By Tori Richards and Earl Glynn | Watchdog.org
The parent company of a “green” car venture with ties to the Obama administration and Democratic Party leader Terry McAuliffe is incorporated in the tax shelter country of the British Virgin Islands, Watchdog has learned.
Yet just nine months ago McAuliffe, former Democratic National Committee chairman and part owner of GreenTech Automotive Inc., blasted Mitt Romney over allegations the presidential candidate had an offshore bank account.
“You’re running for president,” McAuliffe told the Daily Caller. “People just don’t get that. I mean, why do you have an offshore bank account? So we’ve got a long way to go.”
Fledgling GreenTech was founded in 2009 by Chinese businessman Charles Wang, who owns Capital Wealth Holdings (CWH), an investment company incorporated in the British Virgin Islands.
According to court documents, GreenTech is a subsidary of CWH and McAuliffe obtained 25 percent of the stock. GreenTech’s headquarters were then incorporated in Virginia and its manufacturing plant was located in Mississippi. Next, it started recruiting outside investors – primarily from China – through a program called EB-5 that grants visas to foreign citizens in exchange for minimum $500,000 investments in U.S. companies.
“The Chinese government has the U.S. auto industry in its cross hairs and is using every ploy possible to get into the business via U.S. politicians and struggling entrepreneurs in the ‘green car’ industry,” said economist Greg Autry, who lectures on China and authored the book “Death By China – Confronting the Dragon.”
“A company wants to be in the BVI for one reason: TO AVOID PAYING US INCOME TAXES,” Autry said in an email exchange with Watchdog.
Further, the BVI has no taxes on foreign companies that put money there; no mutual treaties with the U.S. or anyone else to report income or assets; and has a very strong tradition of client privacy and asking no questions about the source of funds, Autry added.
The British Virgin Islands is the second largest source of capital investment flowing into China, an investigation by the International Consortium of Investigative Journalists has found.
CWH and GreenTech are private companies, but Watchdog learned through public documents that a third businessman planned to pour $6.5 billion into the green car venture. Court documents state that he spent $15.6 million before a falling out that led to the lawsuit.
At one point, GreenTech had 10 billion outstanding shares of stock, which were set to be sold at a penny a piece.
A professor at Chapman University in California said it’s curious that GreenTech filed public documentation of its mergers given the companies are private.
“We can only speculate what they are trying to do,” said Fadel N. Lawandy, director of the C Larry Hoag Center for Real Estate and Finance. “It’s weird that they’re very transparent in what they are doing. What the holding companies are all about and why they are based out of the British Virgin Islands; that would be speculation.”
But the documents appear to be “very straightforward” and clear that 25 percent of GreenTech belongs to McAuliffe.
“When two companies merge together (filing a stock share exchange document) is a method” of co-ownership, Lawandy said. “We can do it in cash where I give you cash or I can give you shares. There is no real common way of doing it. “
Either way, GreenTech apparently has the funds to pay for top talent. It has employed Obama aide Rick C. Wade as its Head of China Operations. Wade was assistant chief of staff at the U.S. Department of Commerce until he quit in 2011 to serve simultaneously as spokesman for Obama’s presidential campaign and work at GreenTech.
The green carmaker’s presidential connections don’t stop with Obama. Last year Bill Clinton attended the opening launch of its Mississippi car plant and his brother-in-law, Anthony Rodham, helps solicit EB-5 funds through Rodham’s company Gulf Coast Management. Both Gulf Coast and GreenTech share an office suite.
Obama’s crusade against Romney didn’t stop with the British Virgin Islands – his lead campaign adviser Robert Gibbs questioned investments in Bermuda.
At one point GreenTech’s majority owner Charles Wang was also director of Compass Pacific Holdings, a Hong Kong company incorporated in – where else? Bermuda. One of Compass Pacific’s missions was to pursue a hybrid car project.
“It was reported that Mitt Romney has taken pretty extraordinary steps to hide the fact that he has a shell corporation in Bermuda,” Gibbs said during an MSNBC interview. “We’ve got to know why he has that money there. The American people deserve to know if he’s sheltering this money somewhere or, quite frankly, is not paying the taxes that he owes.”
Contact Tori Richards at [email protected] or on twitter @newswriter2.
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