Nov 22, 2022 News
Kaieteur News – British advocacy group, Oxfam on Monday filed a shareholder’s resolution against American oil giants, ExxonMobil, Chevron, and ConocoPhillips calling them out on their alleged ‘secretive’ tax practices.
Oxfam is a British-founded confederation of 21 independent charitable organisations focusing on the alleviation of global poverty. The resolution that they filed, is called a ‘shareholder resolution’ which is usually a 500 word request submitted to a company by a shareholder asking the company to address an issue of concern.
In their shareholder’s resolution, Oxfam stated that oil majors’ lack of transparency creates a material risk for long-term investors who want to safeguard against risks of reputational damage. “Worse still, these secretive practices undermine the public’s interest in a fair tax system, especially in Global South countries with the greatest tax revenue needs” Oxfam said in a press release.
Oxfam’s resolutions ask the companies to publish tax transparency reports in line with the tax standard of the Global Reporting Initiative (GRI), the world’s most utilised corporate reporting framework. The reports would include country-by-country reporting (CbCR) of certain company financial information, including revenues, profits and losses, and tax payments within each jurisdiction – critical information to understanding risks of profit shifting and tax avoidance.
Daniel Mulé Policy Lead on Extractive Industries and Tax at Oxfam America said, “Exxon, Chevron, and ConocoPhillips’s threadbare tax disclosures leave investors, watchdog groups, and the general public in the dark about the companies’ secretive tax practices.”
Oxfam in their press release stated that a November 2022 report shows that public CbCR could reduce tax revenue losses due to cross-border profit shifting by US$89 billion and that the oil and gas sector is a particularly high-risk sector for corporate tax avoidance – and emissions from oil and gas are also fueling the climate crisis.
“Oil and gas companies frequently point to their contributions to the tax base in producer countries as a justification for their continued operations, particularly in poor countries, but secretive tax practices make it impossible to verify whether the companies actually contribute to shared prosperity,” said Mulé.
“If oil and gas projects are alleviating poverty, why hide the numbers?” he added. It was explained that public country-by-country reporting allows companies to get out ahead of potential impending regulatory changes and can help to show whether companies are paying taxes in line with their economic activity in every country where they operate.
According to Oxfam, its resolutions would be put to shareholders at Exxon, Chevron, and ConocoPhillips’s annual general meetings in May 2023. It was also stated that the company expects to attract co-filers on the resolutions prior to the filing deadlines.
“As a shareholder that advocates for responsible corporate governance, Oxfam challenges companies for their lack of transparency and their broader lack of social responsibility – including promoting climate disinformation and lobbying against extractive industry transparency measures – and uses its shares in the companies to hold the company to account,” Oxfam stated in the press release.
Moreover, Jason Ward, Principal Analyst at the Centre for International Corporate Tax Accountability and Research (CICTAR) said, “Shareholders need a full understanding of potential risks,” adding “Corporations should respect shareholders and lead the way to let the sunlight in.”
Oxfam’s shareholder’s resolution comes at a time when Exxon’s subsidiary, Esso Exploration and Production Guyana Ltd (EEPGL) the operator of Guyana’s prolific Stabroek Block and its partners Hess Guyana Exploration Limited and CNOOC Petroleum Guyana Limited are enjoying tax-free profits in Guyana.
This is due to the Production Sharing Agreement (PSA) Guyana signed onto with Exxon. Under the 2016 PSA, neither Exxon nor its affiliates pay taxes. In fact, Guyana has agreed to, under the taxation provisions, to pay ExxonMobil’s share of Corporation and Income Tax. As such, it would mean that Guyana foregoes each year, billions of US dollars. On top of this, documentation to this effect is then provided to the US based company allowing it to not have to pay any taxes in its home country for its earnings overseas.
Guyana’s Stabroek Block is 6.6 million acres (26,800 square kilometers) and has approximately 11 billion proven barrels of oil. In January 2022, Kaieteur News Publisher, Glenn Lall, approached the High Court to challenge the Government of Guyana’s (GOG) decision to grant massive tax waivers to the oil companies and their affiliates. Earlier this month, Lall’s lawyer filed final submissions in the case and oral arguments into the case will be conducted on December 12, 2022 and February 22, 2023 was set for the ruling.
The KN’s publisher’s court case seeks to overturn the expansive tax provisions granted to the oil companies as part of the PSA for oil drilling exploration in the Stabroek Block. Among the grounds, Lall argues that Articles 15.4 and 15.5 of the petroleum agreement requiring the Minister responsible for Petroleum to pay taxes for and on behalf of the ERPGL, and the Commissioner General to issue certificates to that effect is therefore a violation of the Petroleum Act.
Guyanese you are being prostituted by your politicians!
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