation Act (NDAA): Buried in its 4500+ pages is something called the Corporate Transparency Act (link is to the original stand-alone House version). According to Goddard (behind a paywall) this puts Trump and his family in jeopardy:

The United States is currently the easiest place in the world where corrupt businesses can form anonymous shell companies to help them launder money, evade taxes and hide illegal payments. The NDAA includes a measure which makes it more difficult to use corporate shell companies to launder money by mandating the reporting of the owners of the company. The bill also increases penalties for money laundering and streamlines cooperation between banks and law enforcement, particularly those abroad.

In short, the measure would effectively ban anonymous shell companies and severely weaken their use for illicit purposes.

Perhaps most important, the bill also calls for investigation, data collection, and prosecution of current shell companies:

Here’s the kicker: The new requirements in the defense bill apply to existing shell companies and not just new ones. This bill threatens to expose Trump’s business activities in ways not previously possible.

I have to say this argument makes a lot more sense than Trump’s complaint that the bill calls for renaming of bases named for Confederate traitors (though it was a convenient… shell, shall we say… to cover up the real reason).

Here’s more from the Washington Post: Congress bans anonymous shell companies after long campaign by anti-corruption groups

The Corporate Transparency Act, which was tacked onto the defense bill, would require corporations and limited liability companies established in the United States to disclose their real owners to the Treasury Department, making it harder for criminals to anonymously launder money or evade taxes. The rule applies to future and existing entities alike. . . .

The banking industry became an important supporter of the legislation in recent years, after realizing it would help banks identify the real owners of all accounts, as required under Obama-era regulation.
The legislation will give banks access to the Treasury ownership database to verify information on new customers requesting accounts.

(This information won’t be available to the public, a weakness, but law enforcement — even foreign law enforcement — will have access.) The WaPo article, written before Trump’s veto, doesn’t mention how it could expose Trump, nor does the Fortune article — which likes the measure — written around the same time. Political Wire seems to have scored a point here.

Trump’s fondness for shell companies is well-known, from the one Michael Cohen set up for him to pay off Stormy Daniels (something “Individual One” was well aware of) to the recently exposed shell Jared Kushner has been using to siphon off funds from the Trump campaign:

A campaign shell company created in part by Jared Kushner spent half of President Donald Trump’s massive war chest and secretly paid Trump family members and associates, according to a bombshell report in Business Insider Friday.

Goddard thinks that Trump’s sudden agreement to sign the Covid relief-and government funding bill is “related to changes he wants in the defense bill.” I don’t agree with that part; Trump signed the bill because vetoing it or even dragging it out longer was going to hurt his image with his base. But I agree with Goddard on the rest of his thesis: Trump saw a danger to himself in the NDAA — accurately, I would say — and has no qualms whatever about selling out the troops to protect himself.

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