In the latest of a round of attacks on the Cayman Islands’ status as an offshore tax haven, the US Senate Finance Committee is targeting companies registered at Ugland House in George Town.

Bloomberg News reported on a statement recently issued by committee chairman, Democrat Senator Max Baucus, referring to Ugland House, that reads, “I want the GAO (Government Accountability Office) to go looking in one of the most likely places shady tax transactions could be sheltered, and that’s this building in the Caymans.”

The top Republican representative on the committee, Charles Grassley, backs his move.

Both senators have put their names to a letter asking Comptroller General, David Walker to visit the Cayman Islands and investigate the activities of US companies registered there.

Sen Grassley added that the Ugland House office building has been a source of many debates over the years. “It’s time the Finance Committee found out what is really going on there,” he concluded.

Ugland House is home to international law firm Maples & Calder, but Sen Baucus’ focus is on around 150 of the nearly 13,000 companies that, he claims, use the offices as their registered address to benefit from the Cayman Islands’ tax-free status. The companies under investigation include offshoots of some very big names in US commerce.

Concern in the USA about offshore companies stems from at least two significant incidents involving Cayman-registered subsidiaries.

In December 2003, Parmalat Finanziaria SpA, a large Italian food company, collapsed after telling investors it had lied about its finances. Italian prosecutors claimed the company and its top executives had used three Cayman subsidiaries and a so-called mutual fund, also believed to be registered at Ugland House, to misrepresent assets.

Prior to that, the Houston-based energy company Enron was found to be bankrupt. Senate investigators said the company had used 441 Cayman affiliates to help hide $2.9 billion in losses.

American politicians are also upset by reports that major US government contractors are boosting profits from federal contracts by diverting funds into Cayman-registered subsidiaries. The GAO has in the past accused 24 companies of using this tactic to avoid paying tax on profits, which themselves were sourced from taxpayer-dollars.

Responding to the comments, Ted Bravakis, Director of Public Relations in the Portfolio of Finance & Economics said that law enforcement, regulatory and tax information exchange channels between the Cayman Islands and the USA offer no protection for Americans who are seeking to evade their tax obligations. He also pointed out that some of the control measures used by the two countries go back more than 20 years.