A syndicated news story looks at a 2012 merger that Republican U.S. Senate candidate Mike McFadden's investment firm was involved with, suggesting it could become a "flashpoint" in his race against DFL incumbent Sen. Al Franken.
The Associated Press story said the controversy surrounds a deal that moved a U.S. company, Jazz Pharmaceuticals, to Ireland, significantly dropping its tax obligation. Public filings show McFadden's firm, Lazard Middle Market, made more than $11 million in the deal. McFadden was chief executive of the firm at the time, but told the AP he was not personally involved in the merger.
In an interview Friday, the AP said McFadden "distanced himself" from the deal, saying that McFadden portrayed it "as a one-sided business maneuver driven by Jazz and its financial adviser — not the Irish drugmaker Azur Pharma, which his firm represented."
The deal in question involved a so-called tax inversion, a legal maneuver that allows U.S. companies to merge with a foreign partner and then reincorporate abroad to reap tax savings.
Politicians including McFadden have called for a review of inversion deals. McFadden called it a "tragedy" when the U.S. loses tax revenues when a company makes an offshore move. Fridley-based Medtronic is in the process of such a deal with a plan to buy Covidien, an Irish competitor, for $42.9 billion.
"I think inversions are bad for America," McFadden said. "Any time we lose a corporate headquarters from the United States, especially when we lose them from Minnesota, it's a double whammy."
A Franken campaign operative contacted by the AP labeled McFadden a hypocrite.
"Mike McFadden knew what kind of buyer he would attract when he represented a company in a nation known for being an offshore tax haven," campaign spokeswoman Alexandra Fetissoff said. "He knew he was helping an American company dodge paying taxes and is just as culpable for this deal as anyone else."
The AP story is getting traction in Minnesota media. It's been picked up by the Star Tribune, the Pioneer Press and WCCO, among other major outlets. McFadden's latest tweet does not address the issue; it hammers Franken's record.
The issue did not come up in a front page campaign story in the Saturday Star Tribune. The story, which assesses the U.S. Senate campaign at the Labor Day mark, notes that national political groups have not yet focused on funding the race.