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NEW YORK (CNN/Money) -
Republican lobbyist Jack Abramoff bragged two years ago that he was in contact with White House political aide Karl Rove to fight a move to crackdown on firms which used offshore headquarters to pay lower U.S. taxes, according to a published report.
The Washington Post reported Friday that boast by Abramoff, who is facing wire fraud and conspiracy charges on another matter, was revealed by Timothy E. Flanigan, general counsel for conglomerate Tyco International (Research) in a statement to the Senate Judiciary Committee. Flanigan is a Bush administration nominee to be deputy attorney general, and the statement to the committee was part of his confirmation process.
Flanigan's tie to the controversial Abramoff has caused troubles for his confirmation chances, according to a report in the Los Angeles Times, which earlier had reported some details of the statement.
Flanigan has told the committee he would recuse himself from any Justice Department investigation or action against Abramoff if he is confirmed.
Tyco is one of the companies that would have been hurt by a legislative proposal in 2002 to deny federal contracts to companies largely based in the United States but incorporated in tax havens. It hired Abramoff and his law firm, Greenberg Traurig, as it faced both the legislative threat and fallout from the indictment of CEO Dennis Kozlowski on charges he improperly used company assets for himself and avoided paying sales taxes on high-end purchases.
Kozlowski was sentenced Monday to between 8-1/3 to 25 years in prison on some of those charges.
The efforts to kill the measure against offshore companies ultimately was successful, as most of the provisions of the legislation were killed.
The Post reports that White House spokeswoman, Erin Healy, said Rove "has no recollection" of being contacted by Abramoff about Tyco's concerns.
Tyco's contract with Greenberg Traurig is already being investigated by a special counsel appointed by Greenberg to examine Abramoff's activities at the firm, according to the reports. According to knowledgeable sources and Flanigan's written statement, Greenberg has promised to repay three-quarters of a $2 million fee that Tyco paid, at Abramoff's direction, to a firm called Grassroots Interactive, the Post reports.
The fee was supposed to finance a letter-writing campaign by Tyco suppliers against the offshore tax bill, but Greenberg concluded that $1.5 million of it was "diverted to entities controlled by Mr. Abramoff" and misspent, according to Flanigan's statement.
For more on Kozlowski's sentencing, click here.
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