Power to Truth: China, Power, and What We Fail to See

Quick Overview

Investigative reporters, including Michael Forsythe, face significant hurdles in exposing corruption and opaque corporate structures in China, particularly regarding the ownership of entities like the China Development Bank and the reliance on offshore entities like Delaware LLCs and British Virgin Islands companies to shield true ownership, which requires immense effort to uncover as these structures are deliberately designed to hide information from journalists and regulators.

Key Points: Michael Forsythe, author of "When McKinsey Comes to Town," discusses his investigative work focusing on opaque corporate structures in China and the West. The China Development Bank (CDB) is state-owned, highly powerful, and funds numerous initiatives both within China and globally, often without transparency. Western corporations and journalists struggle to uncover ownership structures due to heavy use of offshore secrecy jurisdictions like Delaware LLCs and British Virgin Islands companies. For a Delaware LLC, there is no requirement to disclose ownership publicly, making it difficult for journalists to trace who ultimately controls assets or entities. Forsythe and his colleague, Henry Sanderson, wrote their book after spending significant time in China and facing difficulties obtaining information due to the secretive nature of the system. The lack of transparency is contrasted with the US system, where regulations like the Bank Secrecy Act mandate some level of disclosure for certain activities. The discussion highlights that even with anti-corruption crackdowns, opaque structures persist, making it hard to trace illicit wealth and political influence.

Context: This video features a conversation between Anat Admati, Professor of Finance and Economics at Stanford GSB and Co-faculty director of CASI, and Michael Forsythe, an investigative reporter for The New York Times and author of "When McKinsey Comes to Town." The discussion centers on the challenges of uncovering opaque corporate structures, especially those involving Chinese state-owned entities and the use of Western offshore secrecy jurisdictions, which shield wealth and influence from public scrutiny.