The recent American International Group (AIG) scandal has outraged Americans from red and blue states alike. And now, we learn from the New York Times that AIG has the gall to sue the U.S. government demanding over $306 million back in taxes it paid - twice the amount of the now infamous executive bonuses.
AIG is claiming that it overpaid taxes related to activities of an AIG-linked Panamanian corporation chartered in tax haven Panama. No surprise then, that none other than AIG - along with other bailed-out banks - supports a hangover Bush Free Trade Agreement with Panama.
At issue is AIG-linked Starr International Company, Inc. (SICO), which, it turns out, is AIG's largest private shareholder. It is also the manager of a compensation fund for AIG employees, who are paid, you guessed it, in AIG shares. Oh, and SICO's chairman is former AIG chairman Maurice "Hank" Greenberg.
Why is SICO, which is so extensively connected to U.S. firms and individuals, based in Panama? Well, the country applies low to no regulations and taxes on foreign firms registered there, of which there are 350,000 - second only to Hong Kong.
The Panama FTA, a hangover trade deal negotiated by the Bush administration, would grant SICO and other Panama-registered corporations with offshore ties with expansive new rights to challenge U.S. public-interest regulations (like U.S. policies that crack down tax cheating, money laundering and risky shady financial dealings) in foreign tribunals, and to demand taxpayer compensation for regulations that undermine their expected future profits.
Whatever the eventual outcome of the U.S. court battles, this case shows that AIG will exploit every available channel to escape U.S. taxes and regulations and to profit at the taxpayers' expense.
The Panama FTA takes us in precisely the wrong direction at a time when all of our energies should be dedicated to fixing the mess made by corporations like AIG.
(For more information on this case, and to add to the 10,000 letters that concerned citizens have already sent to Congress opposing the corporate Panama FTA push, please join me and my fellow Public Citizen-ites here.)