Slayton: Corporate inversions pose a reputational threat

US Consul General Gregory Slayton has hit out at corporate inversions after hinting they bring few jobs but a lot of bad headlines.

Companies including industrial giants Ingersoll-Rand and Cooper Industries have relocated their headquarters to Bermuda a manoeuvre known as corporate inversion to avoid paying US tax on their non-US profits.

Typically the operational headquarters remain in the US, which has sparked a political storm in recent years.

Mr. Slayton told The Royal Gazette: "I have always been against corporate inversions."

He said he had shared those thoughts with both Alex Scott, when he was Premier, and then his successor Ewart Brown.

Mr. Slayton explained: "When you do a cost benefit analysis of a corporate inversion and a small handful of jobs that may or may not come to Bermuda versus the potential reputational threats that it may have that cost benefit analysis should be done very, very carefully."

When Democrat John Kerry ran for president four years ago, he referred to such firms as "Benedict Arnold" companies, citing the name of an American traitor, who switched sides during the American Revolution.

A 2007 report by the US Treasury said it had "strong evidence" that companies like Ingersoll and Cooper had shifted "substantially all their income out of the US".

By diverting income from the US subsidiary to the offshore parent company a technique known as "earnings stripping" companies were minimising the amount of tax paid even on their US profits, the Treasury report said.

Corporate inversions differ from the vast majority of the Island's key insurance and reinsurance sector companies, which originally incorporated on the Island.

Recently some of Bermuda's best known corporate inversions such as three Tyco spin-offs, engineering company Foster Wheeler and oil company Weatherford International have announced their intention to leave Bermuda, going to either Switzerland or Ireland.

Courtesy of Royal Gazette reporter Matthew Taylor