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Evidence Indicates That O?Neill Helped Enron Hide Financial Condition; Public Citizen Calls on Treasury Secretary to Explain

Jan. 18, 2002

Evidence Indicates That O?Neill Helped Enron Hide Financial Condition; Public Citizen Calls on Treasury Secretary to Explain

Public Citizen Sends Letter to Treasury Secretary Paul O?Neill

WASHINGTON, D.C. — Public Citizen today called on Treasury Secretary Paul O?Neill to explain evidence indicating that he helped Enron continue hiding information about its financial condition and took actions enabling it to funnel potentially billions of dollars belonging to shareholders and employees into offshore tax havens.

In a letter to O?Neill, Public Citizen President Joan Claybrook said she is “deeply concerned” about O?Neill?s actions. She asked the secretary to provide detailed information about his communications with Enron executives and Bush administration officials about the tax havens.

“The secretary owes the public an explanation,” Claybrook said. “His actions have created a tremendous appearance of impropriety. He has a duty to taxpayers, Enron shareholders and Enron employees to clarify this matter.”

In 1998, the Clinton administration began making moves to crack down on countries whose lax banking regulations permit U.S. companies to hide money in offshore tax havens. Clinton threatened strict economic sanctions on all nations with lax banking regulations, effective July 2001, in an effort to create a global trend toward increased financial transparency.

But on Feb. 17, 2001, O?Neill announced that the Bush administration was going to review the matter, effectively delaying it. As a result, Enron and other companies could continue to hide money in the Cayman Islands and other offshore accounts. Enron has 874 subsidiaries registered in the Cayman Islands and other nations with weak bank disclosure laws.

On Nov. 27, 2001, O?Neill?s office announced that according to an agreement with the Cayman Islands, that nation would not have to tighten its banking laws until 2004. That would give enough time for companies to move their assets and destroy their records.

O?Neill?s efforts must be viewed in the context of the more than $1.1 million Enron contributed to Bush?s presidential campaign and inauguration, Claybrook wrote. She noted that O?Neill?s responsibility is to collect owed taxes — not to facilitate tax avoidance — and that if Enron and other companies are hiding money in the Cayman Islands, he has an obligation to end that abuse.

Public Citizen first raised questions about the offshore tax havens in a report about Enron issued in late December, Blind Faith: How Deregulation and Enron?s Influence Over Government Lotted Billions from Americans.

In the letter, Public Citizen asks O?Neill to answer detailed questions about his decisions regarding the tax havens; provide a comprehensive list of his contacts with Enron executives, President Bush, Vice President Dick Cheney and their staffs about the issue; explain the extent of his knowledge about tax havens being used by terrorists to hide money; explain why he took the steps; and more.

Click here to read the letter.