Norwegian National Authority for Investigation and Prosecution
of Economic and Environmental Crime, states in its indictment
that the Transocean parent company changed its country of
registration from the US to the Cayman Islands in 1999.
The Cayman Islands has long been
regarded as a jurisdiction which companies and individuals can
use to avoid tax and keep their activities secret.
Ten years later, the ownership
was transferred to a newly formed company registered in
"We are unambiguous about
Switzerland's status - it is a tax haven with very deeply
rooted legalised secrecy and lax regulation," said John
Christensen, director of the Tax Justice Network.
Transocean’s Norwegian company, TASA, sold six of
its rigs to group companies registered in the Cayman Islands,
and the remaining six in 2001.
"From 1996/97, Transocean
Group’s master plan was to concentrate the
ownership of the Group’s Norwegian rigs in
companies registered in the Cayman Islands,"
indictment states, arguing that the plan was tax
One of the
indictment’s claims is that one rig, Polar
Pioneer, which was owned by a Norwegian Transocean company and
operated almost continuously on the Norwegian continental
shelf, was towed outside the country’s territorial
waters for eight hours and fifteen minutes in May 1999, during
which time it was sold through a number of group companies to
Transocean International Drilling, registered in the Cayman
"On May 21 May 1999, the rig was
sold while the rig was located outside Norway and Norwegian tax
jurisdiction," an attachment to Transocean Offshore
Norway’s 1999 tax return recorded. "The sale is
thus not subject to Norwegian taxation."
Okokrim asserts that the
information the company provided was misleading and that the
failure to provide details of the true legal status of the rig
could have resulted in NOK 689 million of tax evasion.
Kjelle Inge Gade, a petroleum tax partner at PwC, said that it
is standard practice to move maritime assets before selling
"It's common to ensure anything you're selling is not under any
jurisdiction when you're selling it," said Gade. "It happens
with ships which are not sold in harbour."
Transocean, however, had assets that had been in Norway for an
extended period of time and advisers believe that it was
unlikely the deal was arranged in that eight hour window as it
would have taken considerable preparation.
The company might have to pay as
much as NKr5 billion including interest, if the charges
Transocean rejects all of
Okokrim’s accusations and states that it intends
to clear its name in court, which will result in
Norway’s biggest ever tax evasion case.
"With respect to the claim related to the Polar Pioneer case,
the court concluded that there was no tax evasion," a
Transocean spokesman said. "Transocean believes it has
provided the tax office with proper input for their assessments
based on the requirements of law. The company looks forward to
setting the record straight at the appropriate time in the
"The indictment is based on an inadequate comprehension of the
facts; moreover in our opinion Økokrim base their
conclusions on peculiar and original interpretations of
Norwegian and international tax legislation. We believe we have
a strong case," Erling Lyngtveit, Transocean's defence
Two tax advisers from Ernst
& Young, Einar Brask and Klaus Klausen, are also named by
Okokrim for allegedly aiding and abetting in "providing
incorrect or incomplete information".
Brask refused to comment on the
Ernst & Young defended its employees in a statement.
"Based on Ernst & Young’s knowledge of the
facts of the case and our assessment of the tax questions, we
feel secure that our colleagues correctly related to the then
applicable laws and regulations," the firm said. "We cannot see
that there is any basis on which to indict them for the work
they have done and we are therefore both surprised and
disappointed that Okokrim has taken the step of issuing