David Barboza, a prominent former New York Times reporter, shares his experience and insights on investigative journalism, focusing on revealing hidden power and financial truths in China. Barboza's 2012 Pulitzer Prize-winning investigation detailed the hidden corporate wealth among Chinese government officials' families. His work highlighted the complexity and opacity of China's corporate records, often intertwined in layers to mask ownership, providing a rare glimpse into the financial entanglements of significant figures in China. This discussion examined how investigative journalism can uncover hidden truths that many seek to conceal.

Beyond journalism, Barboza ventured into entrepreneurship by co-founding a company aimed at digitizing corporate records to efficiently map global business networks. Through a platform akin to a Bloomberg terminal, the goal is to bring transparency to complex corporate structures, which often hide ownership and obscure financial pathways. This innovation not only aids journalists but also helps investors, government agencies, and companies conduct due diligence and adhere to compliance regulations more effectively.

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Key Vocabularies and Common Phrases:

1. opacity [oʊˈpæsɪti] - (noun) - The quality of being difficult to understand or see through; lack of transparency. - Synonyms: (obscurity, inscrutability, impenetrability)

These layers are always what creates opacity in our global financial system.

2. investigative [ɪnˈvɛstɪɡeɪtɪv] - (adjective) - Inquiring into detailed and systematic examination, often conducted to uncover hidden information. - Synonyms: (analytical, probing, examination-focused)

Yeah, well, I'm an investigative journalist, so our job is to try to figure out where are there records that you wouldn't know or is it maybe it's sources, maybe it's records.

3. whistleblower [ˈwɪsəlˌbloʊər] - (noun) - A person who informs on a person or organization engaged in illicit activity. - Synonyms: (informant, tipster, snitch)

In other stories, it's sometimes it's whistleblowers send us documents.

4. entrepreneur [ˌɒntrəprəˈnɜːr] - (noun) - A person who sets up a business, taking on financial risks in the hope of profit. - Synonyms: (businessperson, founder, innovator)

But actually right now you're also an entrepreneur and run a business in the space of media.

5. jurisdiction [ˌdʒʊərɪsˈdɪkʃən] - (noun) - The official power to make legal decisions and judgments. - Synonyms: (authority, control, administration)

Hong Kong data, which is a separate jurisdiction for China.

6. beneficial owner [ˌbɛnɪˈfɪʃəl ˈoʊnər] - (noun) - The true owner of an asset or security who enjoys its benefits but might not be the named owner. - Synonyms: (actual owner, title holder, proprietor)

And in fact, even the government doesn't know the beneficial owners of many corporations

7. compliance [kəmˈplaɪəns] - (noun) - The action or fact of complying with a wish or command, often used in a legal or regulatory context. - Synonyms: (adherence, conformity, observance)

So ownership, investments, suppliers, that's all core to what we do.

8. transparency [trænsˈpærənsi] - (noun) - The quality of being done in an open way without secrets. - Synonyms: (openness, clarity, accountability)

That's why I love doing corporate transparency, which I think of what, what we're doing.

9. stakeholder [ˈsteɪkˌhoʊldər] - (noun) - Any person or organization with an interest in a business decision or action. - Synonyms: (participant, investor, shareholder)

So there are our executives, their background. Suppose we have an executive.

10. nexus [ˈneksəs] - (noun) - A connection or series of connections linking two or more things. - Synonyms: (link, tie, bond)

So I'm starting to build a nexus. But obviously China, US Right.

Power to Truth - Anat Admati & David Barboza on Global Markets, Hidden Ownership, & the Power of Data

I'm very thrilled to have today for a discussion as part of our Power to Truth series, David Barboza, a longtime friend of CASI Cooperation Society Initiative. And finally here with me to discuss the many ways in which he embodies power to truth. So David has a history of being a very prominent New York Times reporter in China in the years before China was as much of a topic in the front page of newspapers. But he made it into a front page of newspaper, among other things, with his report from 2012 that won a Pulitzer Prize about reflecting an investigation, multi year investigation that showed, conclusively based on verified information, that some people at the very top of the Chinese government owned very indirectly shares in public companies in China. David, welcome. Thank you. Wonderful to be here with you. And you want to tell us a little bit about that story which got you the Nobel Prize and got The New York Times.com, the Pulitzer Prize. I'm sorry, got you the Pulitzer. Trying to get the Nobel. Yeah, the Nobel, the appropriate equivalent in media, the Pulitzer Prize and got the New York Times, nytimes.com kicked out of China.

