CalPERS, CalSTRS highlight offshore tax havens
US – A group of US institutional investors, retirement funds and unions, including pension funds CalPERS and CalSTRS, have taken out a full-page advertisement in the Wall Street Journal urging Tyco and other expatriate companies to leave their offshore tax havens and return to the US.
“This ad is intended to demonstrate to shareholders that expatriation has direct, detrimental impacts for investors,” explains Sean Harrigan, who was recently elected president of CalPERS.
The advertisement “Ahhh……Bermuda. A nice place for a vacation…but should U.S. companies take legal refuge there?” names Tyco and Ingersoll-Rand among those corporations operating from the US, but having mailing addresses in offshore havens to avoid taxes.
Concerns are that offshore incorporation makes it difficult to hold officers and directors accountable, and shareholders do not enjoy their full rights.
“What companies like Tyco really are seeking with their sham offshore mail drops is legal shelter from their own shareholders,” says Harrigan.
Adds Phil Angelides, Californian State treasurer: “This practice of expatriation…. represents – to millions of shareholders – the type of deceptive corporate practice that has shaken the financial markets, harmed taxpayers and pensioners, and damaged our economy. “
Tyco International shareholders are due, in the coming week, to vote on a petition to reincorporated the Bermuda-chartered company on US soil. Institutional Shareholder Services (ISS), a world provider of proxy voting and corporate governance services to 750 institutional investors in North America and Europe, has recommended a vote in favour of the resolution.
"California's educators expect accountability from their pension fund and we expect it from the companies we invest in," said Jack Ehnes, chief executive officer of the California State Teachers' Retirement System (CalSTRS). "The reincorporation resolution supported by ISS calls for Tyco to step up and give us investors the accountability we need."
US retirement funds have been banging the drum for corporate governance since losing hundreds of millions of dollars in the WorldCom scandal. Last August a core group of pension funds, led by those from California, New York and North Carolina, agreed to clamp down on companies that do not abide by good company practice. At that time, Angelides put forward the case for divesting in companies operating through offshore tax havens, saying: “We are the investors, we are the owners and we expect a better code of conduct.”
Signatories on the advert were:
* California Public Employees' Retirement System
* California State Teachers' Retirement System
* American Federation of State, County, and Municipal Employees
* California State Treasurer Phil Angelides
* Connecticut State Treasurer Denise L. Nappier
* Connecticut Retirement Plans and Trust Funds
* New York City Comptroller William C. Thompson, on behalf of the New York City retirement systems
* New York State Comptroller Alan G. Hevesi
* American Federation of Labor and Congress of Industrial Organizations
* Communications Workers of America
* International Brotherhood of Teamsters
* Amalgamated Bank of New York
* Central Laborers' Pension Fund
* Service Employees International Union Master Trust
* SEIU 1199 National Pension Funds
* Sheet Metal Workers' National Pension Fund
* Steelworkers’ Pension Trust