- The Washington Times - Tuesday, April 5, 2016

President Obama weighed in for the first time on the global Panama Papers controversy, appearing in the White House press room to tout new administration plans to curb so-called “corporate inversions” and decrying the ease and prevalence of schemes to hide income and wealth from legitimate taxation exposed by the gigantic leak.

The Panama Papers revelations are proof that “tax avoidance is a big global problem,” Mr. Obama said.

“There are loopholes that only powerful individuals and corporations have access to,” Mr. Obama said. “They are gaming the system.”

Assistant Attorney General Leslie Caldwell declined to discuss the expanding controversy in a conference call with reporters, but she acknowledged that U.S. officials are actively poring over the thousands of records made public over the weekend.

Most of the early revelations have targeted government leaders and figures overseas, not in the U.S. Iceland’s prime minister became the first casualty of the scandal, resigning Tuesday over revelations contained in the voluminous private financial records of hidden income and shell companies.

“We are reviewing the reports that we saw, but we have no comment beyond that at this point,” Ms. Caldwell said.

Mr. Obama spoke on the same say the Justice Department announced plans to beef up its policing of international corruption cases, while offering a break to companies who come clean voluntarily about wrongdoing and the bribery of foreign officials.

Justice Department officials outlined the new policies under the Foreign Corrupt Practices Act even as governments across the globe were scrambling to contain the fallout from the leak from a Panama law firm that revealed secret accounts and hidden income linked to dozens of world leaders, government officials and their families.

The Treasury Department imposed new limits on corporate inversions Monday, surprising Wall Street and throwing into doubt a proposed $150 billion merger between Pfizer Inc. and Allergan PLC. The new rules, the third in a series of administration actions against inversions, will make it harder for companies to move their tax addresses out of the U.S. by merging with foreign firms and shift their profits to lower-tax countries using an accounting maneuver called “earnings stripping.”

But the latest move got negative reviews from the top Republican tax-writers in Congress.

The Treasury moves amount to “punitive regulations that will make it even harder for American companies to compete and will further discourage businesses from locating and investing in the United States,” said House Committee on Ways and Means Chairman Kevin Brady, Texas Republican.

Senate Committee on Finance Chairman Orrin G. Hatch, Utah Republican, added that “the administration continues to tinker along the regulatory edges with unilateral proposals to address the symptoms of inversions, but not the disease.”

The new Justice Department pilot program provides new guidance for prosecutors handling investigations into cases where companies are suspected of bribing foreign officials and clients to obtain contracts or other business advantages. Companies that “self-report” violations will now be eligible for credits for their cooperation, including recommendations of penalties up to 50 percent below federal sentencing guidelines. Some companies could also not escape prosecution.

But the new guidelines are meant to draw a clear distinction between those who confess upfront and those who wait to get caught, said Andrew Weissmann, head of the Criminal Division’s Fraud Section. Those who are prosecuted and have not self-reported will not be eligible for the full range or credits.

The pilot program will run for one year.

The Justice Department has sought in recent months to ramp up enforcement of the act, hiring 10 additional prosecutors. The FBI has also established three new squads of special agents devoted to the foreign corruption law.

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