83% of big U.S companies, contractors use offshore tax havens

GAO: 83% of big U.S companies, contractors use offshore tax havens

Jan 16 (Washington Post) - The US Government Accountability Office (GAO) has just issued a report showing that 83 of the 100 largest publicly traded corporations and 63 of the 100 largest federal contractors rely on offshore subsidiaries to do business and cut their tax bills. Some have received tens of billions in bailout money: Citigroup, for example, has received $25 billion from the bailout fund, plus $300 billion in government guarantees — and has 427 tax haven subsidiaries; 91 in Luxembourg, 90 in the Cayman Islands and 35 in the British Virgin Islands. Report summary here; full report here.

First, an indication of some of the worst offenders, in terms of numbers (sheer number of offshore subsidiaries does not necessarily provide a good guide of how bad a company is, but it probably does give a certain indication of, shall we say, a mindset. Here are some of the big ones:

Citigroup (427 offshore subsidiaries)

Morgan Stanley (273)

News Corporation (152)

Bank of America (115 - see the latest lifeline story)

Lehman Brothers Holdings (57)

Wachovia Corp. (59)

Marathon Oil (78)

ExxonMobil (32)

Goldman Sachs (29)

Merrill Lynch (21)

We often like to criticise companies that we find doing this kind of thing. But for a change, here is a "white list" of companies that have NOT been identified by the GAO as having subsidiaries in these countries. Some of these companies (defence companies, Wal-Mart, for example) have been the target of campaigners' ire for various reasons, but they seem to have kept themselves off this list at least. They are:

AT&T Inc.
AmerisourceBergen Corporation
CVS Caremark

Enterprise GP Holdings

Fannie Mae

Freddie Mac

Home Depot

Humana

Johnson Controls

Lockheed Martin

Lowe's

Macy's

Northrop Grumman

UPS

Verizon

Wal-Mart

No firm conclusions can, of course, be drawn about any of these companies just from this list. And some companies that aren't listed as having tax haven subsidiaries find other ways to use the offshore system. For example, a second list of top federal contractors listed in this GAO report, KBR Inc. is listed as having no foreign offshore subsidiaries.Take a look at this Boston Globe story from last March, for example:

"Kellogg Brown & Root, the nation's top Iraq war contractor and until last year a subsidiary of Halliburton Corp., has avoided paying hundreds of millions of dollars in federal Medicare and Social Security taxes by hiring workers through shell companies based in this tropical tax haven.

More than 21,000 people working for KBR in Iraq - including about 10,500 Americans - are listed as employees of two companies that exist in a computer file on the fourth floor of a building on a palm-studded boulevard here in the Caribbean. Neither company has an office or phone number in the Cayman Islands."

This kind of ongoing research that the GAO has done is essential, and we applaud it. Bit by little bit, light is starting to permeate the dark spaces of the global economy.