Franken ad criticizes McFadden, Lazard for incorporation in Bermuda

In a new 30-second ad, Sen. Al Franken criticizes opponent Mike McFadden's business ties to global investment firm Lazard Ltd. for its incorporation in Bermuda, accusing "McFadden's business" of avoiding paying taxes in the U.S.

The ad, which blurs distinctions between the parent firm and subsidiary McFadden co-ran, opens with scenic views of Bermuda, the subtropical island 640 miles east of North Carolina. A narrator says "McFadden's company" uses "a special tax loophole to list its headquarters offshore" for the purposes of tax evasion.

Lazard is the parent company of Lazard Middle Market, a firm it acquired in 2007 when the GOP challenger was co-chief-executive. McFadden is on leave while he runs for office. At the time of the deal, McFadden's private investment bank was named Goldsmith Agio Helms.

Lazard Middle Market is based in Delaware. It pays U.S. taxes on revenue generated in the country. Parent company Lazard is incorporated in Bermuda for tax purposes.

McFadden's campaign on Friday bit back against the campaign ad.

"It's either sloppy or malicious," said McFadden deputy campaign manager Tom Erickson.

Delaware, a low-tax state, is a haven for many U.S. companies for favorable corporate laws and court structure.

Deputy campaign manager Erickson said that McFadden, in his role as co-CEO of Lazard Middle Market, had no say in Lazard's headquarters decision.

The Franken campaign, however, does not accept that distinction.

"There is no difference between the two. They are the same company," said Alexandra Fetisoff, communications director for Franken's Senate campaign.

Fetisoff notes that when McFadden sold his firm to Lazard in 2007, he did so knowing that Lazard was based out of the country.

Earlier this year, McFadden himself has blurred the lines between the parent company and subsidiary.

The ad is hitting airwaves across Minnesota and comes on the heels of an announcement by Burger King Worldwide Inc. to move its headquarters to Canada once it finalizes a merger with Tim Hortons Inc., a Canadian doughnut chain.