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Corporate Profits Take an Offshore Vacation

26th Feb 07 - Lucy Komisar, IPS

Last week, Merck, the pharmaceutical multinational, announced that it will pay 2.3 billion dollars in back taxes, interest and penalties in one of the largest settlements for tax evasion the U.S. Internal Revenue Service (IRS) has ever imposed.

Merck had cooked its tax books by moving ownership of its drug patents to its own Bermuda shell company -- an entity that has no real employees and does no real work -- and then deducting from U.S. taxes the huge royalties it paid itself. While setting up a shell company is not inherently illegal, it is if tax authorities determine that its only purpose is to evade taxes. Bermuda is a tax haven that has no levy on royalties.

Merck also faces legal action in Canada for 1.8 billion dollars in back taxes and interest.

What Merck did isn't unusual but in fact is becoming common for multinationals in the era of globalisation. It's one of the ploys in a corporate bag of tricks called profit laundering. A company figures out how to move its book profits offshore so it can evade millions and even billions in taxes to the country where it really operates. In an era where much of a company's assets may be intangible intellectual property -- patents, logos, manufacturing processes -- this strategy can make reported profits and taxes disappear.

Time to Clip the Wings of Vulture Funds

21st Feb 07 - Jesse Jackson, The Chicago Sun-Times

They prey upon the poorest nations, taking resources from the most desperate peoples -- billionaire scavengers pocketing the funds that might go to feed children whose families live on less than $1 a day. They are called the vulture funds. They protect their scavengings with fat checks to politicians and lobbyists. One of the leading vulture firms is led by major donors to President Bush. Now it is time to put an end to this disgrace.

Will Congress Reform Wretched Executive Excess?

6th Feb 07 - Morton Mintz, The Nation

Excessive pay for top business executives--particularly for poor performers--has outraged millions of Americans and investors and now even Virginia Senator Jim Webb, who criticized the widening gap between rich and poor in his response to President Bush's State of the Union message.

Few people know, and Webb didn't say, that Congress has repeatedly stifled a bill to do something sensible about wretched executive excess: disallow business tax deductions for executive salaries in excess of twenty-five times the salary of the lowest-paid employee in the same organization.

Exxon Record Profits Also Shows Company Took Less Profit in Run Up to the Election

5th Feb 07 - Foundation for Taxpayer and Consumer Rights

Exxon, Shell and Marathon Oil Slashed Q4 Refining Margins to Temporarily Lower Pump Prices, Group Says

Exxon set the record for the largest annual corporate profit of $39.5 billion last year even with a 4% decline in fourth-quarter profit resulting in part from an 18% drop in refining margins, according to the company's profit report today. Shell, the world's second largest oil company, set a company record earning $25.4 billion in 2006 but also announced a 23% decline in refining margins. Pump prices have increased dramatically in recent years following industry wide increases in refining margins.

The Foundation for Taxpayer and Consumer Rights (FTCR) said today's earnings reports show that industry leaders cut domestic refining profits in the run-up to the November election in order to lower gasoline prices, very likely hoping to influence the mid-term election. The nonpartisan group is calling for Congressional investigations to determine whether Exxon and others manipulated the market to effect the election.

Read FTCR's early analysis of how oil companies could have wielded gas prices for political impact http://marketplace.publicradio.org/shows/2007/01/02/PM200701026.html

FTCR noted that, despite the temporary and limited relief of election season pump prices, the record annual profits of Exxon and Shell show once again that last summer motorists were the victims of one of the greatest rip- offs of all time when gasoline prices topped $3 per gallon. The industry has long claimed that gasoline pump prices are attributable to external factors such as the price of crude oil, but today's profit data make it clear that high gasoline prices are directly tied to oil company decisions.

"The proof in Exxon's profit report is that oil companies are robbing Americans blind and that the companies can have tremendous influence over gasoline prices at any time they want simply by taking a little less in profits," said FTCR President Jamie Court. "That's a very different portrait than the industry paints of being captive to global economic forces. Congress needs to hold hearings and ask company executives under oath about whether Exxon's sudden profit drop in the fourth quarter was based on a political motivation and subpoena company documents to determine the root of the change."

Similar Results Throughout Industry

Marathon oil, the fifth largest U.S. refiner announced today a 30% drop in refining margins and an overall 4th quarter decline in profit. Still, the company announced a 75% increase in profits over 2005. Last week Conoco Phillips announced a 16% drop in fourth quarter profits. Like Exxon and Shell, the decrease in profits and gasoline prices in October and November, were easily offset for these companies by the enormous refining margins and high pump prices of prior quarters.

