Bermuda's `beneficial tax status' has recently brought much publicity from US newspapers and politicians, who have slammed corporations as `unpatriotic' for moving their headquarters here. Business reporter Lilla Zuill takes a look at some of the fact and fiction coming from the States.

Bermuda is coming up more and more on international radar - but it's not for its beautiful beaches.

The Island's current high-profile status for the most part is linked to the ongoing debate on Capitol Hill over American corporations that move offshore to trim their tax bills.

Bermuda's been in the spotlight after such companies as Ingersoll-Rand, Cooper Industries and Stanley Works said they would reincorporate here.

The spin-off has been ill-informed hysteria from US legislators and in the media that ultimately may not help Bermuda. The latest twist saw the actions of one company - Connecticut toolmaker Stanley Works - likened to those of Benedict Arnold, who was reputed to have conspired with the British during the war of Independence to betray the colonial stronghold at West Point, New York and then fled after the plot was uncovered. Rep. James Maloney - a Democrat from Stanley's long-time home base of Connecticut - reportedly said the company was "engaged in a betrayal of Connecticut" over its plans to move here. "There has not been a day like this in this state since Benedict Arnold sailed to Bermuda," Rep. Maloney reportedly said.

There is only one problem - it does not appear that Benedict Arnold ever sailed for Bermuda.

Historical records showed that although one of his sons may have been briefly at the Royal Naval Dockyard, Arnold Sr. does not appear to ever have visited our shores. Rep. Maloney's press secretary Betsey Arnold told The Royal Gazette that the Congressman's comments had been take out of context: "He was speaking metaphorically," she said. However, the metaphor found its way in to newsprint across the globe, including mention in a New York Times editorial on Monday.

The Times has a daily circulation of more than one million readers, so the fact that Benedict Arnold never set off for the Island does not really matter. We have now been tarred with the same brush - Arnold was a traitor, and by association, so must we be too.

But the hyperbole did not start there - take a February editorial in the Seattle Post-Intelligencer, a daily newspaper with a circulation of close to 176,000 titled `Look into Bermuda Tax Dodge'. The piece said setting up a business on the Island is "usually a paper transaction" and the company "won't even have to have an office in Bermuda".

According to Finance Minister Eugene Cox that is not quite right. He said companies do have to set-up a registered office under the Companies Act 1981 and are legally required to maintain a register of members, corporate minutes and accounts.

The SPI also reported the number of failed energy giant Enron subsidiaries based in Bermuda as "nearly 700 partnerships registered in Bermuda to avoid paying federal taxes".

But that number is off by several zeros - in fact Bermuda was reportedly home to eight of the 881 Enron subsidiaries worldwide. When a Royal Gazette reporter queried the number with the paper's editorial page editor Joanne Byrd, she defended the piece as accurate, and said its source of information were stories in the New York Times. She added that there had been no correction in the New York Times. In fact the New York Times correctly cited Bermuda as the domicile of eight Enron subsidiaries. The Ministry of Finance also contacted SPI about the error, that eventually led to the paper printing a small correction - but again, damage done.

In March, New York Times tax journalist David Cay Johnston wrote a piece headlined `Senators Assail Corporate Use of Bermuda as Tax Shelter'.

It continued: "Senior senators from both parties used blunt language today to denounce companies that use Bermuda as a mail drop to reduce their American income tax."

The furore had legislators branding specific companies as "guilty" for moving to Bermuda. But several of the branded corporations never resided in the US - so they could not have reincorporated from there to here.

The debacle prompted a three-man contingent from the Ministry of Finance to head for Washington last week. But beyond Mr. Cox's comment in the House of Assembly last Friday, that the trip was perfectly timed - we don't know who was spoken to, or if progress was made.

The Ministry has declined to comment on the trip earlier this week, but a House statement is expected from the Minister today. But the matter has found a voice from members of rival political parties. The National Liberal Party's Graeme Outerbridge said the debate could affect tourism as US citizens may have got the message that it is now "unpatriotic to vacation in Bermuda".

And Opposition leader Dr. Grant Gibbons has said the perception left by the media reports will have consequences: "It will unnecessarily raise our profile in a very negative way with the US legislators without providing any balance to the positive contributions that Bermuda makes."

Even a one-time friend of Bermuda's in Washington, influential Democratic Congressman Charles Rangel has joined in the debate. In a speech to the House this week - with Congress trying to push through legislation to halt the flow of corporations to the Island - Rep. Rangel said: "It is unpatriotic and downright immoral to do this in time of war when we have men and women in harm's way."