All of us have seen the images of liberated Iraqis looting government buildings in Baghdad. Now that those images are fading in our memories, Americans should take an equal interest in another form of looting happening back here at home - the shameless looting of corporations and U.S. tax coffers by unscrupulous and unpatriotic chief executive officers of companies.
According to reporting by journalist Bill Moyers, America loses roughly $70 billion a year - nearly the cost of Operation Iraqi Freedom - from corporate tax cheats who use overseas tax shelters to avoid paying their fair share.
"In the sands of Iraq, our soldiers risk their lives for our country. At the same time, big corporations are abandoning our country and setting up phony tax shelters in the sands of Bermuda," states the Bermuda Project, a campaign against corporate tax dodges co-founded by columnist and author Arianna Huffington.
President Bush, the business school graduate, should jump on board with the Bermuda Project and stop this looting of our tax coffers.
We know that politics plays a large part in any discussion of corporate America - on both sides of the aisle. Both political parties reap large donations from corporate lobbyists. Of course, Republicans receive the lion's share, but Democrats receive hefty donations from labor unions, whose own fund-raising practices deserve a measure of scrutiny. However, the president and his party could dispel their image of coddlers of corporate fat cats by taking a hard line against overseas tax shelters.
Politics aside, Americans should press members of both parties in the U.S. Congress to support House Resolution 737, the Corporate Patriot Enforcement Act. It's the right thing to do to eliminate tax shelters.
Unfortunately, the Bermuda Project and HR737 represent only the beginning of reform. The corporate world remains a scandal-ridden embarrassment to this country. Americans should keep the pressure on companies to clean up their act or lose our loyalty as customers.
It's not necessarily a legal issue but an ethical one. The margin of pay between CEOs and office workers has spiraled out of control, with CEOs now making 500 times what their "worker bee" counterparts make.
Corporate boards argue that they need to keep hiking CEO pay to hold on to good acquisitions. We don't buy this argument. One reason we don't buy it is because many of these CEOs aren't doing their companies any favors. The Washington Post reports that CEOs of U.S. airlines received hefty pay increases even as their companies floundered and staff and pilots suffered layoffs - also while these companies sought cash bailouts from the federal government. Gordon Bethune, CEO of Continental, for example, saw his pay increase from $4.2 million in 2001 to $14 million in 2002. That's disgraceful. Corporate boards need to wake up and stop lining the pockets of CEOs at the expense of the workers and the nation.
Some progress is being made in the legal arena with the most egregious corporate offenders. Here are a few updates.
Enron - While Ken Lay, the infamous CEO of Enron, so far has escaped criminal charges, he is confronting a hefty civil suit in the wake of Enron's collapse. Other leaders of the company face charges such as fraud, conspiracy and lying to the government. Accounting firm Arthur Andersen was sentenced to a $500,000 fine and five years probation in October for obstruction of justice in an Enron-related investigation. (Andersen has appealed the case.) Former chief financial officer Andrew Fastow has been indicted on 78 counts, and three former British bankers have been indicted in connection with Enron.
ImClone - "Sam Waksal, former CEO, was charged last year with insider trading, and pleaded guilty to six counts, including bank fraud, securities fraud, conspiracy to obstruct justice, and perjury. The latest news from Reuters reports that securities regulators are investigating some tax issues involving ImClone - Waksal reportedly owes $23.3 million in taxes," Forbes reported.
President Bush should reassert the case for prosecution of corporate crooks. We need a president and a Congress that are as tough on American corporate tax cheats and corporate wrongdoers as they are on foreign dictators.