Acting Finance Minister Randolph Horton yesterday departed from diplomatic language and defended Bermuda in the face of accusations in US media that the Island encourages corporate malfeasance by allowing reincorporations here.

Mr. Horton was responding yesterday to calls for Bermuda-based Tyco International to repatriate in the US.

Reports that a resolution concerning relocation has been circulated to Tyco shareholders and will be voted on at the company's AGM on March 6.

Mr. Horton said: "Bermuda does not encourage companies to reincorporate in Bermuda in order to reduce their tax obligations. The shareholder resolution is an internal company matter and Government has no comment in that regard."

But he took pains to contradict the impression given in the US media that Tyco has no real presence here: "Tyco became established in Bermuda after it acquired ADT Ltd. in 1997. Tyco has an office and employees in Bermuda and clearly it is not a mail drop or a `Bermuda address'."

A cross-section of US institutional investors, state treasurers and labour unions joined in a coast-to-coast news conference yesterday to call on Tyco International's new Board of Directors to set a specific timetable for the company to make a decision on returning the company from Bermuda to US soil.

On the issue of Tyco's troubles with authorities in the US, the Minister said: "Bermuda takes no position on issues that Tyco may have with regulatory bodies in other jurisdictions."

But he took issue with the depiction by "certain media" of American firms taking legal refuge in sham overseas mailing addresses.

"The handful of companies that left the United States for Bermuda over the last five years did so of their own volition based on their analysis of the tax code. As Mr. David Aufhauser, the General Counsel for the US Department of Treasury has stated `the incentives to relocate in Bermuda arise out of our own US Tax Code, - we are at fault and it is not the fault of Bermuda'."

Since the Enron scandal, there has been increased opposition from US politicians and labour unions to so-called inversions, whereby US corporations incorporate a new parent company in a jurisdiction such as Bermuda and thereby transfer ownership of the group offshore.

The movement has appears to have found new momentum with the recent campaign called "Come Home to America".

During the news conference yesterday, California State Treasurer Phil Angelides said: "This practice of expatriation has direct, detrimental effects on shareholders, it represents the type of deceptive corporate practice that has shaken the financial markets, harmed taxpayers and pensioners, and damaged our economy.

"Tyco is one of only a handful of US corporations - out of thousands of publicly-held corporations - that has chosen to engage in this practice."

Connecticut State Treasurer Denise L. Nappier, participating from Washington DC, said: "If you want transparency as an investor, if you want to ensure that your voice is heard by your board of directors, and if you need to take legal action to protect your rights and interests as a shareholder of Tyco or McDermott or Cooper Industries or Nabors or Ingersoll-Rand, then Bermuda can be a very cold and uninviting place."

New York City Comptroller William C. Thompson, Jr., said: "In Congress, the Reid, Levin and Neal Bill - the Corporate Patriot Enforcement Act - will deny tax benefits to former American companies that reincorporate offshore to avoid US income taxes. At introduction, that bill had over 150 co-sponsors."

The Minister's statement did not answer allegations that the rights and interests of shareholders were in any way undermined by a corporation being based in Bermuda.

But according to a local legal source, Bermuda's company law is based on the UK system and shareholders' rights are not seriously compromised by US corporations moving here.

More on Tyco, Page 20