Media giant Viacom is being sued by a former senior executive who claims she was fired for objecting to an unethical, and possibly illegal, offshore corporate tax dodge.
Viacom allegedly sought to avoid paying U.S. income taxes on the licensing rights for various Viacom TV shows and movies, including “Teenage Mutant Ninja Turtles,” “SpongeBob” and “Dora the Explorer.” Nataki Williams, a former vice president for financial planning at Viacom, alleges that her vocal objection to shifting the company’s intellectual property into a Netherlands subsidiary for tax purposes was the reason the company fired her.
So far Viacom’s hasn’t denied shifting its profits offshore through the use of offshore tax havens; instead, the company has claimed that it fired Williams for an entirely unrelated reason having to do with improperly claimed family benefits.
If Viacom isn’t pleading innocence in the court of public opinion on the charge of offshore tax dodging, it is plausible that this is because such a plea would seem laughable. After all, as a Citizens for Tax Justice report documented last year, Viacom’s most recent annual report discloses the existence of 39 Viacom subsidiaries located in known tax havens. These subsidiaries tend to be located in resort islands such as the Bahamas, Barbados and the Channel Islands.
It is, of course, possible that Viacom chose to locate its inscrutably named “Yellams LDC” subsidiary in the Cayman Islands to better capitalize on that tiny beachfront nation’s insatiable appetite for Dora the Explorer-themed flip flops and other such licensed products. But it’s far more likely that this subsidiary, and Viacom’s six other Cayman Islands subsidiaries, exist for one simple purpose: to funnel Viacom profits out of the United States and into jurisdictions with little or no taxes on intellectual property. Nataki Williams’ allegations suggest that the same may be true of the company’s 24 Netherlands subsidiaries.
Because Viacom and other multinationals aren’t required to disclose the location of their offshore cash, we can’t know just how much of the media giant’s $2.4 billion in permanently reinvested offshore earnings have been shifted into tax havens in the way alleged by Nataki Williams. The Securities and Exchange Commission should require this disclosure.