Chevron: What’s the Scam?

Chevron: What’s the Scam?

When the boss of Strike Energy told an oil and gas conference the other day Australia had the second best tax regime in the world, he wasn't kidding, though his peers at the conference must have been cussing "Shut up Stuart". Particularly the Chevron delegation.

 

Chevron has raked $8bn offshore to its sister companies in interest, dividends and returns of capital over the past two years alone, and paid no tax. Well, okay, the latest set of financial statements for Chevron Australia Holdings show it did pay a smidgeon - $570k last year and $10m the year before - but that may have been paid elsewhere as they also booked a tax benefit of $1.2bn and the ATO transparency data shows them paying zero over the previous six years. 

How good is that for a tax regime? A place where you can pay no tax but still suck out a lazy $8Bn from those dopey Aussies.

 

What's the scam? Gargantuan "related party transactions" designed to siphon billions overseas. Take the eye-watering $37bn in loans, for instance, from Chevron's parent entities overseas. Interest rates 3.66%.

The scam is exploiting a tax regime where tax losses (now towering at $22bn) can be banked forever, deducted against the billions in income (last year almost $6bn). To be fair to Chevvers, there is a global gas glut, the touted LNG export boom is in disarray and their total income fell by $2.3bn year on year.

So they posted a loss of $1.8bn in 2020 from a $1.4bn profit the year prior.

Unabashed in their daylight robbery - indeed undaunted by the biggest courtroom defeat this century at the hands of the Tax Office - Chevvers and their accountants from PwC, had the hide to include this line in their P&L:

"Royalties, excise, licenses and other taxes".

Royalties are not taxes, they are the cost which has to be booked in payment to the owners of the oil and gas these guys are plundering, that is, us, Australians. They are dressing up these normal costs of doing business as taxes while they plunder the people of the country who are hosting them, dud the effete government and regulators who have allowed this to happen, and pay no tax anyway..

https://www.michaelwest.com.au/hornswoggler-chevron-hit-by-historic-court-case/

Chevron once infamously claimed, with the assistance of an "independent experts" report it would deliver $338 billion in royalties and taxes. The reality is it will drain that out to its tax havens and US headquarters.

This is not a good corporate citizen, anywhere. This week, the trial of Steven Donziger kicked off in the US.

"As I head into my Chevron-orchestrated "trial" today after 643 days of house arrest, please never forget what this case is really about," Donziger posted on Twitter last night. This is the lawyer who represented 30,000 farmers and Indigenous people from Ecuador in a case against Chevron related to environmental damage and health effects caused by oil drilling in the Amazon

"After helping win a $9.5b pollution judgement against Chevron, my passport was confiscated and a private Chevron law firm detained me at home without trial."

Chevron, says Donziger, "caused a mass industrial poisoning of the Amazon. 6 courts and 29 judges found it guilty".

Here in Australia, it's the government which prosecutes its citizens for doing the right thing; the likes of whistleblowers Witness K, K's lawyer Bernard Collaery, David McBride, Julian Assange. We can only hope the sinister prosecution of Steven Donziger is not a harbinger of things to come because the power of corporations over democracy remains, inexorably, on the rise, even as their accountability continues to subside. 

Shell: What’s the Scam?

Shell: What’s the Scam?

Shell paid more to consultants of its massive oil and gas business in Australia over the past two years than in paid in tax. What's the scam? 

"Debt-loading" and tax losses; that's the scam. The gas cartel got the LNG export boom horribly wrong. They made Australia the biggest gas exporter in the world, but in the process they overspent, drove up domestic gas prices and took massive asset write-offs which will see them paying next to no tax for years to come.

The latest accounts for Shell Exploration Holdings Australia Ltd have recorded in $8bn in further write-downs. 

It’s time to follow the US and others where tax losses can’t be stored up indefinitely (to deduct endlessly against profits) because it allows the likes of Shell, its peers Exxon and Chevron, and many others to pay tax once every six years or so.

Debt-loading is a key scam for the oil majors, that is, loans from overseas Shell associates to Shell in Australia. The 2020 financial statements show a lift in related party loans to $US10.4bn. This debt-loading saw them rake out $US671m over the past two years in finance charges to other Shell companies overseas.

