Editorial: Close secrecy loophole

Friday, May 6, 2005 | 5:23 a.m.

WEEKEND EDITION

May 7 - 8, 2005

Last Sunday reporter Steve Kanigher wrote about the growing popularity of limited liability companies and how the secrecy they are permitted under state law is creating a raft of serious issues involving openness in government. Businessmen who form limited liability companies, also known by their acronym LLCs, don't have to reveal who their investors are unless it's specifically required by government. As we said in an editorial on Tuesday, it creates a secrecy totally incompatible -- at least in those instances when an LLC is doing business with government -- with the public's right to know. That is why we were glad to see Assembly Majority Leader Barbara Buckley, D-Las Vegas, say Thursday that she wants to close this loophole.

The issue has arisen prominently in the Clark County airport land deals. Investigators are having difficulty determining all the businessmen involved since most of the land sold by McCarran International Airport was purchased by LLCs. The city of Las Vegas requires that all LLCs that do business with the government, such as a land swap or through a contract for goods and services, to reveal its members who have an interest of more than 1 percent; Clark County has a less restrictive policy -- the only disclosure required is for those individuals who have more than 5 percent of a stake in an LLC. Another significant problem is that campaign disclosure forms only require candidates to list the name of the LLC making a contribution -- and not the investors who make up the LLC.

Buckley still is working on the specifics of her legislation, but she is considering that full disclosure be required for all members of an LLC in instances when they approach government regarding land matters or when making campaign contributions. We know it's late in the legislative session, but there is plenty of time for the Legislature to close this gaping loophole that currently permits indefensible secrecy involving government.