Steven Mnuchin, the banking and hedge fund executive, and film financier who is President-elect Donald Trump’s nominee to be the next secretary of the treasury, was grilled by lawmakers over his investments, including his use of a Cayman Islands address as a tax shelter for his hedge fund.
Sen. Ron Wyden (D-Ore.), the ranking member of the Senate Finance Committee, claimed the Mnuchin sought to take advantage of a 0% tax rate by moving his hedge funds to the Cayman Islands, thereby shielding profits, including returns from “Avatar.” That is one of the movies that Mnuchin helped finance via his Dune Capital fund.
“It certainly wasn’t for ease of commute,” Wyden quipped about the Cayman Islands address.
But Mnuchin said that he “did not use a Cayman Islands entity in any case to avoid taxes for myself.” He said that the Cayman Island entities were set up “for non profits and pension funds who want to invest through offshore” means.
He told lawmakers that he was in favor of tax simplification, saying that it “makes no sense” that there were provisions in the law that encourage companies to set up the offshore addresses.
“These are all just set up to make the accountants rich,” he said.
He added, “I would support changing the tax laws to make sure that they are simpler and more effective.”
Sen. Robert Menendez (D-N.J.) asked if Mnuchin set up offshore entities to enable his clients to avoid paying taxes.
“This was done so different entities could invest. Sometimes it didn’t have anything do to with taxes,” Mnuchin said.
Sen. Sherrod Brown (D-Ohio) asked Mnuchin whether he had been question by law enforcement over his connections to Relativity Media. Mnuchin said he had not.
On Thursday, Brown sent a letter to FBI Director James Comey, asking the agency to disclose any findings they have discovered on Mnuchin and Relativity as part of an investigation of the film company, which declared bankruptcy in July, 2015. Mnuchin was a board member and co-chairman of Relativity until two months before the bankruptcy filing.
A watchdog group had issued a Freedom of Information Act request to the FBI seeking information on Mnuchin and Relativity. But the FOIA request was denied, according to Brown, with the reason given that the release of such information “would interfere with enforcement proceedings.”
“I have no idea why they didn’t approve the FOIA issue,” Mnuchin said.