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Sunday, November 30, 2014
Swiss Role in Aggressive Tax Avoidance by Shell
Swiss Role in Aggressive Tax Avoidance by Royal Dutch Shell
Nov 30th, 2014
by John Donovan.
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By John Donovan
The lead article in The Sunday Times Business section today (authored by Simon Duke and David Smith) says that Britain is at the forefront of a crackdown on corporate tax avoidance – a blitz on tax avoidance by multinationals.
The UK Treasury is planning a consultation on forcing multinationals like Royal Dutch Shell to declare how much tax they pay in every country in which they operate.
Extract
Country by Country reporting would introduce greater transparency into the complex structures used by big companies to minimise their tax liabilities…
It is therefore interesting to note that earlier this year, two organisations – Stichting Onderzoek Multinationale Ondernemingen (SOMO) aka Centre for Research on Multinational Corporations and Friends of the Earth Europe, jointly published a 23 page report entitled “The Role of Switzerland in Shell’s Corporate Structure and Tax Planning.”
It is focussed on Shell’s Tax avoidance and points out the distinction between tax avoidance (unethical) and tax evasion (outright illegal).
EXTRACT
SOMO and Friends of the Earth Europe jointly took the initiative to clarify the role of Switzerland in Royal Dutch Shell’s corporate structure and tax planning. The aim of the research is to highlight the use of low-tax and secrecy jurisdictions by Shell in order to minimize its tax payments in other jurisdictions. This research should be seen in the context of Shell’s extensive global network of mailbox companies in tax havens like Bermuda, the Cayman Islands and the Bahamas, where they pay very little or no tax over their profits. Switzerland was chosen as an example because there are indications that Shell may be using Switzerland for tax purposes, at least since 2005, when the company shifted ownership of its brands and trademarks to a Swiss-based subsidiary, Shell Brands International AG. This company was registered in the canton of Zug, which is a very popular location for multinational corporations because of its particularly low income tax rates for foreign companies and because of Switzerland’s high secrecy regulations, in combination with Switzerland’s extensive network of double taxation treaties. It is hypothesised that Shell’s presence in Switzerland is potentially leading to significant tax losses for developing countries because Shell is able to use the specific advantages of the Swiss financial system (and other secrecy jurisdictions and tax havens) to lower its profits in developing countries, leading to lower tax payments there. Different Shell subsidiaries in Switzerland may play similar roles as Shell Brands International AG and have also been included in the research for this report.
A number of people, including a Swiss tax justice expert, reviewed the report which was supplied to Shell in advance of publication to give the company the opportunity to conduct a fact check and provide missing information. As could be predicted, Shell was not forthcoming.
The royaldutchshellplc.com website is cited as an evidence source for an internal Shell document.
Shell’s tax avoidance machinations are such that the Guardian is quoted as concluding that, “legally speaking, Shell is now simultaneously a British public company, tax-resident in Amsterdam, whose brands are Swiss.”
The report concludes by making recommendations to Shell, including that the company should implement full country-by-country reporting, to live up to their claims of leadership in tax transparency. Policy recommendations are also made to the Swiss Government and to the European Union to end the facilitation of aggressive tax avoidance by multinational corporations. (Closing paragraph from the report).
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ROYAL DUTCH SHELL HISTORY OF TAX AVOIDANCE: 1 October 2011
The TRUTH will set you FREE.
Too honest to sign Shell’s Business Principles?
CEO Ben van Beurden T
By John Donovan
It is a year since Peter Voser left his job as Chief Executive of Royal Dutch Shell Plc to allegedly spend more time with his family. Soon after his surprise early exit, Shell announced a profits warning.
Leaving that contentious issue to one side, I am puzzled that his replacement Ben van Beurden has still not put his name and signature to the Shell General Business Principles document.
As can be seen, as of todays date, it is still displayed on shell.com signed by Peter Voser in his capacity as Royal Dutch Shell Chief Executive Officer.
What is supposed to be an important ethical code pledging honest transparent trading unpinning the entire Royal Dutch Shell business, is woefully and conspicuously out of date.
This has been pointed out to Shell several times in the last year, but the document remains out of date thereby undermining the credibility and competence of the company and its senior management.
Doesn’t anyone care?
Perhaps Ben van Beurden does not one to put his name to a sham, given that Shell’s track record proves that in reality, the oil giant does not abide by the pledges trumpeted in its claimed business principles.
EXTRACT
The Form 20F declarations about Shell’s claimed hydrocarbon reserves filed with the US Securities & Exchange Commission ten years contained multiple references to Shell’s business principles. This was in an effort to bolster confidence in the false information provided. The huge scandal involved the Shell Group Chairman Sir Philip Watts (later sacked) at a time when Ben van Beurden was his private assistant and advisor.
Mr van Beurden has shown himself to be more honest that his predecessors, candidly admitting that he puts shareholder commercial interests before what he described as geopolitical considerations – Russia’s invasion and annexation of Crimea.
He may be a religious man who simply does not want to associate his name with such a discredited, dishonest ethical platform.
There must be some logical reason for the withholding of his name and endorsement for a whole year from such an important undertaking.
EXTRACT
The TRUTH will set you FREE.
OPEC KEEN TO SELL ALL WHAT THEY HAVE WHILE OIL IS STILL VALUABLE
Repercussions Of Lower Oil Prices On Energy Sector
Published: November 29, 2014 at 11:11 am EST
By: Micheal Kaufman
By: Micheal Kaufman
The decision by the Organization of Petroleum Exporting Countries (OPEC) to maintain production at 30 million barrels of oil per day came as a shock for most oil companies. As a result crude oil prices fell drastically and West Intermediate Texas (WTI) was down 10% yesterday, to $66.15.
