ENATOR John Kerry's attacks on companies incorporated in Bermuda produced a firm response from the two companies named in campaign speeches during his run for the democratic presidential nomination.

In unusually blunt language, Kerry vowed to crack down on "unpatriotic corporate tax evaders" whom he branded "corporate Benedict Arnolds", invoking the name of that legendary turncoat of Revolutionary times.

"We need the courage to stand up to unpatriotic companies that incorporate overseas to avoid taxes here at home," said Sen. Kerry in front of the New Hampshire headquarters of Tyco, one of the companies regularly demonised by Kerry in stump speeches.

But Kerry went further than attacking allegedly suspect corporate ethics. He specifically threatened that, "if elected (US President in November), I will not be a President who stimulates the economy of Bermuda", and pledged to end Bermuda's "creed of greed" within 500 days of his inauguration.

Political and business leaders in Bermuda have suggested that Kerry's animus is not unacquainted with his need to sound a populist note in this election year. They point out that the United States is one of only three jurisdictions in the world to tax corporate profits on world-wide earnings and that a fairer target for Kerry's outrage would be the US tax code.

A spokeswoman for Tyco insisted that "Tyco is not an expatriate company. It is part of the US fabric, and if Senator Kerry knew the new leadership of the group, he would surely change his views. We have amended our by-laws and have elected a new board. We are committed to regular performance reviews. In fact, we are completely aligned with Senator Kerry in terms of accountability and responsibility."

Given that the former CEO and CFO of Tyco are currently on trial in Manhattan Supreme Court accused of looting some $600 million in unauthorised compensation and illicit stock sales, the company has made an easy target for politicians seeking examples of corporate excess. Also, Tyco is one of only three significant examples of "corporate inversion", the type of transaction that is anathema to Sen. Kerry.

According to the US Department of the Treasury, the term "inversion" is used to describe a broad category of transactions through which a US-based multinational company restructures its corporate group so that after the transaction the ultimate parent of the corporate group is a foreign corporation.

The other entity named by Kerry as an example of dubious corporate ethics is Accenture, formerly associated with accounting firm Arthur Andersen, a prominent casualty of the Enron debacle. A spokesman for Accenture takes strong issue with Kerry's allegations, without ever using his name.

"Accenture did not undertake a US corporate inversion.

"In fact, Accenture is not and never has been a US-based or US-operated organisation and has never operated under a US parent corporation or partnership. Accenture is a multinational company, incorporated in Bermuda, with approximately 86,000 people in 48 countries."

"An October 2002 US General Accounting Office (GAO) report on the top federal government contractors said that Accenture is not one of the companies that engaged in a transaction that could be characterised as an inversion.

"In media interviews regarding the report, James R. White, the GAO's director of tax issues, said the GAO applied 'the Treasury's use of the term inversion . . . and since Accenture didn't have a corporate structure to begin with, it didn't have a corporate structure to invert. Accenture was a series of international partnerships operating through a Swiss entity before its incorporation in Bermuda in 2001'.

"Most important, Accenture pays, and has always paid, its fair share of taxes in each of the countries in which it generates income, including the US. In fact, our disclosed effective tax rate is high compared with that of most companies, including US companies. A news release we issued on January 13, 2004, regarding our first-quarter fiscal year 2004 earnings stated that Accenture's effective tax rate for fiscal 2004 is expected to be 34.8 per cent."

"When Accenture does business with state and local government in the US, we do so through our US-based subsidiary, Accenture LLP. It operates in the US and employs US workers, and all its income is subject to US tax."

In an October, 2002 letter to Democratic Congressmen Henry Waxman and Jim Turner, the GAO's James White wrote: "Some US-based multinational companies have found that the effective tax rate on income earned from foreign sources can be reduced if they are incorporated in countries that either do not tax corporate income at all or tax the income at a lower rate than the US corporate tax rate.

"Consequently, some US-based companies incorporate from the outset in these so-called 'tax haven' countries. In addition, some companies that were incorporated in the United States have reincorporated in tax haven countries through 'corporate inversion transactions'."