And the oil and gas majors also have a penchant for scamming the "thin capitalisation" rules (which are designed to stop them carrying too much debt for tax purposes) by issuing extra equity, as Shell did again this time around.

They paid more to consultants over the past two years - $US34m - than they paid in tax at $US29m, and that little bit of tax was quite possibly paid elsewhere in the region. Overall, revenue rose from $US3.5bn to $4.2bn.

They recorded a $US1.8bn tax benefit for last year.

The ATO transparency data for 2017 showed Shell paying zero tax on $A4.5 billion. 

https://www.youtube.com/watch?v=c4SahEbl4Yo&ab_channel=TheWestReport

EnergyAustralia: What’s the Scam?

EnergyAustralia: What’s the Scam?

EnergyAustralia, once Number 2 on the annual Top 40 Tax Dodgers chart, is back to paying no tax again despite pandemic profits last year. Tax once every six years. What's the scam?

Here is a company which bought up a suite of privatised state electricity assets, set up its parent company in the notorious British Virgin Islands, and raked out billions in profits offshore, profits reaped from Australian energy bills.

https://www.michaelwest.com.au/energyaustralia-holdings-limited-2019/

 

Then it was slugged by the Tax Office for a tidy $241m in tax in 2019. But it’s back to its old ways. There is no record of tax payments in 2020 in its cash flow statement, although it estimates $143m payable this year (from a tax benefit of $99m last year).

Seems that EA and its advisers PwC, in the aftermath of a reputational hiding for tax chicanery, have taken their Caribbean tax haven connection out of the picture (cheekily named EnergyAustralia too) and EnergyAustralia Holdings is now apparently directly controlled by Hong Kong juggernaut CLP Holdings, in turn controlled by billionaire Michael Kadoorie.  

It’s weird though. ASIC filings show EnergyAustralia Investments is the parent but when you search this entity it shows EnergyAustralia Holdings is parent. In other words they appear to own each other. Whatever the case, the scam is related party transactions, the most notable, in this latest set of accounts, being $493m in recharges to associates. The parties are not disclosed.

Revenues are down from $5.3bn to $5bn in 2020 but costs plunged further which left EA with a 309m profit (from a $1bn loss previously).

Netflix: What’s the Scam?

Netflix: What’s the Scam?

Netflix Australia has produced a brilliant fantasy. Suspend disbelief now! Netflix claims it made a loss in Australia last year, in the year of Covid when we were locked down watching too much Netflix.

You can watch this latest Netflix fantasy for just $41, the price of its financial statements from the corporate regulator ASIC.

What’s the scam? Netflix's 2020 fantasy accounts show revenue in Australia of just $20.5m. If you assume their 12m subscribers here pay a basic rate of $10 a month, that’s $1.4bn in revenue. So what happened to this $1.4bn?

Netflix and its co-conspirator EY are “doing a Google”, that is, the caper Google used to rely on to pay zero tax before it was forced to resort to another scam. They just book their income here to an associate offshore and the minuscule amount of income they book here is “service” fees from Netflix in the Netherlands and the US.

Tax seeped in at just $581k. They claim they actually turned cashflow negative in the year of Covid.

https://www.michaelwest.com.au/a-netflix-original-dreams-of-theft-downunder/

Google: What’s the Scam?

Google: What’s the Scam?

Google Australia raked in $5.2bn revenue last year and paid the Tax Office … drumroll … zero income tax. What’s the scam?

The scam used to be that Google simply pretended its income from selling services in Australia to Australians really belonged overseas so it invoiced straight from Singapore. No revenue here, ergo no tax. 

Now the scam is how they define revenue. They claim their revenue is $1.4bn but, buried in a footnote is the admission that gross revenue last year was actually $5.2bn. GST mysteriously plunged from $114m to $43m and “service fees” to foreign associates stomped in at an heroic $3.8bn. 

They actually paid $133m in tax in 2019. That's $133m more than Rupert Murdoch's News Australia Holdings paid in six years. But they're back to their dodgy old ways - paying no tax again. Although they recorded a tax charge of $53m - this is what they claim they paid, their cashflow statement shows income tax received (not paid) of $22m last year. They got a tax benefit. That's the scam.

Google's revenue note

  

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