Big brass ones

This is almost (but not quite) unbelievable.

ENRON, the bankrupt energy company, is trying to claim back tens of millions of dollars in taxes from America's Internal Revenue Service (IRS) on the ground that it paid too much during the years when it fraudulently overstated revenues and profits.

The audacious move is also being considered by other companies embroiled in accounting scandals, including WorldCom - now called MCI - Qwest Communications and HealthSouth.
All the companies are believed to have paid appropriate amounts of tax on the revenues and profits they reported, even though these were false.

The companies are arguing that the frauds that inflated their revenues were the result of the actions of individuals who worked for them and not the fault of the companies or their shareholders.

Yeah, you read that right. Criminal corporations want their tax money back. This, in spite of the fact that they made use of every tax shelter and haven possible to reduce their taxes as much as possible in the first place.

The companies are trying to claim that the extra taxes should be repaid as they are an extra burden on the shareholders, bondholders and employees who had invested in the company through their retirement plans. If I thought for a moment that the money would actually go to any of those people - in particular the employees who not only lost their retirement incomes (in the case of Enron, largely because the company kept encouraging them to invest in Enron's plan, even after the corporate officers were selling off their own shares, knowing the end was on the horizon), but also their jobs, and have been hurt the most by the criminal actions of the companies involved.

So, how much money are we talking about?

WorldCom has so far restated about $11 billion (£6.8 billion) of earnings, Enron $586 million and HealthSouth some $2.5 billion. Between them, tax experts told The Times, they could claim back more than $1.5 billion, if the IRS accepted their claims.

In other words, a lot.

Personally, I could possibly understand refunding the tax money that was paid on income that didn't actually exist on the condition that no person who knew, should have known (based on their position within the company - you know, like senior officers) or participated in the fraud sees a single penny of it. There may need to be other conditions as well, to make sure it's fairly distributed, but that's my starting point.

Posted by thorswitch at May 3, 2003 03:28 AM | TrackBack