Updated: You can’t tax Halliburton for bribing Nigerian officials – Court

Nigeria has not convicted anybody for receiving the Halliburton bribe .

The Tax Appeal Tribunal sitting in Lagos has ruled that the Federal Inland Revenue Service, FIRS, cannot tax U.S. energy firm, Halliburton, for admitting to paying bribes to Nigerian officials.

The five-man tribunal granted the appeal filed by Halliburton Energy Services Nigeria Ltd, a subsidiary of Halliburton Inc., against the FIRS.

Halliburton, in January 2009, paid a $559 million fine to the U.S government after the company was found guilty of bribing Nigerian officials. The FIRS, through a letter dated February 25, 2009, wanting to help Nigeria make some money from the American company, ordered that Halliburton pay $167 million (30 per cent of the figure paid to the U.S) as tax for the bribe payment.

The tax agency’s basis for the fine was that the $559 million paid by Halliburton is part of its earnings that should have been taxed by Nigerian authorities

Halliburton Energy Services Nigeria Ltd challenged the imposition of the fine, stating as part of its reasons that it was not involved in any bribe as it did not represent Halliburton Inc. USA in the gas pipeline dealings.

 

The fine is illegal

The tribunal, in a judgement read by its chairman, Kayode Sofola, a Senior Advocate of Nigeria, ruled that the fine by the FIRS was illegal describing it as “being speculative, contradictory and inconsistent with the relevant tax laws.”

“While foreign companies may be liable to d imposition of tax in Nigeria in appropriate cases, Halliburton Inc USA is not chargable to tax in Nigeria with regard to the fine it paid to the American government in the circumstances of the case,” the tribunal ruled.

The tribunal also ruled that the fine paid by the energy giant in the U.S. was a loss and not a profit, and so should not be taxed.

“We find that the fine is not profit and to the contrary, is a loss. Thus the case the respondent has presented before us is untenable,” Mr. Sofola read.

No conviction in Nigeria

Halliburton, as part of a consortium called TSKJ, had bribed senior Nigerian officials with $180 million in order to receive liquefied natural gas contracts worth $6 billion from the Nigerian Government.

Three successive Heads of State- Sani Abacha, Abdusalam Abubakar, and Olusegun Obasanjo- , as well as former petroleum ministers like Dan Etete, and top officials of the Nigerian National Petroleum Commission, have all been linked to the bribe.

While Halliburton and the other three companies that paid the bribe have been convicted and fined in the U.S. and in their own countries, and the middlemen who  delivered the bribe also convicted, no Nigerian official has been convicted for receiving the bribe.