The fall in oil prices has severely affected numerous economies and companies. It was far more than what was expected by experts. Last month, before deciding to take on investment projects, BP plc. (ADR) (NYSE:BP) assumed Brent crude oil prices would be at $80. Goldman Sachs had predicted the price of WTI would hover around $75 for the first three months of next year. Russia had expected average crude oil prices to remain at $100 and had planned its budget accordingly.
US energy stocks also suffered as investors dumped them. Among the most-affected companies were Continental Resources (NYSE:CLR), Exxon Mobil (NYSE:XOM), BP, and Royal Dutch Shell plc. (ADR) (NYSE:RDS.A). Continental Resources saw its stock decline by 19.9% yesterday, to $41. Exxon, BP and Shell are currently trading at $90.5, $39.32 and $66.4, each falling 4.1%, 5.4% and 6.9%, respectively.
The most influential member of OPEC, Saudi Arabia had indicated that the curb in oil production would have allowed the US to capture Saudi Arabia’s market share. Thus, it was necessary for OPEC to maintain production, driving down prices and making it unprofitable for a lot of US companies. Companies such as BP and Shell are clearly suffering due to the lower oil prices as they have higher costs of production.
According to a Shell spokesperson, the company, before taking on an investment, must be certain that it is able to break even at $70 per barrel.
Although many oil producers are expected to suffer, oil consumers are bound to benefit. According to the International Air Transport Association, jet fuel constitutes around 30% of an airline’s cost, thus allowing the global airline industry to save $7 billion on fuel costs compared to 2013. This has seen airline companies such as Delta Air Lines, Inc. (NYSE:DAL) and American Airlines Group Inc. (NASDAQ:AAL) reporting year-to-date (YTD) returns of 32.08%.
The decline in commodity prices has also led some airline companies to hedge their current positions and lock on lower oil prices in order to gain if prices were to rise again. One such company is Ryanair Holdings plc. (NASDAY:RYAAY), which hedged 90% of its expected full-year consumption. The lower oil prices also contributed to falling raw-material prices. Anglo American plc. (ADR) (OTCMKTS:AAUKY) indicated that each $10 fall in oil price allows the company to earn an extra $44 million in annual earnings.
Falling oil prices have also led companies and asset managers around the world to restructure their investments by moving away from the energy sector. UK-based Fastnet Oil & Gas PLC. indicated giving back $25 million to its shareholders by moving out of the energy sector and going into medical technology. Asset managers also are pulling out investments from energy companies. Aberdeen Asset Management did the same and took out its investment from Nigeria and reinvested it in Turkey, which is a big oil importer.
The TRUTH will set you FREE.
Nigerian Parliament Fines Shell 3.96 Billion
Nigerian Parliament Fines Shell 3.96 Billion For Bonga Oil Spill
Published: November 29, 2014 at 6:55 am EST
By: Micheal Kaufman
By: Micheal Kaufman
Nigeria is a member of the Organization of Petroleum Exporting countries and is the largest crude oil producer in Africa. At one point, the country had a great demand for its oil exports in the US and enjoyed high profit margins. However, the US shale oil boom has taken this advantageaway from Nigeria. The hydraulic fracturing techniques have allowed the US to produce oil that is quite similar in composition to the oil produced in Nigeria, reducing its reliability on Nigeria for oil imports.
Furthermore, Nigeria has experienced a fall in foreign investments as major investors like Royal Dutch Shell plc (ADR) (NYSE:RDS.A) are now involved in asset divestitures due to the oil theft in the region. Recently, Shell also decided to shut down a pipeline due to leakage, which has been a major source of oil revenue for the country. Therefore, the country is going to suffer heavily following Shell’s actions.
In pre-market trading today, Shell’s shares of Class “A” American Depository Receipts (ADR) dropped 6%. Over the past three months, Shell stock has declined 11.6%.
However, it seems that Nigeria is not going to let go of Shell that easily. Nigeria’s National Assembly has bombarded the oil giant with a $3.96 billion fine. The fine has been imposed as a punishment for the 2011 oil spill in the Bonga oilfield in which Shell’s subsidiary, Shell Nigerian Exploration and Production Company, was involved.
Numerous state agencies of Nigeria have spent a lot of time analyzing and researching the oil spill. Initially, the agencies felt that the fine should have been $11 billion. However, the assembly finalized a penalty of $3.96 billion after going through a report by the National Oil Spill Detection and Response Agency (NODRA).
According to NODRA’s report, around 40,000 barrels of oil were spilled in 2011. The oil spill covered an area of 950 square kilometers and heavily disrupted the environment. Before the spill, the Bonga oilfield had been producing 200,000 barrels of oil per day. Local fishermen who heavily relied on fishing in the area were also severely affected.
Although Shell initially assumed responsibility for the spill and cleaned the area, decided not to comment over the recent development. The company on several occasions was approached by the environmental committee over the issue but was constantly rejected by the company. Therefore, the committee decided to use NODRA’s report as a lead agency in the oil spill management.
Other than the Bonga oilfield spill, Shell was also alleged of involvement in two oil spills in the Niger delta in 2008. In June, the company offered $51 million in compensation, which was rejected. The compensation was offered to the 15,000 individuals living in the Bodo community.
Shell is bound to face considerable pressure owing to the newly-imposed fines. The United Nations Environment Program has consistently blamed the European energy company for not dealing with the Nigerian spills in an efficient manner. How Shell will react to the non-binding fine remains to be seen. However, one thing is certain that the Nigerian Government is not going to let Shell divest its assets and leave the country without paying a heavy price.
The TRUTH will set you FREE.
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