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Transocean caught up in Norway’s biggest ever tax scandal

transocean.jpg

The charge is Norway’s largest
Source:www.deepwater.com

Transocean, the world's largest offshore drilling company, has been hit with accusations that it dodged tax on NKr10 billion ($1.8 billion) of revenue.

Okokrim, the 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 Switzerland.

In 1997, 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," Okokrim's indictment states, arguing that the plan was tax motivated.

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 Islands.

"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 NKr 689 million of tax evasion.

The company might have to pay as much as NKr5 billion including interest, if the charges stick.

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.

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 allegations.

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