Senate chairman launches tax probe of Transocean, drilling rig owner in Gulf oil spill

By Stephen Ohlemacher, AP
Wednesday, June 30, 2010

Senate chairman starts probe of Transocean’s taxes

WASHINGTON — A key member of Congress launched an investigation Wednesday into the tax practices of Transocean Ltd., owner of the Deepwater Horizon rig that exploded in the Gulf of Mexico, leading to the massive oil spill.

Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee, said his investigation would examine whether Transocean is exploiting loopholes in U.S. tax law by moving its headquarters overseas.

The company moved its headquarters to landlocked Switzerland two years ago, where it paid a 16 percent tax on its $4.4 billion global operating income last year. Before that, the company had been located in the Cayman Islands, another tax haven.

The company was once based in Delaware, where many U.S. corporations have headquarters because of the friendly tax treatment.

“Transocean’s questionable business practices may be at fault for costing lives and livelihoods on the Gulf Coast, and now there are questions regarding the oil company’s tax practices as well,” Baucus said in a statement. “Hardworking Americans pull their own weight by paying the taxes they owe every day and American companies must do the same.”

A Transocean spokesman did not respond to a request for comment Wednesday.

Baucus didn’t accuse Transocean of criminal wrongdoing, only of exploiting tax loopholes. Baucus cited press reports about Transocean moving its headquarters overseas to minimize U.S. taxes.

The Associated Press reported in May that only a dozen of Transocean’s 18,000 employees work at the company’s headquarters in the central Swiss state of Zug. About ten executives are based in its management offices in Geneva. About 1,300 work in Houston.

At the time of its move to Switzerland, Transocean said shifting its head office would “improve our ability to maintain a competitive worldwide effective corporate tax rate.”

Baucus sent a letter to Transocean requesting detailed documents about the company’s tax practices. He said the investigation will help lawmakers learn whether Transocean is using loopholes that were supposed to be closed by a 2004 tax law, and whether new legislation is warranted.

Associated Press writer Frank Jordans contributed to this report from Steinhausen, Switzerland.

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