The New York Daily News reported today in an exclusive story that Harken Energy Corp. set up an offshore subsidiary in the Cayman Islands to avoid US taxes during the time President Bush saton Harken's board of directors.
Just yesterday following the President's signing of the Corporate Responsibility Act, White House spokesman, Ari Fleischer said the President condemned US companies that tried to avoid US taxes by setting up shell corporations offshore.
When confronted with the NY Daily News story a Bush spokesperson justified the Harken offshore entity stating that, since Harken never made a profit Harken never was able to use the offshore company to lower its taxes.
Even White House spokesman Ari Fleischer condemned the tactic yesterday, saying, "The President is concerned about corporations in America who take advantage, set up operations outside of America, in an effort to lower their taxes."
The offshore company "Harken Bahrain Oil Co.", was set up on Sept. 1, 1989, according to Cayman Islands government documents. It was formed as the parent company in Texas was wrapping up a $25 million contract with the Bahrain government to drill in the waters off the Arab islands.
Harken Bahrain was paid at least $2 million by 1993 for its Bahrain operation, which never did strike oil. Bush was on Harken's board of directors from 1986 to 1993.
White House communications director Dan Bartlett said, "In order to save money [on taxes], you would have to make money, and they didn't make any. They found no oil."
The NY Daily News story comes at a sensitive time for the Bush administration as it tries to restore investor confidence in publicly traded companies. And, it puts Republican lawmakers back on the defensive just one day after they hoped that the law Bush signed yesterday would kill questions both the party and the administration's ties to corporate misbehavior.
"It is reminiscent of Enron," said Chuck Lewis of the Center for Public Integrity, a Washington-based government watchdog. "Here is a controversial, on-the-edge company investigated by the feds, sham transactions where they have to restate their earnings and - oh, yeah - they have a Caymans account. What's wrong with this picture? ... What else don't we know?"
That last question will renew calls that Bush order the SEC and Harken release all relevant documents on Harken's business dealings and accounting during Bush's term as a director.
"And don't forget Dick Cheney," a Democratic consultant said. "Don't tell me that Halliburton, with its worldwide operations, does not have some offshore entities floating around offshore someplace."
View the full New York Daily News Story.
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