That's right. What happened? Yeah. Goodness, that's such a long story. I mean, I worked on that story for about a year and a half beginning in 2011 and was basically an investigation into whether I could prove that the relatives of senior officials in China actually held secret shares in companies, public companies, but also privately held companies. And so I ended up finding corporate documents. I worked, I went to cemeteries, I looked through lots of different, you know, public company documents, private company documents, to try to prove that the families actually held those shares through a series of shell companies hidden behind maybe six or seven layers of companies.

Yes. These layers are always what creates opacity in our global financial system. And they are often impossible to trace. So it was quite remarkable what you could do in China about that. Like, tell us some of what you could do to get the owners of a company. Right. Well, China, to my surprise, but also lots of other people's surprise, has some of the best corporate records. So you can get private company records, you can get public company records, and you could understand things that you can't even get in the US which is I can look at a small company, a medium company, a big state owned company. I can know who owns that company, who ultimately controls that company, all in black and white documents.

Back then, it was paper documents I went through. I would request and get 500 pages on the company. Today it's digitized documents as we have it in the United States, this is not something possible. And in fact, even the government doesn't know the beneficial owners of many corporations. And so it's been committed by the government to change that. And we have a corporate transparency law, but it's hotly debated and not yet implemented fully in the United States. And even when it is implemented, it would not be for a journalist to be able to use, so it would only be for the government to use. So this is pretty remarkable fact. I remember when I first heard about it, being very surprised by it.

So how do you give power to truth in a world where some people want to hide the truth? Yeah, well, I'm an investigative journalist, so our job is to try to figure out where are there records that you wouldn't know or is it maybe it's sources, maybe it's records. That's part of the excitement about doing investigative journalism is you're searching to find a story that could be in records, it could be your sources, it could be in different ways to track down.

So it just so happens in this case, because China is so good in corporate records, which again I did not know when I began this investigation that for these we could actually use government documents to prove the case that government officials and their families were holding secret shares. In other stories, it's sometimes it's whistleblowers send us documents. Sometimes I find a source who tips me off as to what's going on and then you try to figure out how do you verify that.

So I think that's the fun of investigative journalism is each story is very different, how you pursue it, whether you lean on more sources versus, you know, documentary evidence, Is it official evidence, is it whistleblower, leaked documents? Could you, an investigative reporter, local, looking for truth? This is something, you know, more rare.

But actually right now you're also an entrepreneur and run a business in the space of media. So tell us about. So about four years ago, I left the New York Times to co found a company that's, that's called Wire Screen and it's really connected to the stories. The work that I did in China, which is I got these records and I was able to reconstruct company by company by hand. But we asked ourselves, suppose we were able to get thousands or tens of thousands or millions of company records into a platform like a Bloomberg terminal and organize it in a way that what I did by hand we could do at the snap of a finger.

My investigation by hand was about a year and a half really, really hard work, mapping on paper, mapping you know, on spreadsheets now digitize it, put it in a platform and not just ask it. The question I was asking, which is, is there a family hidden behind these layers? But ask it lots of questions. Are these companies state owned companies? Are they say, you know, privately held military company? What can we know about lots of companies that we put into the database in search in a new way, not answering one question about corruption, but answering many questions.

So can you do something? But how many countries could you do this for in principle that you know, do you focus on China entirely? Yeah, I haven't done that many, but there's plenty. So certainly we, we've got China, there's a lot of Hong Kong data, which is a separate jurisdiction for China. Taiwan, still China, China, but not China. Right. So you have Taiwan data, you have a lot of ties to the US So when I'm looking at China data, I'm also looking at U.S. data from those sources. Chinese companies list in the U.S. right. I see Chinese U.S. firms invest in China.

So I'm starting to build a nexus. But obviously China, US Right. It's not the same data, but it's very good. And then also Vietnam has great data, another communist country with great data. There's data from Russia, there's data. UK Companies House, you may know, right. The UK has all of the company's house data. So India, I have quite a, quite a bit of information from India. And then you piece together parts from Cayman Islands, British Virgin Islands, offshore jurisdictions. And I think it's not clear how many we'll eventually get. But you what we're doing is rather than saying we're going to claim to get the world's data, we're going to start with two key countries, the biggest gdp, the US And China, and then build outward so that we can incorporate new countries.

We also have to figure out maybe one country is better in trade data than in ownership data. Right. Or maybe better in investment data. So I want to get what I like to call the golden triangle, which is you have ownership, you have investments, and then you have trade. Like who does this company trade with? No company that I know of can actually do those three.

