Fellows Resource
May 14, 2024
Exposing the Money Behind Environmental Destruction
Reports on environmental damage often focus on the drivers of destruction: economic activities such as illegal fishing by unregulated fleets, deforestation in protected areas, or oil drilling projects without proper licenses.
Through our reporting networks—the Rainforest Investigations Network and the Ocean Reporting Network—we aim to expose not only these types of abuse, but also the financial incentives that drive them.
For example, for a story about illegal logging on protected land, we help the journalists identify who owns the land, who cuts and sells the timber, who exports the timber, who turns it into furniture, who imports the furniture, and who sells it to the end consumer.
There are many financial flows involved in environmental crime. We have developed different methodologies to uncover them, adapted to the region, jurisdiction, and industry.
Whistleblowers and others in possession of sensitive information of public concern can now securely and confidentially share tips, documents, and data with the Pulitzer Center’s Rainforest Investigations Network (RIN), its editors, and journalists.
But beyond following that money, we also want to understand the legal mechanisms that make environmental crimes possible. When I reported on organized crime, I learned that if you uncover a criminal, they may eventually be arrested, but another will often take their place. But if you show how the government and the justice system allow criminals to thrive, unveiling a systemic problem, the stories can have a more consequential impact.
In environmental reporting, this reveals how governments and (a lack of) regulation facilitate supply chains tied to environmental damage. In this methodological series, we will explain various investigative strategies for uncovering the three main money trails (ownership, investment, and supply chains) and the mechanisms behind them, including examples of creative research that helped us overcome stumbling blocks.
Examples of how we use corporate research
In the Congo Basin, Rainforest Investigations Network Fellow Didier Makal obtained a list of ten mining companies licensed to mine in the Haut-Katanga and Lualaba regions of the DRC. We started by looking for their registry numbers, incorporation dates, addresses, and management and ownership information.
Incorporation dates are useful for confirming the timeline of mining activities. By looking at each manager and owner, we established links between the different companies, found that some of the owners also owned companies in Europe, and that one of the shareholding companies was owned by the Canadian branch of Swiss mining giant Glencore.
Regin Winther Poulsen, an Ocean Reporting Network Fellow, investigated the European system of fishing quotas. He found that these quotas, which allow a company to fish certain species in a specific area, are being traded, leading many of the quotas to belong to a handful of companies. Again, we used corporate databases to identify the subsidiaries, owners, and business partners of the companies. This allowed us to see the scope of their power in the market. We also used trade databases to see how they buy and sell fish among themselves.
Corporate Research
We usually start by by trying to find out who owns the companies, land, and other assets, like an airplane or truck, that are involved in environmental damage. Starting with companies, we need to distinguish between the different types.
- A publicly traded company will have its shareholder and financial information on a stock exchange or regulation website, and usually on its own website. It wants to inform its shareholders about the company's health. Hence, you need to take their reports (even when they are audited) with a grain of salt.
- As its name implies, a state-owned company is owned by the state. However, the state is often not the sole shareholder, so it might be worth trying the steps we would use for a private company to uncover the other owners.
- Private companies come in all shapes and sizes when it comes to their ownership structure. Different types and sizes of companies have different requirements when it comes to disclosing and filing information. So, this will influence how much information (like ownership) you can find about a company. In an aside below, you can find out about all the different types, but we will use one general methodology to find out their ownership.
Companies are created because business owners want to separate themselves from the financial entity. If a company folds, the owners don’t want to be responsible for its debts. For example, it can owe money to banks because of loans, real estate agents, product suppliers, and employees.
This is where the concept of limited liability comes in: The owners of a company are only liable for the amount of money they put into the company.
Types of private companies:
- Limited companies
In this most common type of private company, owners have limited liability. Their names will end with Limited or Ltd. in the U.K., GmbH in Germany, Sarl in France, BVBA in Belgium, BV in the Netherlands, and LLC in the U.S.
- Partnerships
The partners share the profits but are also liable for the losses. These are often accountancy and law firms.
- Limited Liability Partnerships
The liability of the partners is capped, like a limited company. This structure is often used by hedge funds and private equity firms.
- Limited Partnership
In the Netherlands this is known as a CV. Many multinationals register limited partnership companies there because they are not liable for taxes if the economic activity is done by partners (often subsidiary companies) in a different country.
- Shareholding and subsidiary companies
Shareholding companies are companies whose only function is to be the owner of subsidiary companies. They are often created when a group of people have multiple businesses. Person X can own shareholding company A, which in turn owns companies B and C. It can also be used to avoid paying taxes by putting all the profits of the subsidiaries in the shareholding company and then registering that company in a low-tax jurisdiction. Sometimes, people create a chain of shareholding companies in different jurisdictions that are secretive when it comes to ownership.
