CalPERS to Vote on Offshore Status Plan
The California Public Employees’ Retirement System, the largest U.S. public pension fund, is expected to vote today on whether to ask companies it owns stakes in to give up their offshore addresses.
CalPERS’ investment committee will decide whether to ask McDermott International Inc., Tyco International Inc. and Ingersoll-Rand Co. to become U.S.-based companies, the pension fund said in a posting on its Internet site.
The fund, with $143 billion in assets on June 30, said moving the companies’ country of incorporation to the U.S. would help shareholders hold executives accountable for their actions. Public scrutiny of offshore operations increased after accounting scandals at companies such as WorldCom Inc., and after Tyco’s former chief executives was charged with fraud.
“Events over the past 12 months demonstrate how crucial it is that, in the event of legal violations by officers or directors, shareholders have the ability to pursue legal recourse,” CalPERS staff wrote in the proposal.
Former Tyco Chief Executive L. Dennis Kozlowski and former Chief Financial Officer Mark Swartz have been charged under a New York indictment of stealing from Tyco $170 million in unauthorized compensation and $430 million through stock fraud. Both pleaded not guilty.
The American Federation of State County and Municipal Employees Pension Plan asked CalPERS to co-sponsor resolutions asking the companies to reincorporate in the United States. CalPERS’ opposition to a plan by tool maker Stanley Works to change its legal address to Bermuda prompted the company to drop the move.
Companies may avoid some U.S. taxes by incorporating elsewhere. Ingersoll-Rand and Tyco are incorporated in Bermuda, while McDermott is in Panama.
About 20 companies have moved their addresses to tax havens while keeping U.S. operations, U.S. Assistant Treasury Secretary Pamela Olson told a congressional panel last month.
Officials at Ingersoll-Rand, McDermott and Tyco didn’t return telephone voice-mail messages left after work hours seeking comment on CalPERS’ proposal.
Colleen Beamish, a spokeswoman for California Treasurer Phil Angelides, also didn’t return a telephone call to her office. Angelides is a member of CalPERS’ board.