Applaud Museveni, Kagina over Heritage London case

By Obed Katureebe

It is now a common story that Uganda won a landmark $434m oil case in the London Commercial Court against Heritage Oil and Gas Ltd. Many congrats to Uganda’s legal team headed by the Attorney General Hon. Peter Nyombi  for having put up a spirited fight to win the country this bounty.

Heritage Oil was mistaken in thinking they could run away minus paying little taxes of $434m to the Ugandan government. This is despite having made a super profit of over $1b, when they sold off their 50% stake to their fellow partners Tullow Oil Plc. Heritage had only invested $150m in the Uganda project.

This was aggravated greed on the part of Heritage who did not feel any sense of responsibility to pay taxes to a poor third world country like Uganda that had facilitated them to make fabulous profit from her natural resources.

President Yoweri Museveni and the URA Commissioner General, Allen Kagina, fought uncompromisingly for Uganda to earn this revenue.  Kagina stood her ground and insisted that Heritage pay the taxes. Hers was not a simple war. She was fighting oil company sharks and at the same time skirmishing with some top lawyers in town, who were busy manipulating some government officials to give biased legal opinions to the effect that Heritage profit was not taxable.

This same group of predisposed lawyers hit a dead rock when they found out that President Museveni had already been correctly briefed. Kagina assembled sharp and patriotic legal brains that included Phillip Karugaba and Herbert Dusabe who consequently briefed the President that Uganda’s laws were clear on Capital Gains Tax. Their advice was lucid. Heritage had to pay.

They further briefed the President that Uganda would win the case in the event Heritage went to any court under the sun.   In a nutshell, Kagina’s resilience and forthrightness which was well protected by the President’s resolve has won Uganda this amount of money.

Many kudos go to President Museveni, who gave Kagina all the necessary support she required to make Heritage pay the taxes. Not only did the President offer Kagina support but he also took the fight head on to prevail over Heritage and Tullow when the two quietly concluded the deal in 2009 worth $1.45b well knowing that Heritage had not reached an agreement with government on the Capital Gains Tax dispute.

The London ruling is of huge significance to Uganda in many aspects. Not only will this judgment give Uganda much needed money but it has also set a precedent to the subsequent commercial litigations of this nature. The message is now clear for any other oil prospecting company in the Albertine Region. That Capital Gains Taxes are obligatory where the company has made a profit.   

The London court verdict further confirms our strong belief in justice and equity before the law. Heritage in its naivety thought Uganda would shy away from going to London and battle them on their home turf. They were in for a rude shock. Uganda was more than willing to square up with them and indeed the submissions by the Ugandan team carried the day.

Finally, this further allays fears from any investor that could be still shy to invest his/her huge monies in Uganda. The fact that Uganda was more than willing to face the adjudication from another country further confirms our faith in the internationally recognised arbitration systems that adjudicate without fear of favour.
 
All the machinations by any oil companies to evade paying Capital Gains Tax especially on that very transaction have been legally fought and that is the very reason the Government of Uganda is at the arbitration court in London.

In order to further safeguards the government interest in the oil sector, the Government of Uganda has since passed new laws that will protect Uganda’s interest in this crucial oils business.

Therefore, whoever is mooting the idea of a bribe or anything of that nature to any official of the Government of Uganda will be day dreaming.

Uganda’s oil resource is a rare resource and the President has made it very clear that he will not accept any sort of arm-twisting detrimental to Uganda’s interests.

The position of the Government of Uganda, and indeed that of President Museveni, remains that all due taxes and royalties from the oil resource shall be fully paid in accordance to the laws of Uganda.