Exxon Produced More Gasoline in 4th Quarter, Made Less Money

According to its earnings report, Exxon increased its refinery throughput (thus producing more, cheaper gasoline for motorists) in the fourth quarter by 10% over the fourth quarter of 2005 year, even though annual refinery throughput actually declined from 2005 to 2006. Although Exxon refined and sold substantially more gasoline in the fourth quarter than in prior quarters, the company's quarterly income associated with refining and sales were $327 million dollars less than in the third quarter of 2006 and $409 million less than the second quarter, during the height of driving season and the 2006 price spike. This provides more evidence that the oil industry manipulated the available supply of gasoline in order to lower prices last autumn.

President's Announcement on Strategic Petroleum Reserves Helped Industry

After President Bush promised in his State of the Union to double the size of the U.S. Strategic Petroleum Reserve, oil prices shot up faster than after Katrina. FTCR has questioned whether Bush was pumping up oil prices for companies that dropped gasoline prices in the run up to the Nov. election. See FTCR's analysis after a similar profit report by Conoco Phillips http://www.consumerwatchdog.org/energy/pr/?postId=7320.

The Foundation for Taxpayer and Consumer Rights is a nonpartisan, nonprofit organization. More information is available on the web at http://www.consumerwatchdog.org.

CONTACT: Foundation for Taxpayer and Consumer Rights

Greedy Corporate Executives Hurt Economy, Laugh All The Way To Bank

Corporate Executive 23rd Jan 07 - John Hanchette, Niagara Falls Reporter

OLEAN --We will return this week to a subject once much-ignored but previously explored in this space, the "income gap" or "CEO excess" in corporate remuneration. These days, columnists and reporters all over the country are writing about it on a daily basis.

First, a few stark statistics:

In 1965, my first year out of college, I found myself working for New York Telephone, a subsidiary company of AT&T, which at the time enjoyed a government-guaranteed monopoly. My salary was $7,900 a year, then considered a princely sum. In that year, chief executive officers -- CEOs -- of American corporations made, on the average, 24 times more than the ordinary working stiff in the United States. I didn't complain. Nobody did. In those days, CEOs were considered worth every penny for running such huge firms that underpinned the U.S. economy.

US Corporate Colonization of Iraq

US and Iraq Yuva, 11th Jan 07 - Market Dynamics Blog

Almost everyone except Bush agrees that the Iraq War is illegal & immoral. The economic/oil interest was underplayed by the Bush government and the US military invasion resulted in pushing the corporate globalization agenda without restoring Iraq or providing Iraqis with fundamental necessities such as water and electricity.

The goal of the Bush Administration, as stated in the economic orders already enacted in Iraq is to, "transition Iraq from a ... centrally planned economy to a market economy." This goal is explained even more clearly by BearingPoint, Inc. - the Virginia based corporation that has received the $250 million contract to facilitate this transition. The contract states: "It should be clearly understood that the efforts undertaken will be designed to establish the basic legal framework for a functioning market economy; taking appropriate advantage of the unique opportunity for rapid progress in this area presented by the current configuration of political circumstances... Reforms are envisioned in the areas of fiscal reform, financial sector reform, trade, legal and regulatory, and privatization." Transformation of an occupied country's fundamental laws is illegal not just under international law & conventions but also, the U.S. Army's own code of war - stated in the Army field is "The Law of Land Warfare."

ExxonMobil Accused of Disinformation on Warming

Jim Lobe, 3rd Jan 07 - IPS

Like the tobacco industry that for decades denied a link between smoking and lung cancer, ExxonMobil has waged a "sophisticated and successful disinformation campaign" to mislead the public about global warming, according to a major new report by the U.S.-based Union of Concerned Scientists (UCS).

The report, which echoes similar charges made by Britain's Royal Society in September, found that the world's largest publicly traded corporation contributed nearly 16 million dollars between 1998 and 2005 to a network of 43 advocacy groups that questioned the increasingly solid consensus that greenhouse gas emissions contribute to global warming.

Among the most prominent recipients were the American Enterprise Institute (AEI), to which Exxon-Mobil has contributed more than 1.6 million dollars; the George C. Marshall Institute (630,000 dollars); and the Competitive Enterprise Institute (CEI), which has received more than two million dollars, more than any other beneficiary.

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