Republicans open new front against Lew: Cayman Islands
February 8th, 2013
10:06 PM ET
10 years ago

Republicans open new front against Lew: Cayman Islands

(CNN) - Republicans opposed to Jack Lew's nomination to be treasury secretary may have a new line of criticism against him.

It's one which has been public for several years, but until recently received little scrutiny.

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Multiple reports say an investment listed on 2009 financial disclosure paperwork when Lew was nominated to serve as a deputy secretary in the State Department is a fund based in the Cayman Islands.

The fund is CVCI Growth Partnership, described on the form as an employee investment fund. Prior to his State Department stint, Lew was employed at Citigroup as the chief operating officer of a business unit. A source familiar with the investments told CNN, "The fund was fully transparent for U.S. tax purposes - all income, gains, losses and expenses were reported on each investor's tax returns."

Lew invested $56,000 and sold his investment in 2010 for $54,418 when he was confirmed to lead President Barack Obama's budget office, the source said.

Obama was highly critical of GOP presidential nominee Mitt Romney for similar investments in funds based in the Cayman Islands.

Documents obtained by CNN show that Hank Paulson, a Treasury secretary under President George W. Bush, also declared Cayman Island accounts on financial disclosure forms.

Sen. Chuck Grassley, a Republican from Iowa and member of the Senate Finance Committee, blasted Lew over the investment.

"President Obama has been almost obsessively critical of offshore investments. He called Ugland House 'either the biggest building or the biggest tax scam on record,'" Grassley wrote in a statement late Friday.

Ugland House is a building in the Cayman Islands, which is the legal address for thousands of investment funds and businesses; the islands themselves are known as a tax haven for U.S. investors and companies. Obama mentioned Ugland House in the 2009 address Grassley cited, saying it "had over 12,000 business claim this building as their headquarters."

"For years, we've talked about shutting down overseas tax havens that let companies set up operations to avoid paying taxes in America," Obama said. He said his budget proposal would crack down on businesses which incorporate in places such as Ugland House.

Grassley said of the contrast between Obama's statements and Lew's past investment, "The irony is thick.

"On the White House claim that Mr. Lew previously disclosed his Ugland House investment, it was disclosed only if you knew where to look and then were able to put the pieces together. To say this information was fully disclosed to the public is misleading, at best," he charged.

White House spokesman Eric Schultz told CNN, "Jack Lew paid all of his taxes and reported all of the income, gains and losses from the investment on his tax returns. The existence of Mr. Lew's investment is not news to the Senate."

"There are no new facts that provide a basis for Senators to reach a different conclusion about Mr. Lew's nomination than they reached twice before in this Administration," he said.

Before Grassley's statement on Friday, Republicans two most significant concerns regarding Lew involved his work at Citigroup and his handling of Medicare when director of the White House Office of Management and Budget.

Before returning to government, he oversaw a Citigroup unit which made bets against the housing market ahead of that sector's collapse, which drove the 2008 financial crisis. Lew has said he did not make investment decisions for the group.

On Monday, a group of Republican senators claimed that when director of the White House Office of Management and Budget, Lew and the Obama administration fell short of requirements to report areas for policy change under a Medicare law.

The law requires the White House to submit legislation when Medicare trustees notice cash flow problems within the program. The White House has said previously it considers the particular law Republicans cited "to be advisory and not binding."

Lew stepped down as Obama's chief of staff late last month after being nominated for the top treasury spot.

His confirmation hearings have been scheduled for Wednesday.

Lew has been confirmed by the Senate for previous positions in both the Clinton and Obama administrations, but his current nomination receives a far greater level of scrutiny.

- CNN's Ted Barrett, Jennifer Liberto, Steve Brusk and Gregory Wallace contributed to this report

Filed under: Chuck Grassley • Jack Lew
soundoff (12 Responses)
  1. Nuance

    Funny how they complain about this guy's off-shore accounts when they gave Mitt Romney a "pass" on his....

    The irony is thick....

