Just around noon, a story caught my eye on Twitter. It was a link to a Forbes story claiming that GE had issued a press release confirming that the company had decided, in the midst of public outrage, to return its $3.2 billion refund. I almost choked on my coffee. What company does this?
The text of the press release (a copy of which can be viewed here) is as follows:
GE Responds to Public Outcry – Will Donate Entire $3.2 Billion Tax Refund to Help Offset Cuts and Save American Jobs
Fairfield, CT, 13th April, 2011 – GE CEO Jeffrey Immelt has informed the Obama administration that the company will be gifting its entire 2010 tax refund, worth $3.2 Billion, to the US Treasury on April 18, Tax Day, and will furthermore adopt a host of new policies that secure its position as a leader in corporate social responsibility.
“We want the public to know that we’ve heard them, and that we know many Americans are going through tough times,” said GE CEO Jeffrey Immelt. “GE will therefore give our 2010 tax refund back to the public and allow the public to decide how to spend it.”
Immelt acknowledged no wrongdoing. “All seven of our foreign tax havens are entirely legal,” Immelt noted. “But Americans have made it clear that they deplore laws that enable tax avoidance. While we owe it to our shareholders to use every legal loophole to maximize returns – we also owe something to the American people. We didn’t write the laws that let us legally avoid paying taxes. Congress did. But we benefit from those laws, and now we’d like to share those benefits. We are proud to be giving something back to America, and we are proud to set an example for all industry to follow.”
Over the coming weeks, GE will conduct a nationwide survey to determine how the company’s $3.2 billion returned refund is to be allocated. The survey will be conducted both online and offline, and will permit the public to weigh in on which of the recently-enacted budget cuts they would like to see reversed.
In tandem with the gift, the company is also announcing a host of new policies to restore public faith in the GE brand, including a commitment to keep American jobs in America, and to create one U.S. job for each new job created abroad. The ambitious plan will overhaul accounting systems to allow public transparency and phase out the use of tax havens in five years. “Given my recent appointment as President Obama’s Chairman of the Council on Jobs and Competitiveness, it is no longer appropriate for GE to engage in practices that, whether by fact or perception, are at odds with the greater good of the nation,” Immelt said.
Immelt outlined several concrete steps he would take to push for modernized tax policies that reflect the realities of the global economy. “I will personally ask President Obama to work with Congress to require country-by-country reporting by multi-national corporations of the sales made, profits earned and taxes paid in every jurisdiction where an entity operates. Instead of moving money via ‘transfer pricing,’ corporations ought to pay taxes in the jurisdictions where profits are actually made. If Congress is able to establish standard industry-wide solutions, GE will close our tax haven operations abroad, including our subsidiaries in Bermuda, Singapore and Luxembourg.”
Further details on GE’s new policy will be released in the coming weeks.
GE Corporate, Assistant Director
Communications & Public Affairs
+1 615 375 6658
GE (NYSE: GE) is an advanced technology, services and finance company taking on the world’s toughest challenges. Dedicated to innovation in energy, health, transportation and infrastructure, GE operates in more than 100 countries and employs about 300,000 people worldwide. For more information, visit the company’s Web site at www.ge.com.
It, of course, immediately started tongues wagging in my office. One associate was aghast. Another surmised that perhaps it was all part of a deferral scheme until things died down. I wondered aloud about how the shareholders would react. We exchanged incredulous glances and agreed that it was a remarkable turn of events.
Somehow, though, it didn’t feel right. I didn’t have any reason to believe that it wasn’t true. But there were too many unanswered questions and the article circulating from the AP was extremely short on details. There wasn’t, I decided, enough information yet to blog the story. I figured I’d wait and see what else GE offered up in terms of an explanation.
A short while later, my associate shouted out from the next room that it was all a hoax. He fired off this link to me, which explained that it was, indeed, all a hoax. Of course, it was confirmed a few moments later when I received a press release – this one genuine – from US Uncut. In the press release, US Uncut acknowledged responsibility for the hoax which it claims it developed with help from the Yes Lab.
Not willing to fall prey to perhaps another hoax, I got on the phone with US Uncut to find out what really happened. I was amazed (and impressed) when US Uncut spokesperson Carl Gibson answered the phone. No voice mail, no canned message. I explained who I was and why I was calling and I braced myself for a “no comment.” Only that didn’t come. In contrast, Gibson immediately owned up to the hoax and was clearly pleased by the attention.
“Aren’t you worried,” I asked, “about possible retribution from GE?” I had noted earlier that GE stock had dropped around the time of the announcement from a daily high of $20.11 eventually closing just pennies ahead of the low of $19.87. Gibson’s response, “Not really.”
Gibson proceeded to explain that the purpose of the hoax was to bring attention to the fact that GE was a multibillion dollar corporation which had been paying “zero tax since 2006″ while individual taxpayers paid into the system. Referring to GE’s “unpaid tax bill,” Gibson said that he hoped the actions of the day against GE would encourage others into “shaming their brand.”
When I asked what additional results US Uncut hoped to see, Gibson indicated that he hoped that President Obama would explain in his address today why the White House embraced GE CEO Jeffrey Immelt to head the President’s Council on Jobs and Competitiveness. Noting that GE outsources a significant amount of their workforce, Gibson questioned why the President found Immelt a suitable candidate to lead the council. Of course, in his address, Obama didn’t refer to GE or to Immelt. He used the word “corporate” just one time, in a vague reference to tax reform: And as I called for in the State of the Union, we should reform our corporate tax code as well, to make our businesses and our economy more competitive.
So is that a fail? Not necessarily. I don’t think Gibson actually expected Obama to bat an eye at the events of the day. And it was clear as we spoke that US Uncut and their actions weren’t about attracting the attention of politicians. Gibson said that he hoped their actions would encourage people to take action and “find ways in their community” to be empowered, rather than to simply be bystanders.
Actions? Future tense? Did that mean that more is planned?
Absolutely, according to Gibson. US Uncut has at least 80 more activities planned leading up to Tax Day. Stay tuned.
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