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Last Updated:  Thursday, 6 March, 2003, 22:18 GMT
Tyco votes to stay offshore
Former Tyco chairman Dennis Kozlowski
Tyco former boss Dennis Kozlowski is facing tax evasion charges
Shareholders in scandal-hit conglomerate Tyco have voted to keep their company registered in Bermuda, resisting a move to bring it back to the US.

The company, whose shares plummeted 71% last year, is one of a handful which have come under the microscope for reincorporating abroad to save on US taxes - a practice decried by many as unfair and even unpatriotic.

Major pension funds and other institutions holding Tyco shares wanted the company back onshore, because they said that would mean greater accountability on the part of its senior executives.

The whole board was replaced last year after revelations about their largesse with the company's money - and following former chief executive Dennis Kozlowski's indictment for tax evasion on a number of paintings bought in New York.

An attempt to sack PricewaterhouseCoopers, the auditor which presided over the company's books while executives allegedly spent millions on their lavish lifestyles.

Institutional pressure

The effort to get Tyco onshore again may have failed, but the 26% of the votes it garnered is a much higher level of support than most resolutions at company meetings.

Calpers, the California public employees retirement system and one of the prime movers in the anti-offshore push, has already barred investment in a number of companies which have shifted their official base elsewhere to avoid US taxes.

As with Tyco, the manoeuvre - known as "corporate inversion" - leaves all management functions within the US, simply moving the registered address to a low-tax location such as Bermuda.

Stanley Works, a Connecticut company which was planning to head for Bermuda last year, eventually gave up the plan under heavy fire from unions, local lawmakers and investors.

Legal manoeuvrings

The decision - accompanied by a promise from the new board to consider the "complex" question in detail - comes as US lawmakers tried to pass legislation designed to close off the issue till after the next election.

While discussing the Armed Forces Tax Fairness Act, a bill designed to ensure dependents of those in the military received death benefits tax-free, Republicans in the House of Representatives added a clause declaring a moratorium on inversions till December 2004.

But Democrats charged that the moratorium was simply a way of kicking the issue into the long grass - while at the same time letting off anyone who had inverted before March 2003.

Calling the amendment an "amnesty for tax dodgers", Texas Democrat Lloyd Doggett said the bill had been "perverted".

"The leadership of the House has launched a sneak attack to protect the corporate 'ex-patriots' who have renounced America," he said, giving a flavour of the kind of language anti-inversion activists are turning to.


SEE ALSO:
New SEC chief pledges tough line
18 Feb 03 |  Business
Tyco inquiry finds no major fraud
31 Dec 02 |  Business
Offshore rules run into the sand
16 Oct 02 |  Business
New Tyco boss rallies the troops
25 Sep 02 |  Business
US firm ditches tax dodge
02 Aug 02 |  Business
Who watches the watchers?
28 Jun 02 |  Business


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