Uganda Government hires sh11b lawyers to defend oil Tax case

Thursday August 11, 2011

The Uganda Government has hired an external lawyer at sh11b to defend it in the Heritage Oil case lodged in London, MPs heard yesterday.

The Attorney General, Peter Nyombi, told the legal and parliamentary affairs committee that the lawyer will lead a Government legal team in the arbitration case. The team has not yet been selected.

Nyombi said the sh11b is to cater for arbitration costs, travel expenses and operation costs.

When asked for information about the case, Nyombi declined to disclose details but promised to do so at the end of the meeting.

“The Heritage issue, I will answer it at the end,” he said. He however left the meeting before it ended.

Heritage in May 2011 initiated arbitration against the Government for the release of, among other things, the $405m held by Uganda Revenue Authority following the sale of its interests in Blocks 1 and 3A in Uganda on July 26, 2010.

Heritage sold its stake to UK-based Tullow Oil at $1.45b last year.

In March, the Government signed a memorandum of understanding with Tullow, separating the tax dispute from Tullow’s $2.93b deals with France’s Total and China’s CNOOC. However, Tullow was forced to pay $313m as security for the unpaid tax bill.

In April, Heritage received a claim from the London High Court in which Tullow is seeking to recover the funds.

A month later, Heritage also began action in London against the Government, saying the sale of its assets in Uganda does not attract a capital gains tax based upon “comprehensive advice” from leading tax experts in Uganda, the UK, and the US.

Despite Uganda’s objection to international arbitration, the Government has constituted its legal team headed by Harriet Lwabi, the solicitor general and New York-based Curtis.

The Government has also appointed as its arbitrator, Ahmed Sadej El Kosheri, a senior partner in Egypt-based firm Kosheri, Rashed and Raid.

During the meeting, the MPs questioned the Government’s procurement procedures and demanded that the ministry tables the agreement made with the lawyer. MPs Amooti Otada and Krispus Ayena complained that the money was too much.

By Mary Karugaba: The New Vision Newspaper