Report: Enron Avoided Paying Taxes

It's reported Enron Corp. paid no income taxes in four out of the past five years.

The New York Times said Thursday that the energy trading giant used almost 900 subsidiaries in tax-haven countries to avoid paying taxes.

The use of overseas tax havens by U.S. corporations is not unusual, but the Times says Enron made use of the technique far more often than other companies.

The Senate Finance Committee is "interested in whether Enron has been complying with federal tax laws" particularly those governing tax shelters, said the panel's spokesman, Mike Siegel.

Whether Enron used any shelters viewed by the Internal Revenue Service as set up mainly to avoid paying taxes is one key point. Sen. Charles Grassley of Iowa, the top committee Republican, said the issue is "whether Enron used certain tax vehicles that might have masked the company's financial condition."

Even as it neared collapse, Enron was in the forefront of a lobbying campaign to scrap the corporate alternative minimum tax.

Repeal of the alternative minimum tax was backed by dozens of companies including Enron and was part of President Bush's economic stimulus plan. The House added a provision that would have given Enron a $254 million infusion of cash, but the package ultimately failed.

The Houston-based energy conglomerate faces investigations from a growing list of congressional committees, the Justice Department and the Securities and Exchange Commission following its collapse late last year in the nation's biggest corporate bankruptcy. The Finance Committee is one of two congressional panels with access to Enron's tax records.

Even as its failure loomed last fall, Enron maintained a high-profile lobbying effort on a variety of tax issues. Enron led the AMT Coalition for Economic Growth, a business group dedicated to repeal of the corporate alternative minimum tax, which is intended to guarantee that companies pay at least a minimal amount of income taxes.

Mr. Bush also pushed for repeal in his economic stimulus package, arguing that the provision hits corporations hardest in down years.

The administration disclosed Tuesday that Enron Chairman Kenneth Lay telephoned Mitch Daniels, director of the White House Office of Management and Budget, in early October to discuss prospects for passage of the stimulus measure.

The two had a general conversation about the legislation and discussed the overall outlook for the economy, said OMB spokeswoman Amy Call. Repeal of the alternative minimum tax was not addressed, she said.

Enron stood to gain handsomely from language added to the stimulus package by Rep. Bill Thomas, R-Calif., chairman of the House Ways and Means Committee. Under the original House-passed bill, billions of dollars in alternative minimum tax credits built up over past years by dozens of corporations would have been immediately redeemed — handing Enron a $254 million infusion of cash.

Enron sought numerous other tax breaks from Congess, according to lobbyist disclosure records. Among them was a five-year extension of a tax credit for electricity generated by wind; Enron is a major producer of wind-generated power.

An Enron affiliate, Enron Wind, provided a sample letter on its Internet site that people could send to members of Congress advocating extension of the credit.

Like the stimulus package, however, extension of the wind credit failed to clear Congress and expired on Dec. 31. Lawmakers of both parties say it will be renewed for at least another year and probably made retroactive to the beginning of 2002.

Enron would also have benefited from provisions of a House-passed energy bill involving oil and gas transmission lines, including tax breaks for certain transmission transactions. Those items would have helped the bottom lines of many other companies, too — and the bill also languishes in the Senate.

©MMII CBS Worldwide Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report