US senators demand probe of Ugland House in the Cayman Islands
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| Published on Wednesday, June 6, 2007 |
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By Ryan J. Donmoyer
WASHINGTON, USA (Bloomberg): The leaders of the US Senate Finance Committee have asked the Government Accountability Office to investigate a five-story building in the Cayman Islands listed as the address of nearly 13,000 subsidiaries of companies, many of them US-based.
The committee chairman, Max Baucus, a Montana Democrat, and Iowa Republican Charles Grassley, the top Republican on the panel, said they would use the GAO's findings to better understand how companies use offshore havens to reduce US liability.
"I want the GAO to go looking in one of the most likely places shady tax transactions could be sheltered, and that's this building in the Caymans," Baucus said in a statement distributed by the committee.
The Ugland House in George Town, the capital of the tax-free Cayman Islands, is home to 12,748 companies, including the subsidiaries of more than 150 US corporations, according to a Bloomberg investigation in 2004. US companies can stash their foreign earnings in the Caymans and delay or avoid the 35 percent US corporate tax rate on those profits.
In a letter to Comptroller General David Walker on Tuesday, Baucus and Grassley asked the GAO to travel to the Cayman Islands to determine among other things what business, if any, the companies conduct in the country and what business reasons exist for incorporating there.
Walker is head of the GAO, which performs investigations for Congress.
"The Ugland House office building in the Cayman Islands has been the source of much debate on the Senate floor over the past few years," Grassley said. "It's time the Finance Committee found out what's really going on there."
Ted Bravakis, a spokesman for the Cayman Islands government, said "the law enforcement, regulatory and tax information exchange channels between the Cayman Islands and US -- some dating back more than 20 years -- offer no protection for Americans who are seeking to evade their tax obligations."
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