He defines the term "tax haven" as "generally used in research and the media to refer to countries that have no or nominal taxes" and notes that multinational companies incorporated in a tax haven may have US-based subsidiaries that pay US taxes.

White wrote that the congressmen "asked us for information on the extent to which large federal contractors are incorporated offshore. We agreed to determine which, if any, of the largest 100 publicly traded federal contractors are incorporated in a tax haven country or have engaged in an (inversion transaction)."

The GAO reported that only four of the top 100 publicly-traded federal contractors were incorporated in a "tax haven" country. Their conclusion was that the four corporations accounted for about $2.7 billion of federal contract obligations in fiscal year 2001, about 2.6 per cent of the $102 billion in federal contracts awarded to the top 100 contractors.

But the biggest off-shore recipient of federal largesse, McDermott International Inc., with contracts totalling almost $1.9 billion, was incorporated in Panama in 1983. Of the three incorporated in Bermuda, Accenture was clearly not an "inversion" of a US entity, and the remaining two companies, Foster Wheeler Ltd. and Tyco International Ltd., were ranked 57th and 68th respectively in the top 100 federal contractors, with contracts totalling $286 million and $206 million in 2001.

The subject of "inversions", and the resulting political attacks from Democratic candidates, continues to draw the attention of mainstream US media. In the current issue of , the bible of corporate America, Bill Powell reports that the Democratic candidates "are unanimous about one thing. They know who their enemies are.

"First, . . . President George W. Bush. The other enemy is . . . well, you, as in corporate America. You're 'special interests', you understand (every major candidate uses the phrase); you own the White House and Congress lock, stock and barrel. You may even work for a 'Benedict Arnold' company, as Senator John Kerry starts his riff on the stump, sending your 'headquarters to Bermuda and jobs to China' (as Howard Dean finishes his).

"It's fine to say, as all the Democrats do, that they'd change the tax code to prevent companies getting any benefit from having their headquarters in Bermuda. But how many 'Benedict Arnold' companies are out there? Of the Fortune Global 500, all of three are incorporated in Bermuda."

There may be notes of sarcasm, even cynicism, in some of that commentary. But Powell warns the management of corporate America, almost uniformly of Republican political persuasion, and by extension the Bush administration, that they face challenging times.

"What's interesting about this year's election is that all of the plausible Democratic candidates ? not to mention the formerly plausible Howard Dean ? have a heavy dose of big-business bashing in their standard stump speeches. That means, simply, that those lines have resonance, at least among potential primary voters."

"The polling for all of us is showing the same thing," says a senior campaign operative for one of the Democrats. "People think that this guy (Bush) is the CEO's President. He does whatever CEOs want, and doesn't give a damn about the consequences. That's why the candidates all sound similar themes ? because those fears are real."

"Populism ? and more recently, faux populism ? is a staple of American politics," writes Powell, but seems to cede considerable political ground to the Democrats when he concludes that "even if the populism on the stump is somewhat phony, the polling results that the Democrats are getting isn't".

"There is some real danger here for Bush, given that nearly every stance the administration has taken on regulatory and environmental issues follows the Bush-does-as-big-business-wants-rule. There are, to be sure, a few exceptions. But . . . there isn't much the administration can boast about, and some Republicans worry that the perception that the wolves are in charge of the hen house could matter in the fall, particularly among moderate women voters."

"Furthermore, the 'CEO's President' will stick as long as jobs are scarce. To state the obvious, Bush badly needs the economy to start creating some jobs over the next six months, particularly in key battleground states like Ohio and Michigan, which have haemorrhaged manufacturing jobs over the past few years."

After an upset victory in the Iowa caucuses last week, Senator Kerry won the New Hampshire primary on Tuesday with 39 per cent of the record turnout of some 200,000 Democrat and Independent voters. Governor Howard Dean was13 per cent behind in second place, and General Wesley Clark and Senator John Edwards tied for third on 12 per cent.

The most recent CNN poll, in a hypothetical match-up between President Bush and Senator Kerry, gave Kerry 46 per cent and Bush 43 per cent.

In his victory speech in New Hampshire, Senator Kerry vowed to fight "powerful special interests".