Dubya's Dodgers

Here's a new angle on Dubya's well-known habit of stuffing the plum diplomatic slots with cronies -- the crony who did a 15 month stint as Ambassador to the Republic of Ireland is in a dispute with the Internal Revenue Service over a huge tax shelter that he set up just before taking the Dublin job. Thursday's Irish Times (subs. maybe req'd) has the details:

President Bush's last Irish ambassador, Richard Egan, set up a $62 million illegal tax shelter as soon as he became ambassador, the [IRS] has said.

Following an investigation, the IRS claims that Mr Egan set up an "economic sham" whose principal use was to reduce his tax payments.

The IRS said that Mr Egan, the billionaire co-founder of Massachusetts' most valuable technology company, EMC Corp, used two companies to set up the scheme using a European-style options scheme as soon as he resigned as the head of EMC to become ambassador.

In typical noise machine fashion, Egan's stated rationale for the deal has nothing to do with the allegation of tax dodging. He says that it was done to provide management over the time that the sale of his shares in the tech company took place -- and it just so happened that the structure happened to contain huge tax benefits as well. Now on the timing question, he should have consulted US Senate Majority Leader Bill Frist, who sold a bunch of shares in the family company 2 weeks before the price crashed -- without needing a dodgy tax shelter to do it.

There is one issue left unclear from the Irish Times description of events -- whether the shelter sought to use Egan's non-resident status during his Ambassadorship. His brief 15 month stint, while justified in terms of his need to return to serve in Dubya's fund-raising machine back home, sounds suspiciously like a time interval that keeps one out of the country for the tax year. Not being accountants, we nevertheless suspect that that's a pretty good time to realise a capital gain. Could it be that Dubya sells Ambassadorships not just to his best fund-raisers, but to the ones who need them for tax planning purposes?