- The Washington Times - Tuesday, September 24, 2002

Little more than a week ago, the Internal Revenue Service announced it would "go after tax cheats in a new way devoting more of its attention to wealthy taxpayers suspected of hiding income received from offshore accounts," according to the Sept. 13 Page One article in the New York Times.
Why not go for the really Big Enchiladas not individuals but business firms?
Take Intelsat, which lives off U.S. government contracts and yet makes excessive after-tax earnings because of its "offshore" shenanigans. And constitutes a national security risk, to boot.
Intelsat currently receives some $200 million from the Defense Department. It gets roughly three-fourths of all commercial space contracts given by the Defense Information Systems Agency (or DISA), and many of these contracts are written so it's hard for any company besides Intelsat to compete.
In essence, they're wired for Intelsat.
Yet Intelsat's management concocted a scheme for Intelsat to reincorporate in Bermuda, obviously to avoid paying its proper share of taxes to the U.S. Treasury.
Hence, even though Intelsat makes $200 million from the U.S. government, it ducks its share of tax obligations to the U.S. government.
Fortunately, such shenanigans are no longer under the table. The Sept. 16 issue of U.S.News & World Report reveals this Bermuda device. It also mentions the risk to U.S. national security by the Pentagon's using Intelsat (more about this in a minute).
It's rare, indeed unprecedented, that I would agree with anything proposed by hyper-liberal Sen. Paul Wellstone, Minnesota Democrat.
But I do applaud his amendment prohibiting the Pentagon from awarding military contracts to any American company that reincorporates "offshore" to avoid U.S. taxes. That common-sense amendment passed the Senate 10 days ago, and now awaits House action. Besides Intelsat's shady finances are its shady owners. Not just shady but, in part, just awful.
Intelsat is unique in that it is owned by numerous foreign governments and private companies. Included in this list are two-thirds of the Bush administration's "axis of evil" states Iran and Iraq. Syria and Libya are two other gems that are also state owners of Intelsat.
Mr. Wellstone and, indeed, even more security-minded senators should ask Pentagon officials whether it makes any sense for a provider of the most sensitive U.S. military communications to be partially owned by the likes of Iraq, Iran, Syria and Libya.
The bulk of Intelsat's employees are non-Americans, coming from more than 85 different countries, including hostile states. Since these employees are informed each time the U.S. government needs to buy satellite space, they thus gain access to confidential U.S. government even national security information.
Symbolic of its cozy relationship with the U.S. government, Intelsat is being given office space owned by the U.S. State Department. These facilities are below market rates, and exempt from D.C. building codes as well.
Does the Pentagon intend to go to war with Iraq while sharing its critical satellite network with Iraq? Will a Pentagon fighting a war rely upon a satellite network partly owned by its enemy?
Is there a human in the loop somewhere?
Last time around, the Pentagon did just that. It relied upon the Intelsat network to support its military and intelligence Gulf war operations, even though Iraq partly owned this sensitive network and questionable nationals staff Intelsat operations.
Sometimes, the U.S. government does seemingly ludicrous things out of sheer necessity. Hence, its cozy relationship with Intelsat might be understandable if there was no alternative.
But there are several other American satellite companies of high quality.
Congress mandated through the Orbit Act of 2000 that Intelsat be privatized and then go public, presumably putting it on a level playing field with the other American satellite companies. But, low and behold, Intelsat has put their initial public offering off several times, claiming that "market conditions are not right," and, as stated before, this playing field is slanted.
So as a new backer of Mr. Wellstone, I say: "Right on, Senator. It's even worse than you imagine."

Ken Adelman was assistant to U.S. Defense Secretary Donald Rumsfeld from 1975 to 1977, and a U.N. ambassador and arms-control director under President Ronald Reagan. He is now a member of the Defense Policy Board and co-host of TechCentralStation.com.

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