Bermuda could have avoided becoming the “poster boy” for tax dodging in the United States had Government acted more quickly and halted the stream of corporate inversions, said Shadow Finance Minister Grant Gibbons.

Speaking on the state of Bermuda's economy, he criticised the Government for the way it had handled the whole issue and said they could have done more to safeguard the Island's reputation. “When you look at the amount of damage the bad publicity did us and the amount of benefit we got from it, it was way out of proportion,” said Dr. Gibbons.”The damage was a lot higher. Bermuda is now used as the poster child for tax evasion in the United States.”

There was a flurry of so-called corporate inversions in the US shortly before and after the September 11 terrorist attacks, prompting an outcry from consumers and some lawmakers in the US that the businesses were abandoning the nation in a time of need. And Bermuda has been caught up in the furore, being branded a haven for tax-dodging unpatriotic US companies.

Cooper Industries Inc., Ingersoll-Rand Co. and Nabors Industries Ltd. all moved to Bermuda after September 11, 2001.

Stockholders have generally been supportive of the transactions, but many on Capitol Hill have called the companies who moved “unpatriotic”.

Lawmakers had considered legislation that would have blocked Cooper and other inverted corporations from enjoying any tax benefits from the transactions, but in the face of Republican opposition legislation has stalled. Republicans argue that corporate inversions are symptomatic of a broken tax system and say companies shouldn't be punished, but the tax system should be fixed.

Congress did add a contract restriction to the bill creating the Homeland Security Department, signed into law on November 25, 2002.

But Republicans watered down the provision to apply only to the parent corporation located abroad - not to its US subsidiaries - and only to corporations that had inverted after November 25, 2002. Earlier this year there was a planned TV advertising campaign which attacked Bermuda as an offshore jurisdiction by a group calling itself the “Bermuda Project”.

They sponsored advertisements which portray US companies with holding companies in Bermuda as unpatriotic.

At the time acting Minister of Finance, Paula Cox, said that Government was continuing to monitor these and other initiatives. And a group called “Come Home to America” launched a newspaper campaign which promoted repatriation to the offshore holding companies of US corporations. Ms Cox pointed out that extra funds had been set aside for lobbying and said: “It should be noted that though the Ministry continues to monitor the position and keep the situation under active review and liaise with our overseas lobbyist routinely in this regard, we note that this is not the mainstay of Bermuda's international business.”

But Dr. Gibbons criticised the way Government has handled the situation - and said it could have stopped the whole thing in its tracks. “When you consider that probably only about a dozen companies are included and their contribution to our economy is minimum, probably if we had moved to stop some of this inversion from taking place it wouldn't have had a knock-on effect,” he said.

“The Minister of Finance could certainly have made some suggestions, particularly with the Bermuda Monetary Authority that this was not the type of business we were looking for.

“We have certainly done it in the past - we made it very clear in things like Internet gambling and in other types of areas. I am not saying that we actively turn away business, but clearly the Ministry of Finance has a role in the types of business it does and does not encourage.”