Bermuda Shorts and Homeland Insecurity

By Joel D. Joseph

The Bush administration has selected a triple threat to receive $10 billion for implementing a homeland security program. The Department of Homeland Security awarded a contract to Accenture LLP to oversee and expand the massive US Visitor and Immigrant Status Indicator Technology (US-VISIT) program that screens foreign visitors to the United States in an attempt to stop terrorists.

Accenture, formerly known as Andersen Consulting, is itself a triple threat to the US and to Bush's re-election campaign. Accenture is also a poster child for Republican skuldugerry, tax-evasion and outsourcing, a three-fer. Bush could not have selected a more objectionable corporation for a multibillion dollar government program.

Accenture was the consulting division of Arthur Andersen. Arthur Anderson, as Enron's auditors, overlooked billions of dollars in corporate chicanery. Now renamed to cleanse itself of Andersen's taint, Accenture apparently has a clean bill of health to skim billions of taxpayer dollars in the name of homeland security.

Accenture has also setup shop in Bermuda, not only to evade US taxes, but to evade US laws so that it can cheat stockholders as well as taxpayers. Only in America can we reward what John Kerry called the Benedict Arnold companies, and allow them to scam their investors at the same time.

Accenture's 2,500 partners, who remain majority shareholders with 80% of the company, have chosen Bermuda for the headquarters of their holding company, Accenture Ltd. Accenture Ltd in turn controls Accenture SCA, a company based in Luxembourg, which in turn controls all the Accenture subsidiaries around the world.

In filings with the US Securities and Exchange Commission (SEC) last year, Accenture details its reasons for locating its headquarters in the quiet island of Bermuda: "We are not subject to tax in Bermuda on our income or capital gains." Better still, Accenture benefits from the low fees charged by Bermuda. In that wealthy island nation "the maximum annual government fee applicable to us [Accenture] is currently $27,825, and we expect to be subject to the maximum fee," Accenture officials stated in documents filed with the SEC.

Accenture also opened a storefront in Bermuda for the legal protection it receives there, as it told the SEC: "It may not be possible to enforce court judgments obtained in the United States against us in Bermuda or in countries other than the United States where we have assets. In addition there is some doubt as to whether the courts of Bermuda and other countries would recognize or enforce judgments of United States courts obtained against us or our directors or officers."

No treaty provides reciprocal recognition and enforcement of judgments in civil and commercial matters between Bermuda and the US. Accenture also will not have to contend with those nasty stockholder derivative cases in the US: "Shareholders of Bermuda companies do not generally have rights to take action against directors or officers of the company," it boasted in the SEC filing. That's fortunate for those who run the company because their interests "may differ from those of our other shareholders" notably in the case of elections to the board of directors and in the choice of management." The SEC document went on to explain that the partners can act "without the consent of the public shareholders," which will "enable (partners) to act in their own interest ... which may conflict with or not be the same as the interests of shareholders who are not partners."

Benedict Arnold, and many Wall Street Republicans, would be proud of how Accenture has managed to screw both the US Treasury and the shareholders at the same time, while managing to get $10 billion in tax dollars for a homeland security pork project.

Accenture, while claiming that it was based in the US (despite its Bermuda "headquarters,") is one of the leading proponents of outsourcing of jobs to third-world countries. Accenture employs 2,000 Filipino software developers and has 2,400 workers in India, China and Russia. Chief Financial Officer Harry You recently commented at an investor conference, "we can easily envisage in our senior management meetings that in three, four, five years, we'll [have] 25,000 to 30,000 [employees] in low-cost areas throughout the world." Mr. You could not even get himself to call these people employees. To him and to Accenture workers are not people or even employees.

At the same time, Accenture is cutting 760 jobs in the US. I told you that Accenture was a triple threat -- remember Enron, Bermuda headquarters and Outsourcing. I look forward to Mr. Bush explaining why Accenture is a company that should be rewarded with a multi-billion government contract.

Joel Joseph is chairman of the Made in the USA Foundation. Email

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