The push by some US legislators to close a "loophole" that allows US corporations to move their incorporations to Bermuda and minimise global tax bills - actions that are increasingly being labelled as "unpatriotic" by American politicians and in the media - have left at least one group of investors up in arms.

A group of industrial investors has announced that they may move to block Nabors Industries - who are presently incorporated in Delaware - in their plans to do a "corporate inversion" (as moving incorporation from the US to a foreign country has become known) to the Island, as reported earlier this year.

Meanwhile diversified manufacturer Ingersoll-Rand has moved ahead with their "corporate inversion" to Bermuda, as of December 31, 2001, which could reportedly save them an estimated $40 million in taxes annually.

There were two separate shareholder suits launched against Ingersoll-Rand over the reincorporation plans but both - one from an individual, and another class action suit - were settled in December, 2001.

And Stanley Works, a Connecticut toolmaker, - which has also come under heat in media reports and from US legislators - told The Royal Gazette yesterday it has not been swayed in their plans to reincorporate on the Island. The company predicts tax savings of $30 million a year after the move.

Senior vice-president for investor relations, Gerard Gould said: "We are proceeding as planned. Comments of legislators and the media have not deterred us. What we have to do today is manage our company according to today's - not proposed - laws," he said.

Mr. Gould said the company still has some steps to take before it can reincorporate to the Island. He added that Stanley Works was still awaiting approval from the US Securities and Exchange Commission (SEC) after which a two-thirds shareholder approval vote would have to be secured. "That vote is by no means assured," he said.

Nabors Industries, a global land-drilling contractor, does have the unanimous approval of its board to move to Bermuda, and has made initial filings with the SEC. But a coalition of investors - the Amalgamated Bank, the AFL-CIO, the Central Laborers' Pension Fund and the Laborers' International Union of North America - said yesterday that they plan to "examine closely and, if necessary, vote against, the proposal by Nabors Industries".

They cited concerns about reductions in shareholder rights and doubts over the economic benefits of the reincorporation.

Specifically, these investors reportedly object to the limitations imposed by Bermuda law on the ability of shareholders to hold directors and officers accountable in the event of legal violations.

"In light of recent events at Enron and other companies," said Barry McAnarney, Executive Director of the Central Laborers' Pension Fund, "our fund has become much more sensitive to these issues. We want to be sure we are able to seek appropriate legal remedies on behalf of our worker beneficiaries in the event of any wrongdoing."

The investors also say they want more detail on the economic benefits Nabors touts for the reincorporation, mainly possible tax savings on income derived from operations outside the US.

"Nabors asserts that the move may result in tax savings, but unlike other companies that have asked shareholders to approve these kinds of reincorporations, Nabors hasn't told shareholders how the move will affect its tax rate," said Melissa Moye, Chief Economist for the Amalgamated Bank.

Any economic benefits, the investors point out, may not survive increased scrutiny from Congress and regulators. "We are concerned that any tax savings may evaporate if Congress decides to crack down on foreign reincorporations," explained Linda Priscilla, the Laborers' governance advisor.

She noted that the Treasury Department has stated that it intends to study the issue, and that a bill was recently introduced by Democrat Richard Neal - which has 25 cosponsors including two Republicans - to eliminate the tax benefits of reincorporations to foreign countries.