Oct 5, 2012 / 1:35 pm
A Canadian-owned company is raising eyebrows south of the border after federal election filings revealed it recently contributed $1 million to Mitt Romney's political action committee, a donation that has set off alarm bells amid the ever-murky waters of American campaign law.
OdysseyRe is a subsidiary of Toronto-based insurance giant Fairfax Financial Holdings. The company, headed by Indian-born CEO Prem Watsa, had total assets of $31.7 billion at the end of 2010, and employs more than 8,000 people worldwide.
The U.S. Supreme Court's controversial Citizens United ruling allows American corporations to make contributions to so-called SuperPACs, while banning foreign-owned companies from doing so. But there remains confusion about whether the 2010 ruling also applies to foreign-owned U.S. subsidiaries.
Fairfax says it doesn't, and that it's broken no laws. The decision to donate the money in August to Romney's Restore Our Future SuperPAC, a company official added Friday, was made by a sub-committee of the company's board of directors comprised entirely of U.S. citizens.
"We had no role; the U.S. company is in fact our largest company, and they had business reasons for doing it, but we played no role at all," Paul Rivett, Fairfax's vice-president of operations, said from Toronto.
Peter Lovell, counsel general for OdysseyRe, said "neither our parent company nor any other foreign nationals were part of the decision-making process to contribute to the SuperPAC."
The subsidiary chose to donate to Romney because, as an international reinsurer located in the United States, it operates under "one of the highest corporate tax rates in its industry," Lovell added.
"Gov. Romney has proposed meaningful corporate tax reform that would help to level the playing field; consequently, a victory by Gov. Romney in November would be beneficial to OdysseyRe."
Nonetheless, officials at Campaign Legal Center, a non-profit, non-partisan campaign finance watchdog, have said OdysseyRe's donation "raises some legal red flags."
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