Ted Cruz will vote against tax haven reform
By Kenneth Thomas From US News
Time (h/t TPM) reports that Texas Sen. Ted Cruz invested $6,000 in a company with his college roommate/debate partner, David Panton, which has turned into at least $100,000. While this is true on paper and required Cruz to make multiple amendments to his Senate financial disclosures, the story is of more interest to me for Cruz’s use of a tax haven company.
The tax haven in this case is the British Virgin Islands. Caribbean Equity Partners Limited was founded by Panton, Cruz, and two other partners in 1998. Cruz’s $6,000 plus help starting the firm gave him a 10 percent ownership stake, according to a spokeswoman for Cruz in response to my email inquiries. The other partners owned 30 percent apiece.
Caribbean Equity Partners Limited consisted of two separate units, Caribbean Equity Partners Limited (based in Jamaica) and Caribbean Equity Partners Limited (based in the British Virgin Islands). Cruz held stock in both of them. In the Jamaica corporation, he held 100 regular shares plus 250 Class “C” Preference Shares. He held 5,000 shares of the British Virgin Islands-incorporated company. This information comes from a Certificate of Divestiture dated January 6, 2003, filed when his wife, Heidi Cruz, took a job in the Department of the Treasury, one of many documents published by Time. The Cruz spokeswoman confirmed his ownership in both companies.
[See a collection of editorial cartoons on Ted Cruz at: http://www.usnews.com/cartoons/ted-cruz-cartoons]
This divestiture, about five years after the company was founded, netted Cruz $100,000, consisting of $25,000 in cash and a $75,000 promissory note from a different company, CEP Investments Holdings Limited. This firm is headquartered in Jamaica but domiciled for tax purposes in the British Virgin Islands, Cruz told Time. He also told the magazine that it is “effectively” a promissory note from Panton, as the company is owned by Panton. Based on what the Time story describes as an “oral provision” with Panton to pay reasonable interest on the note, it has now grown to over $100,000 in value as indicated in an October 1 amended disclosure and confirmed by the Cruz spokeswoman. As the promissory note shows, it was originally scheduled to have been paid December 31, 2003, but according to Cruz’s spokeswoman he and Panton have an oral agreement to postpone payment indefinitely.
Cruz’s ownership of a firm with a tax haven-based unit does not augur well for him to oppose tax havens, as some Republicans have in the past. Notably, former Sen. Norm Coleman, R-Minn., co-sponsored the Stop Tax Haven Abuse Act of 2007. Moreover, we find from opensecrets.org that Cruz has received campaign contributions from Goldman Sachs (where his wife now works) PAC and Credit Suisse Group PAC, in addition to tens of thousands of dollars from employees of the two companies. According to the Government Accountability Office, as of 2009 Goldman Sachs had 29 tax haven subsidiaries, including 15 in the Cayman Islands and one in the British Virgin Islands. Credit Suisse, of course, is a Swiss bank under criminal investigation for assisting at least some of its American clients to commit tax evasion.
Bottom line: Cruz is likely a vote against tax haven reform.
For more on this story go to:
