Finance Minister Eugene Cox yesterday said Bermuda companies had been "unfairly targeted" in a "short-sighted, nonsensical" campaign calling for ten offshore companies to be stripped from the S&P 500 index.

Mr. Cox was speaking out after California treasurer Phil Angelides, and nine other state authorities, called for certain offshore but US listed companies to be removed from the leading index.

Mr. Cox, in a press statement, strongly rebuked the call for ten companies - with six on the target list being Bermuda companies - to be delisted. He pointed out to do so would be "to undermine the basic principles of free trade and good corporate governance".

The S&P index is a basket of 500 stocks considered to be widely held. Weighted by market value, the index's performance is thought to be representative of the stock market as a whole.

There are clear benefits to being listed on the index - including a generally positive impact on a company's stock price given that it is is used as a baseline by an estimated 97 percent of American money managers and pension plans.

About $1 trillion in overall US investments is indexed to the list and S&P management have estimated that being delisted could cause at least a ten to 15 percent drop in a company's share price.

Mr. Cox said: "Actions taken to limit the involvement of Bermuda based companies in the world economy is shortsighted and nonsensical.

He added: "The singling out of Bermuda based companies in this manner disregards the real issue and that is that these companies have not done anything illegal and are engaging in legitimate businesses."

Companies named were: Noble Drilling Corp., Cooper Industries, XL Capital Ltd., Ace Limited, Tyco International, Ingersoll-Rand, Schlumberger, Carnival Corp., Transocean Inc. and McDermott International. The first six companies on the target list are in Bermuda although both XL and ACE are incorporated in the Cayman Islands and were never domiciled in the US.

Other state officials to put their name to the campaign hailed from Connecticut, Maine, Massachusetts, Wyoming, Kentucky, Colorado, Oregon, Iowa, and New York. Eight of the ten state officials are Democrats and two are Republicans.

Mr. Angelides said the move is needed because many US companies have moved their legal address to offshore tax havens such as Bermuda and the Cayman Islands - while keeping their primary operations stateside. He cited the moves as the company's method of avoiding "scrutiny for sleazy corporate-governance practices".

He added: "This is about ten renegades who have chosen to set up a phony mailbox for only two purposes - to avoid paying US taxes and to weaken the rights of shareholders to collect judgements against corporate boards in US courts. It's a poster child for the kind of corporate behaviour that repels most US citizens."

But Mr. Cox said Bermuda had a strict incorporation process to ensure that businesses were setting up here for legitimate business purposes.

He also pointed out that Bermuda companies played a pivotal role in the world economy: "Bermuda based businesses contribute much to the world economy and in the area of insurance are recognised as world leaders.

"These major companies provide much needed financial services and in particular reinsurance coverage for insurers located in all parts of the world."

Mr. Cox concluded: "The contribution towards managing the cost of finance and especially insurance is so significant that Bermuda's role in this regard compares to that of major centres including the United States and the United Kingdom."