How Delaware Became the Frontline in the Corporate Takeover of US Democracy

Matt Bernardini examines alarming new legislation that could give foreign business owners the right to vote in one US state

One of the biggest problems with the political system in the United States is that corporations are given many of the same rights as people. Now America’s first state is threatening to become the trailblazer in allowing corporations to directly determine public policy. 

The Delaware House of Representatives, which is controlled by Democrats, recently approved legislation that allows the small town of Seaford to amend its charter and allow non-resident business owners to vote in local elections. That would mean that the 234 LLC’s registered in Seaford would be able to vote in the town’s elections. 

Claire Snyder-Hall, the executive director of the advocacy group Common Cause Delaware, said that the bill would further erode the rights of citizens, in favor of the wealthy. 

“The committee’s decision today is shocking. I have to wonder why these lawmakers would vote in favour of wealthy special interests and outsiders,” she said. “This bill dilutes the votes of Seaford residents and gives corporations the power to kick in the door and dominate our political processes. I urge lawmakers to put a stop to this bill.”

Seaford Mayor David Genshaw told local TV station WRDE that he supported the change because of the money and investment that it could bring.

"Why wouldn't we want to give them a right to vote? Genshaw said. “I find it hard to believe, who wouldn't want that to happen? These are folks that have fully invested in their community with the money, with their time, with their sweat. We want them to have a voice if they choose to take it."

But who exactly are the “folks” that Genshaw is referring to? Delaware is a notorious place for corporations to domicile themselves. The state’s website notes that more than one million entities have made Delaware their legal home. State laws make incorporating a  limited liability company (LLC) simple and quick. Furthermore, there are few disclosure rules. 

Hal Weitzman, the author of a book on Delaware, told Barron’s that Delaware is more of a financial services firm than a state. 

“You can set up a company in Delaware in a few minutes without showing any documentation or without identifying yourself,” Witzman said. “Delaware is a concern because we don’t know who the owners of companies are, the state does not require them to identify themselves.”

Journalists and researchers are unable to get even the most basic information about a Delaware company, like its director and annual report. For all the problems with Companies House, the UK corporate registry, one can at least easily view an entity’s directors and finances. 

Dark money has dominated the US political system since the Supreme Court’s ‘Citizens United’ decision in 2010, which was controversial for erasing most limits on campaign financing. And since the Trump administration, the threat of foreign money impacting America’s elections has garnered more attention. This new Delaware law could result in a double whammy. It is not inconceivable that an out-of-state, or foreign oligarch, could incorporate a Delaware LLC to vote in one of these elections. 

Consider that 33 trusts found in the ‘Pandora Papers’ that were used by world leaders were located in Delaware. Ukrainian oligarch Ihor Kolomoisky used Delaware shell companies to launder hundreds of millions of dollars stolen from Ukraine’s PrivatBank. With these entities, he was able to purchase steel factories in nine US states, as well as luxury real estate in Miami. What if he also had a say in the Seaford municipal elections?

Politics in the US is already dominated by corporations and the wealthy. A notable 2014 study from political scientists Martin Gilens and Benjamin Page concluded that the US already functions as an oligarchy. They looked at 1,779 policy cases from 1981 until 2002. They concluded that policy was almost always determined by money, saying “economic elites and organized interest groups play a substantial part in affecting public policy, but the general public has little or no independent influence." Since ‘Citizens United’ the problem has only gotten worse.

After the Trump era, where many people felt that America’s democracy was tested as it had never been before, Joe Biden enthusiastically declared that “America is back.” Instead it appears that his former state may be setting an even more dangerous precedent for the country’s democracy.