- Offshore company
Any company registered in a jurisdiction where business is not taking place is called an offshore company. This is often done for tax reasons, and some places like Panama, the Bahamas, Luxembourg, Jersey, and the Netherlands have whole economic sectors dedicated to setting up such companies. Confusingly, the companies that help people set up offshore companies are also often called offshore companies.
- Trusts
Trusts are used to create a legal separation between people and their assets. A trustee (not the actual owner) will hold the assets, but the actual owner (the beneficiary) will eventually get all the assets. This can be used to avoid paying taxes and hiding assets, as trusts don’t need to publish accounts.
- Foundations and nonprofits
Sometimes, the shareholding company will be a foundation or a nonprofit entity. In many countries, these are not required to pay taxes but must file documentation about their finances. In the U.S., you can get their filings from the IRS website.
To look into private companies, the Pulitzer Center Data and Research team mainly uses company registries and international company information databases like Sayari. The latter is one of the more accessible database options when it comes to getting access to (almost) worldwide company ownership information. They scrape documents and data from many countries.
This kind of database makes it easier to uncover international business networks because it shows whether a manager or owner of a company is also involved in another company (even in another country). Moreover, you can look up a person's name to see what entities they are involved in, whereas most company registries only allow you to search by a company name. These kinds of databases are often used by people in finance and government who do due diligence on companies. With such clients, you can expect that they come at a high price.
When you don’t have access to such a database, a good place to start is to verify the existence or legal name of a company, and you can do this with the free database OpenCorporates. It will show you basic information such as the address, registration date, and industry of the company. Depending on the jurisdiction in which the company is registered, you will also see who manages or owns it. You can also look for a person’s name using the “Officers” search function, but note that you will most likely not find all the companies in which the person is involved.
The next step is to go to the company registries themselves. Each country (or income countries, state, or province) will require a company to register itself to engage in economic activity. Many countries have registration information available online (and their hyperlinks are often shown in the company information on OpenCorporates). The amount of information you get, how you can search for it, and how much it costs you depends on the country. Another critical factor is the size of the company.
In the U.K., for example, the registry has different rules for companies that have
- a turnover of £10.2 million or less
- £5.1 million or less on its balance sheet
- 50 employees or less
These companies can submit abridged financial accounts to the registry, apply to be exempted from an audit, and don’t need to submit director’s reports.
Some company registries only allow you to search by company number, not by name. This is where OpenCorporates comes in handy because it displays basic company information like numbers.
Some corporate registries, like those in the U.K. and Belgium, are free and have ownership information and original documents. This is the best-case scenario for a reporter following the money because you can use the indexed data on the websites or review the original documents. Important files are the incorporation filing, annual (or full) account, and confirmation statement. What is in the documents differs per country, and some of the national registry websites can be hard to navigate. It pays off to spend time exploring the websites and documents.
On the other side of the spectrum, some jurisdictions don’t have any online database and some do, but they will only let you verify a name, like the UAE. Most online registries are somewhere in between, with paid downloads or subscriptions and a variation on what the information contains. If the online information does not include ownership, like New York State, for example, you can try your luck with requesting the original incorporation documents, which sometimes mention the founders (not the case for New York State).
If there is no registry database, a good alternative is looking for national or business gazettes. Many countries have periodical publications that register company registrations and sometimes ownership changes.
Suppose the jurisdiction where your company is registered doesn’t have a registry of gazettes online. In that case, you can still try your luck with leaked information, which you can access for free, for example, in ICIJ’s Offshore Leaks and OCCRP’s Aleph. Court documents, Politically Exposed Person bulletins, and State Department Cables, for example, can all contain information about a company's ownership.
The fact that a country has no online database or publicly available company information can be an indication that it is a secrecy jurisdiction and that the company was registered there with the purpose of hiding the ownership.
There are still other avenues to try if you get stuck. For example, use Google’s advanced search functions to look for slideshows (filetype:ppt) or PDFs (filetype:pdf) uploaded by the company at some conference or on their website. People sometimes list their relationship to a company on LinkedIn or other social media. Obviously, this type of evidence will be harder to hold up against fact-checking requirements than original company registration documents.
In the upcoming stories in this series, we will cover more such creative research techniques to address stumbling blocks. Journalists from our networks and members of our Data and Research team will show how to track financial investors, uncover land ownership, follow supply chains, and analyze company accounts.
