Thursday, October 11, 2018

Chevron Appears To Be A Global Tax Cheat As Well As Serial Human Rights Abuser

In the battle between Indigenous peoples and Chevron over the company's massive toxic dumping in Ecuador, one thing has become increasingly clear: the human rights abuses committed by the company in the Amazon are not unique. They are in fact indicative of an internal culture that clearly flouts the law as part of the company's customary business practices. And the victims of this culture extend way beyond the people of Ecuador.

Chevron's history of toxic dumping in Ecuador and its subterfuge to avoid paying damages is widely known and undisputed. The company's global tax avoidance practices -- tax cheating -- are less well known but are becoming more evident. Think of that New York Times story on the Trump family's tax fraud, and one can quickly understand what Chevron is doing on a global scale.

Consider:

Australia: Chevron maintains its largest foreign investment in the Gorgon natural gas project off the northern coast of Australia. It sold Australians on the promise that it would pay billions annually in tax revenue to the country so it could build things like hospitals and schools. Instead, Chevron for years paid zero taxes in Australia despite making huge profits. It did this by having its Australian subsidiary pay back a high-interest 9% loan provided by a Chevron subsidiary in Delaware in what is clearly an illegal "related company" transaction designed to evade tax laws.

The loan repayments "wiped out" all Chevron profits in Australia and the company never paid taxes. Chevron ended up being caught and authorities forced it to pay a massive tax bill; company officials who orchestrated the scheme are the same officials who have refused to pay the Ecuador judgment after dumping billions of gallons of cancer-causing waste into the Amazon. They were not personally prosecuted, fined, or punished. See here for part of the background.

Canada: Chevron pays almost no tax in Canada despite generating billions in revenue from its wholly-owned Canadian subsidiary, Chevron Canada. In the course of the judgment enforcement action brought by Ecuadorians in Canada to force compliance with the $12 billion Ecuador pollution judgment, we learned that Chevron Canada pays billions each year to the governments of Indonesia and Nigeria in an obvious tax-avoidance scheme orchestrated at Chevron headquarters in California.

That is, Chevron uses its Canadian subsidiary as a vehicle to lower its tax bill in a country where it maintains an estimated $25 billion in assets. Other oil companies also see Canada as a major tax haven, but Chevron takes the cake in terms of taking advantage of the country's tax laws. This article from The Guardian captures part of the problem.

Netherlands: A bombshell complaint filed days ago by several unions documented how Chevron uses the Netherlands to funnel billions of dollars of profits made through its subsidiaries in other countries (among them Argentina, Venezuela and Nigeria) to lower its tax rates in the places it actually operates. Although we don't have the complaint, we do have this Reuters story that documents what's in it. The article explains how Chevron is once again taking the lead in using the laws of an unsuspecting country to screw populations throughout the world who stand to benefit from the proper payment of taxes in the locales where production actually takes place.

Corporations like Chevron often claim that "tax avoidance" is perfectly legal. While we won't grant the company that much credit, "tax avoidance" seems to have migrated into the realm of "tax cheating" when it comes to Chevron's business practices in Australia, Canada, and the Netherlands.

In our experience, this is par for the course for Chevron CEO Michael Wirth and General Counsel R. Hewitt Pate. This duo and their lawyers from the U.S. firm Gibson Dunn have paid bribes to witnesses and created fraudulent evidence to rip off the Indigenous peoples and farmer communities of Ecuador whose cultures Chevron has decimated. Speaking of cultures, Chevron's is clearly rotten.

We will continue to follow the Chevron "tax cheat" story as information emerges.