The Securities and Exchange Commission has charged U.S.-based shipping conglomerate Overseas Shipholding Group and its former chief financial officer Myles Itkin with failing to recognize approximately $512 million in tax liabilities.
The charges are in connection with the SEC's on-going investigation related to the company's 2012 bankruptcy. Both OSG and Itkin have agreed to settle with the SEC.
According to the SEC, the tax liabilities accumulated over nearly 12 years resulting from OSG's controlled foreign subsidiary guaranteeing the company's debt that had been borrowed under various credit financing agreements. In November 2012, following the discovery of the tax liabilities, OSG filed for bankruptcy protection.
"Where public companies derive economic benefits from their offshore earnings, it is critical that those responsible for the company's accounting and financial reporting understand the federal income tax consequences triggered from these benefits," said Gerald Hodgkins, Associate Director of the SEC's Enforcement Division.
To settle the claims, OSG has agreed to pay a $5 million penalty subject to bankruptcy court approval, and Itkin agreed to pay a $75,000 penalty, the SEC said. The agreement however does not amount to OSG or Itkin admitting or denying the charges.
The agreement with the SEC also resolves the last remaining claim in the OSG’s bankruptcy case. The company says it will now file a motion requesting bankruptcy court approval of the resolution with the SEC and will simultaneously request an order closing the bankruptcy case.
"OSG is committed to operating its business with the utmost integrity and transparency and in compliance with all applicable laws and regulations," said Sam Norton, OSG’s president and CEO. "We are pleased to have reached an agreement to resolve this investigation and to be in a position to close the bankruptcy case. With this matter behind us, we can focus our full attention on building value for our shareholders."
OSG emerged from Chapter 11 bankruptcy protection in August 2014.
OSG currently operates a fleet of 24 U.S. flag tankers and ATBs, consisting of eight ATBs, two lightering ATBs, three shuttle tankers, nine MR tankers, and two non-Jones Act MR tankers that participate in the U.S. Maritime Security Program.
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