Taking the Swift Boat to Douglas

Friday's Wall Street Journal (subs. req'd) has a detailed report on the use of Isle of Man tax shelters by Texas businessmen Sam and Charles Wyly. The pair have made hundreds of millions of dollars from investments in tech firms and retail operations and not satisfied with the already low taxation of capital gains in the US, arranged transactions via Bank of America to dump assets into Isle of Man trusts where the capital gains would then accrue tax free. As with many such trusts, getting the paperwork through is usually just a matter of pulling someone of the street to sign a few oul forms, as they say in Ireland:

Officials provided Mr. Morgenthau [NYC district attorney] a dossier on more than 20 Wyly-linked entities such as Devotion Ltd., a holding company with two directors and no employees. Corporate filings with the SEC and in the Isle of Man show it is run by an Isle of Man resident who lives on a small farm and another in a row house who signed the paperwork for a $25 million loan from Bank of America in 2002.

Unfortunately, unlike their Irish tax dodger equivalents who also love all things Manx, the brothers seem to have been done in by their lack of familiarity with what the Isle of Man is: a posession of the UK that is displaying increasing cooperation with international regulators. Hence the information flow back to the US on the dodgy deals, which may have involved tax, securities, and money-laundering violations.

And finally, amongst the place the proceeds of this tainted wealth showed up: the Bush-Cheney campaigns. Because:

[the Wylys] have donated more than $1.3 million to political campaigns in recent years, Federal Election Commission records show. Almost all of it went to Republicans. The Wyly brothers also gave funds to two groups, Swift Boat Veterans for Truth and Republicans for Clean Air, that ran ads favorable to President Bush in the 2000 and 2004 presidential elections.

In keeping with our recent rants about Irish politics (which we promise, we'll stop soon), we can't help but notice the parallel between the current state of Irish and American politics: an efficient electoral machine maintaining a political power monopoly with the connivance of offshore wealth.