IRS probes Newell Rubbermaid, Cardinal: report
NEW YORK (Reuters) - The U.S. Internal Revenue Service is investigating allegations that Dutch Rabobank Group engaged in a $450 million deal with Newell Rubbermaid Inc to help the Atlanta company avoid paying taxes, according to a Wall Street Journal online story.
The IRS is also looking into a similar deal between Cardinal Health and Rabobank, according to the story. A Cardinal official was not immediately available for comment.
The story said Chicago-based IRS officials interviewed former Rabobank executive Joseph Insinga this week about the Newell deal, citing Insinga's lawyer Andrew Carr of Bateman Gibson in Memphis, Tennessee. Carr was not immediately available for comment.
Citing Insinga's claim and an unnamed person familiar with the transaction, the WSJ said Newell, a consumer products maker, sold accounts receivable from big customers like Wal-Mart Stores Inc and Home Depot Inc at a discount to a newly created, overseas company funded by Rabobank.
Under the deal, which began in 2001, Newell took a tax deduction for the discount, according to the story, which said that as long as Newell did not control the overseas company, any cash left over after paying Rabobank was not taxed in the United States.
Newell spokesman David Doolittle said the company does not comment on its tax audits as a matter of policy. He said the company's deal with Rabobank was above board and noted details of the deal had been disclosed in Newell's annual reports since 2002.
"Accounts receivable financing transactions are a common and accepted method of accessing capital, and this transaction provides favorable financing for Newell Rubbermaid," he said in an e-mailed statement.
"In addition, every company has a duty to shareholders to structure transactions to optimize all financial benefits, including taxes," he said.
No one was immediately available to comment for the IRS.
Lynne Burns, a spokeswoman for Rabobank declined comment on the Journal report, but said a May 2 statement from the company "still stands."
In that statement, Rabobank denied a report it was a promoter of corporate tax schemes and said it acted as a financier in U.S. tax transactions.
Rabobank had also said in the statement that the U.S. Department of Justice has been conducting an investigation of some tax shelter practices for a number of years and has sought information from Rabobank and others.
Doolittle said he was not aware of any Newell involvement in the DoJ tax shelter investigation.
(Reporting by Sinead Carew, editing by Phil Berlowitz & Ian Geoghegan)
