Companies based on the Island could lose out on multi-million dollar American Government contracts if pending legislation already passed by the US House and Senate gets signed into law.

At the centre of the political debate is a Bermuda-based company - Accenture Limited - that currently profits from multi-million dollar contracts with US government agencies including the Internal Revenue Service. The firm, which split off from accounting firm now beleaguered accounting firm Arthur Andersen last year and puts its US Government revenue at close to $350 million per year, vehemently denied the charge that they ever reincorporated from the US to Bermuda.

Still US legislators are aiming to strike where it could hurt companies most, and citing Accenture, by slashing contracts given to foreign-based corporations to the total tune of an estimated $2 billion per year.

Ultimately there appeared to be strong likelihood that the legislation could be made law as both the US House and Senate, in recent weeks, passed measures which would deny federal contracts - for both goods and services - to some US companies that have moved overseas to cut tax bills. The two measures will go into the joint committee process after the legislators' August recess and then would have to be signed off by US President George Bush to become law.

The Royal Gazette understands however that some American lawmakers are pushing for even broader legislation that would deny Government contracts to offshore companies whether once US companies or not. The push to deny companies federal business follows the push from lawmakers since February to change the law to block US companies from reincorporating offshore to save tax dollars.

The focus of the international media and legislators has centred on companies that are either based on the Island or had planned to reincorporate here including Accenture, Tyco, Global Crossing, Ingersoll-Rand, Cooper Industries, Nabors Industries, Weatherford International and Leucadia National Corporation.

High-profile toolmaker Stanley Works has also been front and centre in the debate but announced last week, and bowing to dogged criticism, it would not move to Bermuda after all.

Accenture media contact Roxanne Taylor, in a Press release, stated: “Accenture has never been a US-based or operated organisation and has never operated under a US parent corporation.

“Despite these facts, Accenture was included in recent reports regarding US-based companies that have reincorporated in Bermuda to avoid paying US taxes”

The company said it chose Bermuda as home for its holding company not for tax reasons but as a “neutral location for Accenture's diverse and global business and employee base.”

The New York Times yesterday reported that Accenture was taking the threat seriously and had “turned lobbyists loose on Capitol Hill to seek a change or clarification in the legislative language”. The paper put Accenture's revenue from the US government at $684 million.