Well, I mean, I wonder how much information is hiding in the US because of all the privacy that we give to corporations in the U.S. so I kind of wonder, you know, we have anecdotal stories about how easy it is to hide beneficial owners through chains of anonymous corporations. Yeah, yeah. But if you think about that's one aspect, right, is they could hide their ownership, but I like to think of every situation as just highly complex. Like in the US it's hard to get ownership data on privately held companies, but you get great ownership data on publicly traded companies.

You can get certain amounts of trade data. You can get patent data that's for trade. Also in the US Actually, they give. Not about companies solely, but there is like personal information data. It's, it's widespread in the US it's kind of shocking even. Like, I don't know if you know, but there's. When I was at the Times, we would. Let's say there was a story about there was a plane crash in the USA in a certain area, even if it was a small plane and we were doing a story on that, what we could do is we could get kind of like the white pages of the region digitized. And I could say not just a plane crash, but there's something happened in this era, whatever area, whatever it was, I can get all the people that live in that area.

I can get their phone numbers, I can search by address. I could find the street. And then just when people had phones in their house. Yeah, but still they have. This type of data is available, which I think is a privacy issue. Yeah, yeah, but journalists could get that from a company called tlo, which is not, not anyone can get that, but journalists can. The government has it, but there's actually a lot of different types of data available. So I think each country is different and you have to figure out what is in this country that I want to focus on and how can it help me in investigation. But also being mindful of as a journalist, what are your journalistic ethics? Right, yeah, but also what's the purpose of the knowing?

I mean, because, you know, when we say truth, it's for a purpose. You know, it's in order to get accountability. It's in order to prevent corruption. You know, in other words, we want it out, but we want to give it power to the truth so that it can do something. That's why I love doing corporate transparency, which I think of what, what we're doing. And since companies are increasingly global, having the ability to map around the world will become more and more important. That's, that's our argument with the company is when you're tracking, let's say you're an investor in a company or you're a government agency, your company may be much of their wealth or their assets are offshore. So yeah, what are those affiliates? Who is trading with whom? So the supply chains you're able to chain. We're starting.

We're starting to do supplier relationships, customer relationships. That's a big part of what we're doing now. So ownership, investments, suppliers, that's all core to what we do. And we'll have to go through the jurisdictions to understand how do we plug it in with a new element like patents, for instance. But my question is, okay, so that we have basically data generated by some by company like yourself. And who is it useful for? Is it useful for private sector, for government? Both. And in order to do what? In order to kind of monitor who you're dealing with, know who's who, or enforce laws.

So we think of it as, I mean, there's so many uses, not just for journalists, but you think about, okay, I'm a government agency, so we may have export controls. We may be trying to stop this from getting to a military end user. So that data would be valuable. Right. For companies, they may want to say, well, we know who our supplier is, but we don't know a lot about that supplier. Suppose that supplier is actually working with us. Due diligence. Yeah. Or our partner, our joint venture partner. So for companies you think you want to understand who you do business with, you might also want to understand corporate governance, like who's on my board and what other boards are they on.

Are there any conflicts of interest? Is our board member also somehow invested in one of our suppliers? Right. So there are our executives, their background. Suppose we have an executive. This company has an executive that also has shares. Right. In a competitor or supplier or. Yeah. So there's a lot of so many different interest that can enter through the web of interactions, ownership. Think of the investors, too. They want to know. We want to do due diligence in the company we're about to take over or invest in. So I think investors, one way the companies, government agencies, tax authorities may say, well, this individual is actually a US Citizen, but they have all these assets overseas and those not accounted for in them.

How does that interact with governments gathering information? Obviously, governments vary a lot in how much of that they do. And the countries where you say you can actually find information, it's also because the government collects so much and it's amazing that they, you know, are willing to share it. Yeah, but so how, you know, so I. Is it the case that in the United States, you know, for various reasons, the US Government doesn't do it enough, and then it has to go buy it from somebody like you? I think, yeah. I don't know fully how to answer this, but I Suspect that, you know, the way we operate is. Right. We know, like, this is core to what we do versus the government. They change, you know, administrations.

Their specialty is not corporate ownership. Like a lot of, as we talked last night, that's with the states. Yeah, Right. So the government has to build its own platform. It also has to figure out, yeah, the federal government has to build, or maybe even the state governments build their own platform and figure out what are the things they want to use this for. Maybe they're thinking of enforcement or they're thinking about, we don't need the whole database, we just need to request this company's information. Right. So I'm thinking more holistically, maybe the SEC has a pretty good.

We have a case with social media now and it's information Telegram, you know, in France, right. Where, you know, was a matter of law enforcement and free speech and all these things are related to sort of, you know, who owns that data. Think about the federal government. Say, we'll say, let's say the federal government does have a great database for US Companies, but now their US Companies are partnering in China or in Mexico. And do they. Do they request and say, give us all the information and, and then how do they connect that data they need.

