In case you really need another reason to be suspicious of SEC nominee Christopher Cox's capacity to hold corporations accountable, here's one: he's on the record opposing efforts to crack down on offshore tax havens.
Cox and the 21 other members of Congress who signed this May 2001 letter were apparently objecting to an ongoing OECD effort to crack down on offshore tax havens, a proposal that the U.S. originally supported when it was initiated in 1998.
Interestingly, the letter was sent AFTER the OECD had already agreed to weaken its proposal by, for example, dropping a requirement that tax haven countries end “ring fencing” (tax preferences for business entities that do no business domestically in those countries).
The letter is posted on the site of a little-known group called the Center for Freedom and Prosperity, which promotes tax havens and bank, corporate and tax secrecy.
A few months after Bush received the letter, the Senate Permanent Subcommittee on Investigations decided to hold hearings to clarify the U.S. government's position on offshore tax havens.
Subcommittee chair Senator Carl Levin (D-MI) explained that it was in the nation's interest to support the OECD initiative “because many offshore jurisdictions have combined bank and corporate secrecy laws with weak bank regulation and anti-money laundering controls, [and] have become notorious for offshore operations engaged in tax evasion, money laundering, or other crimes.”
One witness at the hearings, President Ford's IRS Commissioner Donald Alexander, suggested that “criticism of the OECD tax haven project [by Cox et al.] ... seems to be based upon extreme libertarian notions founded in anti-government bias.”
Although other issues are likely to rise to the top of the list of concerns about Cox in his upcoming nomination hearings (which have not yet been scheduled, as far as I know), his position on this issue should concern members of the Senate Banking Committee who must determine his suitability for the job.
For example, SEC investigators are required to seek offshore account information when enforcing the Foreign Corrupt Practices Act (FCPA), which restricts corporations or their representatives from bribing foreign government officials. (Companies nailed for bribery in recent years include Monsanto, Titan, and others. A major ongoing investigation into over $100 million in bribes paid by Halliburton and other companies operating in Nigeria has yet to be concluded.)
The ability of SEC investigators to aggressively enforce the anti-bribery law depends, in part, upon the support and direction they receive from the top. Evidence of lax enforcement in the recent past was revealed in March 2003, when the Senate Finance Committee published a report revealing how the SEC and the Department of Justice (which shares responsibility with the SEC for enforcing the FCPA) "failed to act" on "serious allegations" of bribery associated with an Enron power project in Guatemala.
Cox should be asked how he would address these enforcement weaknesses and whether he still believes that “any initiative to inhibit the flow of capital to low-tax countries is contrary to America’s national interests” in a time of rising deficits. Offshore tax havens represent the loss of as much as $70 billion in tax revenues each year.