HELENA - U.S. Senator Max Baucus is returning more than $20,000 in campaign donations to a defense contractor and its executives after a subsidiary came under scrutiny for setting up shell corporations in offshore tax havens.

Baucus spokesman Barrett Kaiser says as soon as Baucus heard about the situation, he ordered his campaign to return the money to L-3 Communications Holdings executives. He says Baucus is supporting legislation to crack down on that kind of abuse.

The Boston Globe and the Wall Street Journal reported earlier this month that L-3 subsidiary MPRI, which has millions of dollars in federal defense contracts, had set up companies in Bermuda and the Cayman Islands to subcontract the defense work.

The House passed a bill last month that would treat foreign subsidiaries of U.S. government contractors as American employers, requiring them to pay payroll taxes, Social Security and Medicaid withholding. A similar bill has been introduced in the Senate. Kaiser says Baucus expects the Senate Finance Committee to act on the legislation within the next few weeks.