Nominee Is Linked to Controversy

Bush's choice for deputy attorney general worked with a lobbyist, now being investigated, in an effort to shield offshore firms from U.S. taxes.
By Walter F. Roche Jr.
Times Staff Writer

July 29, 2005

WASHINGTON — The Bush administration's pick for deputy U.S. attorney general supervised a lobbying campaign two years ago by controversial lobbyist Jack Abramoff to block legislation aimed at offshore companies escaping American taxes, records and interviews show.

Timothy E. Flanigan, 52, chief counsel of Tyco International Ltd. since 2002, appeared before the Senate Judiciary Committee this week and acknowledged supervising Abramoff's work for the Bermuda-based firm. However, he declined to answer questions describing what the lobbyist did for the company.

Sen. Richard J. Durbin (D-Ill.) said Thursday that he was not satisfied with Flanigan's response, and said he would submit written questions seeking more details.

At the heart of Abramoff's work for Tyco was an intensive effort to block the Corporate Patriot Enforcement Act and similar bills designed to penalize American firms that incorporated outside the U.S. to avoid taxes, according to records and sources familiar with the lobbying campaign.

One person with direct knowledge of Abramoff's lobbying efforts called it "a full-court press." And congressional aides credited Abramoff's intense lobbying with helping to keep the legislation from reaching the House floor for an up-or-down vote.

"They called in the big guns," said one of the aides, who agreed to discuss Abramoff's role on condition of anonymity.

Lobbying reports filed by Abramoff and his law firm at the time, Greenberg Traurig, showed they were paid more than $1.7 million in 2003 and 2004 by Tyco.

Abramoff left the law firm under fire in early March 2004. He is the subject of investigations by a federal grand jury and a Senate committee over allegations that he bilked Indian tribes out of millions of dollars. Questions also have arisen over Abramoff's role in arranging foreign trips for congressional leaders, including House Majority Leader Tom DeLay (R-Texas).

Flanigan did not respond to a request for comment Thursday. Abramoff and a spokesman for Greenberg Traurig also declined to be interviewed.

In a brief statement, Tyco Vice President David Polk said that Abramoff "was engaged to provide certain legal services on matters relating to Tyco's business." He would not elaborate.

Flanigan was White House deputy counsel under Alberto R. Gonzales, now attorney general, before joining Tyco in November 2002.

The diversified manufacturing and service company, founded in Massachusetts in the 1960s, moved its corporate headquarters to Bermuda in 1997.

At the time Flanigan took over the corporate counsel's office, members of Congress, organized labor and pension officials in various states, including California, were pressuring Tyco as a result of the move.

By Tyco's estimates, its move to offshore incorporation saved up to $400 million a year in U.S. taxes.

Bills filed in 2002 and 2003 by Rep. Richard E. Neal (D-Mass.) and Rep. James H. Maloney (D-Conn.) would have imposed tax penalties on such companies as Tyco. Other legislative proposals would have barred companies with offshore headquarters from getting government contracts.

The various proposals — all opposed by Tyco and other offshore companies — were widely referred to by supporters and foes as "the Benedict Arnold bills."

The Neal bill, despite having dozens of sponsors, was blocked from a vote in the House by the Republican leadership in 2003. Attempts to attach the provisions to other legislation also failed.

Tyco also was one of a handful of companies eventually granted an exemption from a new restriction on offshore firms getting Homeland Security contracts.

Federal lobbying reports filed by Abramoff and his law firm characterized their work on behalf of Tyco as "government contracts legislation" and "tax and trade legislation." They also listed the agencies lobbied, which included the House, Senate and "executive office of the president."

Also during Flanigan's tenure as vice president and general counsel, Tyco stood to benefit from language inserted into a Senate bill, which would have given the firm a no-bid $67.4-million contract to install fiber-optic cable to serve a U.S. military installation in the Marshall Islands. The provision was dropped, however, when the measure went to a House-Senate conference committee in late 2003.

Flanigan, the father of 14, previously served as a clerk to former U.S. Supreme Court Justice Warren E. Burger. He was in private law practice before becoming deputy to then-White House counsel Gonzales. Earlier, Flanigan volunteered his legal services to the Bush-Cheney campaign during the Florida recount of 2000.

His nomination is not expected to be voted on until after the Senate returns from a summer recess.