    February 9, 2013 01:15 am at 1:15 am |
  2. Bill from GA

    The issue is how much the repubs can embarrass President Obama. Repubs have to extoll the imperfections of any Obama selection; their number 2 job is to provide fodder for Fox Propaganda Network. ( Nobody's figured out what their No. 1 job is, Rove & Limbaugh ain't talking. ( Well, not about THAT))

    Any tie-ins with offshore accounts would be immediately dismissed if it were, for instance, a top-running repub presidential candidate. But for an Obama nominee, it is reason to bring them before Congress and let the low-lifes all take their shots at him.

    Who better for Treasury Secretary than one with experience in ALL areas of banking.

    February 9, 2013 01:24 am at 1:24 am |
  3. Jen

    I saw an article yesterday about bosses' signatures and what they say about their personalities and what they'll be like as decision-makers. Lew's big loopy signature was the picture they used as an example.

    February 9, 2013 01:37 am at 1:37 am |
  4. Thomas

    Not good !

    Why can't we find clean guys that work in finance ?

    February 9, 2013 01:54 am at 1:54 am |
  5. J.V.Hodgson

    Senate hearings. We are definitely now In Ug(H) land. His investments here are taxable in accordance with laws more that likely set up by a majority Republican house and Senate and yes not repealed by democrats ( maybe not opposed by democrats historically initially) So what!? his actions fall within the tax avoidance( legal) and outside Tax evasion ( illegal)
    And ERR excuse me Treasury has no power under its Congressional mandate to be a driver of tax policy
    At citigroup the bastion of republicn free market ideology he was the COO of "a business unit" not the whole. QED his business unit might have been very succesful, and even if not the relevance to undermining his capability to perform as treasurt SEC is not established!!
    He clearly has an appropriately relevant back ground due to prior confirmations.
    Stop wasting valuable time on matter that do not deserve the time and effort.
    Fix the budget a find a bi partisan legisaltive waty for job creation!!

    February 9, 2013 02:20 am at 2:20 am |
  6. Gurgyl

    Any thing off-shore should NOT qualify. Period. Tighten immigration to India. Later you get more headaches.

    February 9, 2013 04:44 am at 4:44 am |
  7. RDM

    But it was ok for your Presidential nominee to have off shore accounts right GOP?

    February 9, 2013 04:46 am at 4:46 am |
  8. GI Joe

    Too funny. Didn't they just run some guy for president who has a lot of HIS money in the Caymens? And didn't G.W. just give a lecture (paid speaking) on "how to send your money offshore to avoid taxes"?

    Yet not a peep from the republicans on those two guys -– "DO AS WE SAY................................"

    February 9, 2013 08:39 am at 8:39 am |
  9. HenryMiller

    "For years, we've talked about shutting down overseas tax havens that let companies set up operations to avoid paying taxes in America,"

    If America hadn't set out, as a national policy, to rob and punish productive people, there'd be no need for "overseas tax havens." Among the Lefts most favourite phrases is that "the wealthy" ought to pay their "fair share," but then they go on to define "fair share" as hundreds or thousands of times as much money as the average American pays in taxes.

    February 9, 2013 08:47 am at 8:47 am |
  10. fernace

    This is rich! As a comedian friend used to say: "The plot thins"! So Republicans are against Jack Lew because he may have Cayman Islands "tax haven" accounts! I guess there's no cure for Romnesia, because these are the same people who gave us a Presidential Candidate who not only had numerous tax shelters, but also refused to show his tax returns to the American people! His wife Ann said:" 2 years, that's all you people get"! In my 42 years in this country, I have never seen such blatant opposition to everything a sitting president does! Does the GOT-Party get to use the same arguement now, as Americans used against Romney? I don't think so! This man Has released tax records to show that he's investing in his country, as opposed to last years Republican candidate! My comedian friend also used this play on words: "Republiacs, you maniacs"! I think it's an appropriate sentiment & I didn't call them "lunatics"!!

    February 9, 2013 08:59 am at 8:59 am |
  11. Evergreen

    Does the Cayman line of questioning mean the Republicans are ready to go after tax havens? I think both sides could work together on this.

    February 9, 2013 09:18 am at 9:18 am |
  12. Delilah

    Typical of the Repubs to scream over Lew's portion of an Employee Investment Fund based in the Cayman yet, Willard Romney who ran for PRESIDENT was defended by them them and again for his MANY Cayman & Swiss accts!

    February 9, 2013 09:50 am at 9:50 am |