U.S. companies with offshore HQs may be barred from fed contracts
- By Patience Wait
- Jul 10, 2002
The House Appropriations Committee approved July 9 legislation barring U.S. companies that re-incorporate offshore from being awarded federal contracts.
The measure passed 41-17, with several Republicans joining 29 Democrats on the committee to vote in favor of the language, which was incorporated into an appropriations measure for the Treasury Department and other federal agencies.
The amendment was introduced by Rep. Rosa DeLauro, D-Conn., who cited recent moves by companies to incorporate in Bermuda to reduce federal taxes while enjoying the benefits of being U.S.-based businesses.
"They look like U.S. companies, the principle market their stock is traded in is the United States, and their physical assets are protected by our armed forces," DeLauro said. "They just refuse to pay for the benefits ? as every other U.S. citizen and company does."
DeLauro singled out several companies, including PwC Consulting Ltd. (soon to be renamed Monday) and Accenture Ltd., both of Hamilton, Bermuda, as "corporate traitors."
"PricewaterhouseCoopers Consulting will adopt a foreign identity to avoid U.S. taxes, but it has registered as a lobbyist to hustle contracts for itself from the Office of Homeland Security and is listed among the top 100 prime contractors in the federal IT market," DeLauro said.
Accenture, too, has benefited from federal business, with its own earnings statement showing net revenue from government contracts in 2001 topping $1 billion, DeLauro said. But when Accenture, formerly Anderson Consulting, became a publicly traded company just a few years ago, it incorporated offshore.
PwC spokeswoman Sehra Eusufzai said she could not comment on the amendment because the company is in a regulatory quiet period in advance of its planned initial public offering.
Those close to the situation at Accenture said it is far too early in the legislative process to speculate about the possible effect of the amendment.
"There are a lot of hurdles to go through before this potentially becomes a law," one source said. "We continue to believe that Congress will see that our situation is very different from the other companies it's looking at. Accenture never was an inversion; it never was a U.S. corporation. It has always been a global corporation. It never had a U.S. parent, been U.S.-based or U.S.-operated."