Bermuda Firm’s Ties To DC Ethics Scandal

November 1, 2011

The outgoing Nabors Industries CEO became a lavish donor to causes supported by New York Congressman Charles Rangel after the Democratic legislator “protected” a corporate tax loophole  allowing the oil driller to remain a Bermuda company, a leading US pollster and political commentator is reporting.

Scott Rasmussen’s “Rasmussen Report” says Eugene Isenberg — provided with a $100 million compensation package when he resigned as Nabors CEO, more than the company earned in his final quarter at the helm — had an unusually close relationship with Rep. Rangel, one which sparked a lengthy Congressional ethics probe.

“Company gives $100,000 to Congressman’s pet cause. Congressman protects company tax loophole worth tens of millions. Bam! Company gives pet cause another $100,000 check,” reported the website today [Nov. 1]. “The Congressman is Charles B. Rangel, former chairman of the House Ways and Means Committee. The cause was the future Charles B. Rangel School of Public Service at the City University of New York. And the company is Nabors Industries, an oil driller that has pledged a total of $1 million to the school.

“There was nothing subtle here. Nabors CEO Eugene Isenberg reportedly met with Rangel the day the Harlem Democrat’s committee marked up the bill of interest. Shortly after the tax shelter was secured, the second check cleared. [Cynics will be happy to learn that there's also an Isenberg School of Management at the University of Massachusetts, named in the executive's honor].

“And what useful economic activity did Nabors perform to justify this princely tax break? Opening an office in Bermuda and declaring itself foreign.”

“Rasmussen Reports” said the Nabors’ Bermuda loophole will ultimately cost the US Treasury $1.1 billion in revenues over a decade — “money that could have gone toward expanded health coverage, restoring the National Parks or whatever.”

While unsavory, the tax deal for Wall Street heavy hitters isn’t illegal, the website points out.

” … Rangel insists that the company’s largesse to the Rangel School and the preservation of its tax loophole were pure coincidence,” said “Rasmussen Reports”.

In November 2008, following reports by “The New York Times”, Republican Congressmen first asked the House of Representatives Ethics Committee to look into Rep. Rangel’s defense of the Bermuda tax shelter approved by the Congressional Ways and Means Committee he then chaired.

One of the four companies that benefited from the loophole was Nabors Industries, which opened headquarters in Bermuda as a foreign corporation. Under the loophole, Nabors receives tens of millions of dollars in tax breaks. In 2004, Rep. Rangel had led opposition to the tax breaks. Nabors donated $1 million in 2006, and $100,000 later, to the City College of New York school named after Rep. Rangel.

Mr. Isenberg said the donations were unrelated to Rep. Rangel’s February 2007 promise to oppose closing the loophole. He denied there was any quid pro quo, and called the article about it “malarkey”. Rep. Rangel said ‘The New York Times’
had ignored facts and explanations, and denied the charges.

Eventually the Ethics Committee would not make a specific charge over the Bermuda matter but did include it in the supporting documentation for the overall charge that Rep. Rangel had solicited Rangel Center donations from those with business before his committee.

In November, 2010 the bi-partisan Ethics Committee voted 9–1 to recommend that the full House approve a sanction of censure upon Rep. Rangel.The committee stated that “Public office is a public trust [and Rep. Rangel] violated that trust.”

Censure is the strongest penalty the House can impose short of outright expulsion from Congress.

Last month, House Democrats re-elected Rep. Rangel to the House of Representatives Ways and Means committee which oversees the US Federal tax code. But he will serve as an ex officio member sitting on all of the subcommittees without voting rights.

Democratic leader in the House Nancy Pelosi has staunchly defended Rep. Rangel against various ethics charges.

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