Illinois Governor Candidate Scrutinized For Cayman Islands Cash
CHICAGO (AP)- Republican gubernatorial candidate and venture capitalist Bruce Rauner funneled part of his wealth to a Caribbean territory long considered a tax haven, according to a published report Sunday.
Three of five of Rauner’s Cayman Island holdings are tied to GTCR, a Chicago-based private equity firm Rauner helped found, according to the Chicago Sun-Times (http://bit.ly/USDIkM).
Rauner spokesman Mike Schrimpf said none of the holdings involved expenditures of Rauner’s personal funds and Rauner met legal tax obligations and disclosed information to the federal government. The Winnetka businessman hasn’t been accused of wrongdoing. However, political experts said it’s a matter of political optics. A central part of Gov. Pat Quinn’s re-election bid has been scrutinizing how Rauner made his money, and the Chicago Democrat’s campaign has alleged Rauner “stashed” money to avoid paying taxes.
“I’d think someone who anticipates being in the public eye wouldn’t be in the Cayman Islands because the question to be asked is, `Why would you have invested there?”’ Richard L. Kaplan, a University of Illinois law professor told the newspaper.
Cayman, a British territory, is considered one of the world’s largest financial centers and a haven for mutual funds and private equity. International companies and ultra-rich investors have long taken advantage of offshore financial centers there, drawn by regulations and legal systems making it easy to move capital internationally.
The GTCR holdings were set up among partners of the firm using equity stakes each had in the company and didn’t involve Rauner’s personal funds, according to Schrimpf. He said Rauner’s personal tax obligations weren’t affected and the main GTCR funds were incorporated in the U.S.
The other investments were The Overlook Partners Fund LP, from which Rauner disclosed receive a capital gain of at least $5,000 in 2012, and HSBC Holdings PLC. Rauner’s campaign said the investment belongs to Rauner’s family foundation.
The Sun-Times cited a comparison of investments Rauner listed on a state economic disclosure form with the online corporate registry maintained by the Cayman Islands government.
Rauner stepped down from GTCR in 2012, a year when he earned $53 million. He often cites his business acumen on the campaign trail. But Quinn’s campaign has tried to raise questions about Rauner’s wealth, calling on him to release 2013 tax returns and more complete schedules of previous years Rauner has released voluntarily. Rauner has said he’ll make 2013 returns public before the Nov. 4 contest.
“Republican billionaire Bruce Rauner doesn’t just use exotic methods to dodge taxes he even uses exotic, offshore locations,” Quinn spokeswoman Brooke Anderson said in a statement. “Whether Mr. Rauner’s tax dodge is legal is beside the point. It’s wrong.”
Schrimpf said Rauner hasn’t avoided taxes. He said channeling the GTCR money helped “fulfill fiduciary duties” to investors.
“Bruce has disclosed all this information to the federal government and is clearly in full compliance,” Schrimpf said.
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