Well, we need all of China's data, we need all of Mexico's data. So I don't think the government would think of like, we're going to get the global data and we're going to process it and we're going to learn these new skills. I'd be surprised if they had that any government actually has that ability. And so that's why Bloomberg was founded or a pitchbook was founded, because most can't do that in its sort of singular focus. And my focus was I love corporate structures. I love investigating corporate structures and learning about them. So I'm just putting all of my energy into this narrow area.

So, I mean, do you have a sense for why. Why corporate, corporate structures get so complicated? Is it for good reason or nefarious? I think both, as I've learned, like, corporate structures are so complicated, which is again, why you can't figure them out. It's not just that they don't want you to figure them out. It's also because for tax reasons or jurisdiction, like let's say in the tax authorities in one province say, well, you may have registered your company in another province, but we want you to have a registration when you do any business in our province. And also people want to figure out how to get money in and out of an investment.

So they say, well, let's set up a fund that is going to invest in this company, and then for tax reasons, let's register it in Tibet or Xinjiang or another region where the tax benefits. So there are all these. And then they say, well, also we're going to get some investment from Hong Kong, which is a different jurisdiction. So pretty soon, you see, corporate structures are. Because they're in different jurisdictions with different rules and different objectives for the investors. It could be very messy.

I don't know if you know about the. In China for a while. I mean, actually, even to this day, China would restrict foreign investment into certain. So they created something called the BIE structure, which allows variable interest entity. It allows a foreign investor. Let's say Goldman Sachs wants to invest in Alibaba. So Goldman Sachs goes offshore to the Cayman Islands to invest onshore through Hong Kong. So you get this. It's not that they are trying to hide it necessarily. As for regulatory.

There's a way around. Yes. Around that. It just becomes a question of what the rights end up being. And if China decides to pull the rug. That's right. And say that this is trying to undermine their law, then it would be in trouble. Yeah. So, you know, there are lots of students doing a project on this, even undergrads sort of warning their classmates that, you know, grandma's money might be in some vie that, you know, she might have an unpleasant surprise in some situations if China decides, you know, so flex a muscle there.

This complexity adds to your transparency questions. Right. Which is, I think, in approaching trying to get more transparent about companies, you really have to take the time to build all of those structures. So vie structure means if you look up Alibaba in China, you might see a local entity and a Hong Kong entity, and you've got to figure out, like, where's the money really? Are they trying to trick me? No, they may not be trying to trick you. It may be. It is this complex a regulatory structure.

And if I'm doing a big platform, as we're doing, really hard to get that. But it basically. If China. China must know this. So if they don't, if they created a rule such that you have to create a complex structure to get around that rule, then they kind of maintain the option to say, wait a minute. Right. You, you, you know, this was. This is inconsistent with. Because you have these owners in a country and we did not allow that.

Well, in China's case, think of it a different way. Think of it as China has this rule that it's sensitive about. But it also at that time was starving for foreign capital and wanted to develop the Internet industry. So it didn't create the rule, it didn't stop, enforce it, allowed it, tolerate it, allow vie because we're benefiting. At some point we may change our mind. But for now we're going to bring in the best companies from the US as investors and they're going to build up the Alibaba Intense and Baidu bytedance is a VIE structure but it still says that they maintain the control. That's right.

And that anybody who invests in it better know what it is that they bought. They did not buy a share in Alibaba. In a country that has investor rights and all kinds of things instead of if it's an all out conflict. Yeah. Then the Chinese can pull a lever on, you know, on U. S and US investors saying guess what, you know, we allowed it, but now we decided not to. Right. But we should note that from China's standpoint in those companies, this was one of the most successful rules ever implemented in a major economy because they're all to constrain or they will to allow, to allow, to allow.

Because think of then why didn't they allow direct investment? Because they wanted to control it. So they said we don't, you know, as the US might say in things that we deem national security. And they think early on they said the Internet, having the Internet license we want to have, I mean they could always pull it, but they didn't want the foreigners to be leading that effort. But in a way, once they saw the money, they said okay, we will let them bring the money in, but we'll have the control that the Chinese national will hold the license and we'll see how this goes. And what they saw is they could take companies worth a couple million dollars.

And now bytedance by duality, I mean these are some of the most valuable companies in the world. So it worked for. But then how did. I mean, you know, you must know more. More than me definitely about sort of, you know, the Chinese wall with the Internet and exactly how they control data and information. Right. From their own citizen. Yeah, yeah. So all of that is, is factored into this, right. Is if we have that ultimate control, we need to control the Internet, we need to control the surveillance companies.

