Kerry Donors Include 'Benedict Arnolds'
Candidate Decries Tax-Haven Firms While Accepting Executives' Aid
By Jim VandeHei
Washington Post Staff Writer
Thursday, February 26, 2004; Page A01
Sen. John F. Kerry (Mass.), the front-runner for the Democratic presidential
nomination, frequently calls companies and chief executives "Benedict
Arnolds" if they move jobs and operations overseas to avoid paying U.S.
taxes.
On Monday, Kerry was asked why two of his biggest fundraisers were involved
with "Benedict Arnold" companies. "If they have done that, it's not to my
knowledge and I would oppose it," Kerry told a New York television station.
"I think it's wrong to do [it] solely to avoid taxes."
But Kerry has accepted money and fundraising assistance from top executives
at companies that fit the candidate's description of a notorious traitor of
the American Revolution.
Executives and employees at such companies have contributed more than
$140,000 to Kerry's presidential campaign, a review of his donor records
show. Additionally, two of Kerry's biggest fundraisers, who together have
raised more than $400,000 for the candidate, are top executives at
investment firms that helped set up companies in the world's best-known
offshore tax havens, federal records show. Kerry has raised nearly $30
million overall for his White House run.
Kerry has taken aim at "Benedict Arnold" companies as part of a much broader
political and policy debate over stemming the flow of well-paying U.S. jobs
overseas, a chief cause of unemployment, especially in the hardest-hit
manufacturing sector. Kerry's solution, detailed in a speech yesterday in
Toledo, is to enforce trade agreements, track and slow the outsourcing of
U.S. jobs, and stop government contracts and tax incentives from going to
companies that move operations or jobs offshore.
Kerry has come under attack from President Bush, as well as some Democrats,
for criticizing laws he voted for and lambasting special interests after
accepting more money from paid lobbyists than any other senator over the
past 15 years. Some Democrats worry that Kerry is leaving himself open for
similar attacks on the latest issue.
Given the vast sums raised during the presidential campaign as well the
growing number of companies with offshore operations, it seems almost
inevitable that candidates would receive contributions from some of them.
Then he sought to clarify his position: "What I've said is not that people
don't have the right to go overseas and form a company if they want to avoid
the tax. I don't believe the American taxpayer ought to be giving them a
benefit. That's what I object to. I don't object to global commerce. I don't
object to companies deciding they want to compete somewhere else.''
David Roux, who has raised more than $250,000 for Kerry since 2002, is
co-founder of a California company that helped purchase Seagate Technology
Inc. four years ago and incorporated it in the Cayman Islands, one of the
world's best-known tax havens. Roux described himself in an interview last
fall as the "anchor tenant in John Kerry's fundraising mall."
While the State Department lists Seagate as among the companies that
reincorporated offshore to save on taxes, Roux said yesterday that he works
for a "global" company forced to make "thoughtful" business decisions about
where to locate its offices and jobs. Roux said he does not consider Seagate
or himself a "Benedict Arnold." That term, Roux said, "is, like many things
in politics, a label that [was] meant to cover a lot of sins."
Stephen J. Luczo, chief executive of Seagate, has contributed $4,000 to
Kerry, the maximum allowed under law, and $2,000 to the candidate's legal
defense fund. Luczo was on vacation and not available for comment, according
to his assistant.
Thomas F. Steyer, who said he has raised around $200,000 for Kerry, is
partner at a California investment firm called Hellman & Friedman LLC that
helped set up an insurance company in Bermuda, another popular tax haven.
The insurance company -- Arch Capital Group Ltd. -- stated in a 2000
Securities and Exchange Commission filing that it was sinking roots in
Bermuda to reduce its U.S. tax bill.
Steyer said that it "wasn't my decision" to set up the company in Bermuda
and that he now spends less than 10 percent of his time at Hellman &
Friedman. "I believe American citizens should pay their American taxes,"
Steyer said. He said he "absolutely" does not consider himself part of a
"Benedict Arnold" enterprise.
Steyer and Roux have hosted fundraisers for Kerry and are listed by his
campaign as among three dozen supporters who have "bundled" $100,000 or more
each, which means they get credit for packaging individual donations to
reach that total.
When asked for the definition of a "Benedict Arnold" company or CEO,
Stephanie Cutter, Kerry's spokeswoman, said: "Companies that take advantage
of tax loopholes to set up bank accounts or move jobs abroad simply to avoid
taxes." She pointed to a list compiled by Citizen Works, a tax-exempt
nonprofit group that monitors corporate influence, as a source of the
companies that fit the candidate's definition.
According to federal election records, Kerry has received $119,285 from
donors employed at what Citizen Works described as the "25 Fortune 500
Corporations With the Most Offshore Tax-Haven Subsidiaries." The list does
not include nearly all of the companies that shave their tax bill by moving
jobs and operations overseas, so Kerry has actually raised substantially
more from firms qualifying as "Benedict Arnolds."
Kerry has also received $20,100 in donations directly from individuals at
companies with mailing addresses offshore to avoid paying U.S. taxes,
records show.
"Senator Kerry has made it crystal clear that he's going to close these
loopholes, forever," said Chad Clanton, a Kerry spokesman. "Nothing will
stop him. Period."
Sen. John Edwards (D-N.C.), whose campaign gets most of its money from trial
lawyers, has not described these companies in such harsh terms and has
received less from them, Federal Election Commission records show. Edwards
took in $500 from a Tyco International Ltd. employee and $75,000 from the 25
Fortune 500 companies with the most offshore-tax-haven subsidiaries.
Staff writer Dan Balz and researcher Lucy Shackelford contributed to this report. |
