Steven Mnuchin defends offshore business ventures: 'They followed the law'

Steven Mnuchin, President-elect Donald Trump's choice to head the Treasury Department, on Thursday defended his involvement in offshore business ventures that may have allowed clients to avoid paying U.S. taxes.

During his confirmation hearing before the Senate Finance Committee, Mnuchin was questioned about revisions to a questionnaire he submitted to committee members as part of his nomination process. Sen. Debbie Stabenow, D-Mich., indicated she only became aware of the updated release Wednesday night.

The revised documents highlighted an additional $95 million worth of real estate holdings and Mnuchin's involvement in a number of investment funds, including one based in the Cayman Islands tax haven, according to The New York Times.

Mnuchin reportedly said his nondisclosure of management positions with seven investment funds was not on purpose, and that the real estate omissions were due to his misunderstanding of the questionnaire.

But Stabenow and some of her Democratic colleagues used Thursday's hearing as an opportunity to press Mnuchin on offshore business activities that additionally involved the Caribbean island Anguilla, also considered a tax haven.

Mnuchin was adamant that he followed U.S. tax laws and paid appropriate taxes on his own earned income, indicating that his overseas operations primarily helped certain pensions and nonprofits move assets off of U.S. soil.

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"So you helped others [avoid taxation]?" Stabenow asked, before getting cut off.

"They followed the law," he responded.

Sen. Bill Nelson, D-Fla., followed up on Stabenow's line of questioning, asking Mnuchin if he moved a Dune Capital company to Anguilla. Mnuchin equivocated but eventually said "yes."

"When I did move it, I had to apply to the IRS. And the IRS approved it," he said. "So from my standpoint, it made no difference to me whether it was incorporated in Delaware."

Still, Sen. Bob Menendez, D-N.J., pressed Mnuchin further on his offshore dealings. He noted that Mnuchin signed a "notarized affidavit" when he submitted his first questionnaire detailing his financial holdings, and then revised his answers "after the committee staff" brought perceived omissions to the potential treasury secretary's attention.

"Didn't you create most of these offshore entities ... to help your clients, who you are making money from, avoid U.S. taxes?" Menendez asked.

"No, not necessarily," he responded. "Sometimes it had nothing to do with taxes."

Menendez kept going, noting that "one does not go and create offshore entities at the end of the day" if he or she isn't trying to avoid taxes.

"What you did may have been legal, but it was certainly to help entities avoid U.S. taxes," he said.

Mnuchin appeared to attempt to justify his involvement in setting up offshore accounts by noting that "we're not creating jobs there. It's just where these entities are held." He stopped short of specifically saying he would work to stop offshore tax-dodging entirely, but said he agrees that "this does not make sense."

"I wouldn't want to do anything that's detrimental to the pension holders or these nonprofits. But I would commit to work with your office and fix the system," Mnuchin said during his exchange with Nelson.

Meanwhile, Sen. Orrin Hatch, R-Utah, defended Mnuchin, suggesting it was "ironic and hypocritical to have found religion ... on offshore account holdings," considering current Treasury Secretary Jacob Lew has been criticized for similar international activity prior to his time in the Obama administration.

Copyright 2016 U.S. News & World Report

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