Chevron Nigeria Limited is being accused of avoiding $10.8 billion in taxes. The allegations are being made by an accounting firm (ABZ Integrated Limited), who are tax consultants to Nigeria's Economic and Financial Crimes Commission.
Interestingly enough, this story is getting little play in the North American, or European press.
The Nigerian government announced a crack down on fraud three years ago and founded the Economic and Financial Crimes Commission (EFCC) in 2002. Since then, this agency has recovered more than 700 million dollars and arrested more than 500 suspects. Currently, there are 100 cases on trial.
Here are a list of charges from an article on OnlineNigeria:
"•In1998 and 1999, the companies diverted $75 million government tax revenue through dividends.
•Evaded tax through claims to unmerited capital allowances, based on fictitious qualifying capital expenditure by $190 million.
•Evaded tax through claims to unmerited tax credits, such as Reserve Additional Bonus (RAB) and Intangible Drilling Cost (IDC) by $222 million.
•Through conspiracy, the companies were assessed to lower amount of tax than expected by $95 million.The tax consultants further claim that Chevron may have been involved in money laundering during the period under investigation because it did not provide details of debtors and creditors amounting to $260 million in each of the years, in its audited accounts, as required by the Companies and Allied Matters Act of 1990.The consultants also alleged that during their defence of the initial reports submitted to the EFCC, very critical issues were raised bordering on.
•Non payment of monthly Petroleum Profit Tax installments. Chevron Oil Nigeria Limited was expected to make 104 installments for eight years to year 2002. The company failed to make 42 installments, while its partner, TOPCON, failed to pay 24 installments. This denied the nation of several millions of dollars.
•Some payments claimed to have been made by the companies were not traceable to the Federal Reserve Bank account for the domiciliation of PPT revenue.
•Use of illegal revisions of their PPT estimates to manipulate their tax liabilities. These were revisions made beyond the statutorily permitted accounting year of December 31 of each year.
•Manipulation of revenue from royalties for which DPR is responsible for determination of liabilities but ironically does not issue receipt to the oil companies for payment; instead, the office of the Accountant-General of the Federation usurped the responsibilities even though it is not a government revenue generating agency.
•Conspiracy between revenue officers and Chevron which led to replacement of Assessment Notice for a higher amount of $21,838,977 with that of $12,005,455. The difference of $9,833,492 denied the federation has been established to be a fraud actualised by duplicating an expense on licences and miscellaneous taxes in 1996.
•There were cases where FIRS credited Chevron with payments which it never made. An example was the $22,400,000 vide Treasury receipt No. PP036337 of August 14, 1997. This suggests fund diversion.The tax consultants also said in their report that in 2002, Chevron claimed to have spent $25.5 million on community development while in actual fact only $249,000 was spent."
According to the article, Chevron has repaid $6.516 million and nothing is being heard from the EFCC, who had earlier threatened to shut down their operations if these charges were found to have merit.
Although, Nigeria is one of the biggest oil producing countries in the world, the general population remains very poor and sees relatively little of the profits spent on improving their lives.
Here is an interesting link to a report from Human Rights Watch on the status of Nigeria and information on how little of the oil profits are used to improve the daily lives of the poor. It cites that the foreign companies making a lot of the money from oil profits bear some of the responsibilty.
There are a lot of foreign companies making a lot of money in Nigeria. There is also obviously a very small minority in Nigeria getting very rich, while many of their citizens live in poverty. Perhaps this is one of the root causes for all the fraud that comes out of Nigeria?