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Chevron Contests $2.7bn Alleged Tax Evasion

Posted by By Mike Oduniyi on 2005/07/26 | Views: 308 |

Chevron Contests $2.7bn Alleged Tax Evasion


US oil major, Chevron Nigeria Limited, which is currently caught in the middle of an alleged tax evasion of $2.7 billion, has contested the allegation, and described it as false claims by a consultant to Economic and Financial Crime Commission (EFCC).

US oil major, Chevron Nigeria Limited, which is currently caught in the middle of an alleged tax evasion of $2.7 billion, has contested the allegation, and described it as false claims by a consultant to Economic and Financial Crime Commission (EFCC).

EFCC consultant, ABZ Integrated Limited, had in a public notice published last Friday, alleged that from its investigation spanning 12 months from December 2003 and November 2004, it discovered non-payments of Petroleum Profit Tax (PPT) by Chevron group for some 66 installments.

Chevron, according to the consultants, evaded paying PPT to the tune of $994 million through over-bloated cost of operation, that the company also evaded tax through claims to unmerited tax credit, such as Reserve Additional Bonus (RAB) and Intangible Drilling Cost by $222 million as well as other alleged financial malpractices.

However, reacting to the allegations, Chevron management, while confirming that EFCC actually probed payments of PPT and royalties by oil companies in Nigeria last year, said the commission made no findings of any fraud perpetuated by the oil company.

"The fact is that EFCC carried out an exhaustive investigation last year into Petroleum Profits Tax (PPT) and Royalties paid by companies within Chevron group to the Federal Government," said Chevron, adding that "there was no finding of any fraud by EFCC at the conclusion of this investigation."

Chevron, Nigeria's third largest crude oil producer which is battling to restore oil production amounting to 140,000 barrels per day shut in since 2003 due to communal violence, said it had on the other hand been a frontline supporters of the Federal Government's Extractive Industries Transparency Initiative (EITI).

"We welcome scrutiny and are subject to frequent audit by relevant government agencies. Our support for EITI and our internal governance practices are geared towards ensuring that issues such as tax evasion, corruption and fraud are eliminated," it said.

It would be recalled that the Federal Government had earlier in 2001 launched what is called value-for-money audit, in which it discovered that claims submitted by its joint venture partners on operations were over bloated and subsequently reduced the arrears on cash calls being demanded by the multinational oil companies to $500 million from $1 billion.

The government also stopped the payment of Reserve Additional Bonus (RAB) to the firm following the abuse of the package. The RAB is a form of incentive to oil producers to raise their level of oil exploration. A company was rewarded if it made more oil discovery and raised its reserves more than what it produced.

The EFCC consultant, which is seeking President Olusgeun Obasanjoís intervention in retrieving the alleged revenue, stated that the Federal Inland Revenue Service (FIRS) had already credited Chevron with the payments, which were never made, citing the case of a $22.4 million tax with Receipt No. PP036337, which the company had not honoured till date.


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