FG Loses Bid To Get $559m Halliburton Bribe Fine

The Federal Government yesterday lost in its bid to get part of the $559 million (about N89. 44 billion)  fine imposed by the US Government on Halliburton Energy Services Ltd for offering bribe to Nigerian officials in its effort to secure the Liquified Natural Gas, LNG, contract in the country.

The government through the Federal Inland Revenue Services, FIRS, had written to Halliburton Energy Services Nig. Ltd., in 2009, asking it to pay $167,700 being 30 percent of the $559,000 fines paid by the company to the US authority as penalty, arguing that the “bribe would have formed part of the expenses that was charged in the tax returns to FIRS,” in Nigeria.

However, not pleased with the development, Halliburton approached the Tax Appeals Tribunal, sitting in Lagos, asking the court  to stop the FIRS from imposing the tax on them.

In its judgment, the Chairman of the Tribunal, Mr. Kayode Sofola, SAN, nullified the tax, holding that both the assessment and tax were “defective as being speculative, contradictory and inconsistent with the relevant tax laws.”

The five-man tribunal, in its judgment delivered by Sofola, nullified the reply filed by FIRS while granting Halliburton Energy Services Nigeria’s appeal against the imposition of the tax.

The US government had imposed the fine on Halliburton Inc. for offering the bribe to win the LNG plant on Bonny Island, Rivers State.

In its appeal, Halliburton Energy Services Nigeria Ltd, had challenged the tax imposed on it, adding that, it did not represent Halliburton Inc. USA in Nigeria and was therefore, not involved in any bribe contrary to the belief in some quarters.

The tribunal upheld Halliburton appeal and said, “the terms of settlement and non-prosecution agreement” the Federal Government reached with Halliburton Inc exempts it (Halliburton Inc.) from imposition of such tax.

It also held that Halliburton Inc. USA was not “chargeable to tax in Nigeria with regard to the fine it paid to the American government in the circumstances of the case.”

According to Sofola, “for the tax to be imposed on the sum in question, the law must unambiguously impose the tax on the party sought to be charged with it. The evidence shows that the fine was imposed for the bribery of Nigerian officials. What the quantum of the bribe was is not in evidence. The respondent speculates that the fine of $599m or the entire bribe would have formed part of the expenses that was charged in the tax returns to FIRS’.”

It added that the purpose of the sanction, which was a criminal penalty “is a loss imposed on the party unless there is evidence to the contrary, which there is not.”