By Cordia Scott Hennaman, MNE Tax
US Senate Finance Committee Chair Ron Wyden, D-Ore., and Senator Sheldon Whitehouse, D-R.I., launched an investigation on April 28 into whether Trump administration interference stalled a tax investigation of Caterpillar, which former Attorney General William Barr represented.
“In recent years, a series of high-profile federal tax disputes involving powerful and well-connected corporations have raised important questions regarding the enforcement of conflict of interest statutes and policies to prevent political meddling in criminal investigations,” they wrote in a letter to Attorney General Merrick Garland and IRS Commissioner Charles Rettig.
Of chief concern is the handling of the federal criminal investigation into the tax practices of Caterpillar Inc., which Barr represented before he was appointed US Attorney General, they said.
In 2015, Caterpillar revealed that a federal grand jury in Illinois had begun investigating an alleged tax scheme involving the company’s Swiss subsidiary, leading to raids by federal agents on three different Caterpillar offices in March 2017. Days after the raids, Caterpillar announced it had retained Barr to represent it, according to Wyden and Whitehouse, who said the IRS has been trying to recover $2.3 billion in unpaid taxes and penalties from Caterpillar in connection with the alleged tax practices.
“Alarmingly, just six days after Mr. Barr was nominated to serve as Attorney General, an inspector general agent at the U.S. Federal Deposit Insurance Corporation was reportedly instructed by the DOJ tax division and the Office of the Deputy Attorney General ‘that no further action was to be taken on the [Caterpillar] matter until further notice.’ The investigation has reportedly been ‘stalled’ since this order was issued and many questions remain unanswered about the decision and what ethics guidance was provided to Mr. Barr regarding the matter,” they said.
The senators are also investigating whether other Trump administration officials interfered with a multi-billion dollar tax enforcement matter with Renaissance Technologies LLC, a hedge fund with major Republican political donors. The IRS has attempted to collect about $7 billion in back taxes from Renaissance since 2017 for its use of basket options contracts, a type of transaction the IRS considers an abusive tax avoidance technique, the senators said. The IRS’s moves followed a bipartisan report from the Senate Permanent Subcommittee on Investigations, finding that Renaissance used these transactions over a ten-year period to avoid taxes on $34 billion in profits.
Former Renaissance co-chief executive officer Robert Mercer has a direct interest in the matter, they said, saying that in 2016, Mercer gave US $22.5 million in disclosed donations to Republican candidates and to political-action committees, including US $15.5 million to a pro-Trump Super PAC called Make America Number 1. The Make America Number 1 Super PAC also employed Stephen Bannon and Kellyanne Conway, who later became senior leaders in President Trump’s White House, the senators said.
Cordia Scott Hennaman
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