GAO concludes Accenture, others, use tax havens

The General Accounting Office has concluded that four of the 100 largest federal contractors are incorporated offshore in tax haven countries as a way of lowering their corporate taxes.

One of the four, Accenture Ltd. of Hamilton, Bermuda, is ranked No. 24 on Washington Technology's 2002 list of Top 100 federal IT prime contractors. The company had $279 million in federal contracts in fiscal 2001, according to the GAO report. Overall, the four companies pulled in $2.7 billion in government contracts during 2001.

GAO studied the issue of corporate tax avoidance at the request of Rep. Henry Waxman, D-Calif., ranking member of the House Government Reform Committee and Rep. Jim Turner, D-Texas, ranking member of the Government Reform subcommittee on technology and procurement policy.

Turner introduced the Patriotic Purchasing Act, which was cosponsored by Waxman and 59 other representatives, that would bar companies incorporated in tax havens from winning new government contracts. The act has been included as an amendment to the bill passed by the House of Representatives authorizing the creation of a Department of Homeland Security.

"Corporate expatriates should not continue to benefit from government contracts," Waxman said. "It is wrong to make U.S. taxpayers pay billions for contracts with companies that renounced their citizenship in order to evade taxes."

Besides Accenture, the other three companies identified as incorporating in tax havens were McDermott International Inc. of Panama, with almost $1.9 billion in federal contracts in fiscal 2001; Foster Wheeler Ltd. of Bermuda, with $286.3 million; and Tyco International Ltd., Bermuda, worth $206.4 million.

The report said that McDermott, Foster Wheeler and Tyco had conducted "corporate inversions," the term given to companies that were incorporated in the United States and then re-incorporated in a tax haven.

Accenture spokeswoman Roxanne Taylor said the GAO report vindicates the company's position that it was never a U.S. corporation.

"Our contention has always been that we were not a U.S. company," Taylor said. "They have communicated very clearly the fact in their own report that Accenture is not an inversion."

Accenture was part of Andersen Worldwide, which is based in Chicago. When it split from its parent, it operated as a series of related partnerhips, according to the GAO report. In April 2001, it conducted an initial public offering and incorporated in Bermuda.

The GAO report said that about 43 percent of Accenture's contracts were with the Defense Department, and approximately 98 percent of the contracts were for automatic data processing and telecommunications services and equipment.