News & Events

Senator calls for end to ‘sweetheart’ deals

View Boston Herald Article here

By Greg Turner and Hillary Chabot
Thursday, March 17, 2011

The two richest people in Massachusetts — Fidelity Investments honchos Ned Johnson and his daughter, Abigail — could be forced to defend what a senator called a “sweetheart deal” that allows the Hub financial behemoth to ship jobs out of state but still hold on to state tax breaks.

State Sen. Mark Montigny (D-New Bedford) — outraged at Fidelity’s plan to move 1,100 jobs from Marlboro to New Hampshire and Rhode Island — called for a hearing to examine tax breaks that benefit Fidelity and other mutual fund firms.

“The sweetheart deals need to end,” said Montigny, chairman of the Senate Committee on Post Audit and Oversight, whose plan was backed yesterday by Senate President Therese Murray.

Montigny said he will “invite” Fidelity’s top executives — including the Johnsons, who are worth a combined $18.4 billion, according to Forbes magazine — to a March 29 hearing that will also explore possible “clawback” provisions for state tax breaks.

Montigny did not rule out wielding his panel’s subpoena powers. “It’s absolutely the last resort and in most cases it’s not necessary,” he said. “I have no reason to believe they won’t cooperate fully.”

Fidelity spokeswoman Anne Crowley declined to comment on who would attend the hearing, saying the company had yet to receive Montigny’s invitation.

John Bonnanzio, editor of the Fidelity Insight newsletter, said, “It’ll be a frosty day in hell before Ned or Abby show up for this conversation.”

The Bay State’s mutual-fund industry won a controversial tax break in 1996 — after Fidelity first expanded to Rhode Island and New Hampshire — in exchange for a commitment to create a total of 11,000 jobs. Fidelity met its job-creation goal, reportedly scoring a tax break worth $20 million a year, but has since trimmed its Bay State work force to 8,400, from about 13,000 in 2006.

“Said Crowley: “We are one of the few large companies that still maintains its headquarters . . . providing thousands of jobs . . . and contributing to the state’s overall economy.”