I think in the end, you know, even without this rule, China has such a strong arm that it probably could have controlled it. But it did give them, as they were deciding a way to get around this rule and get what they wanted, which is huge investment in talent coming in to build up their companies. Yeah. So obviously China and the U.S. we sometimes discuss this when you visit my class. The big difference is where power lies and how much of the power which is, you know, used for all kinds of purposes, you know, on behalf of their people or other interests versus, you know, an incredible amount of private power in, in the US and some other countries.

Yeah. I mean I think of this as just a sort of a kind of sweeping view, but I think of China's. The Chinese government is way more powerful over its economy than the US Right. It's not even close. And those entrepreneurs can be given free reign for a little while and then taken away no matter who they are. Imagine if you were in the what's his name from Jack Ma. I mean they're all a little under pressure now. So imagine in the US I mean the IPO Right. Of ant at the time, just like that.

Yeah. Ten tycoons disappeared or were arrested or their companies, you know, put under pressure. Like that's. I, I don't think the US has had anything like that. Right. Even when you go back to Enron. Nothing like that. We had Bill Browder here and discussed Russia's control over, you know. Yes. Yeah. There's quite a difference between China and Russia. But there are some similarities and the power, the difference. I think that some of the differences. I'm not a Russia expert but. But China has a kind of a wild west capitalism mixed with state, a little state run economy at the higher sector.

I don't think China ever had real oligarchs like Russia didn't allow it. And so I think if I were to just was more in control throughout. I think the concentration of power and wealth was much different in China and it was allowed China's economy to flourish much more. And also part of that is what did China have as resources versus what Russia. Russia went all in on the sort of heavy industry and controlling what would be considered the state sector. China didn't give it state sector like the steel industry.

All of those are still mostly dominated by state. But it allowed all the privates in a way that Russia has not been able to do flourish in all these other areas. Yeah. They have similarities in controlling information obviously. Yes, that's right. And sort of. And narratives and truth. Yes. In terms of media. Yes. And going after journalists, businessmen and journalists. Yeah, yeah, yeah. So that, that's the oppress oppressive part of that, autocratic part of that. We have strong leaders in both of These countries.

And so truth has to be shaped by the. The leader. Yes. In both countries. And you could get in trouble for the truth, which is why you ended up. Yeah. Where you are today. Geographically. Right. Right. Yes, Very. Probably go back there. Yeah. It's like bit brother cannot go into. That's right. Not anytime soon. Into Russia anytime soon.

So what are you now most busy with and what do you see as the challenges for you, your company and what's what you do and try to achieve? Well, as an entrepreneur, a lot of challenges. I've got a small company of about 40 people, so that is quite a challenge to do a startup. But then what I feel excited about is the challenge of the task that we have, which I mentioned earlier, which is how do you build a company that can map global business networks, something that's never been done before across borders.

And how do you more quickly scale that and surface what are the valuable parts of that so that they could be used? So I think we've got huge technical challenges. Right. Not only different jurisdictions, different languages, but the technical challenges of this person may have different names and different jurisdictions. So that is our. And how. And how to deal with the secrecy jurisdictions that they are incentivized to. To hide a lot of that data. They may think it's like for. For privacy reasons, but they also may be hiding something. Right.

So China could cut off more of its data. Right. So how do we continue to develop data in China, elsewhere in the U.S. hopefully the U.S. rules will become more transparent and put that together so that it makes sense. Decided against China making ownership public. Yeah, but remember I was saying ownership is very important part. But it's not the only part. And so there's a lot of other ways. Yeah. I won't give all my secrets away, but I'm looking at when you think about an entity, all the different data sets that can come in, which are the ones that contract it has put them together.

And as I was talking to some of your colleagues and today about AI, what could we do with AI systems to give confidence scores or fill in some of those gaps or even train it to do things that we're still doing by hand. Right. If I'm going, as I did in my investigation from Hong Kong to the US records to the Chinese records, different languages, different rules, is there a way to train it so that I can do that a bit faster efficiently? So that's what. That's what I want. Okay. Yeah. We'll check in with you in a little while, I hope. Thank you. So much, David. It's great to be with you. And then. Thank you.

Okay. Thank you. And she's happy we weren't. Mike, today was the sound. Okay. Okay.

JOURNALISM, TECHNOLOGY, ENTREPRENEURSHIP, INVESTIGATION, TRANSPARENCY, CHINA, STANFORD GRADUATE SCHOOL OF BUSINESS