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Heritage Oil arbitration case in London deprives Ugandan citizens of right to information

23rd August 2012

PRESS RELEASE – EMBARGOED UNTIL 00:01 GMT+1 TUESDAY 28.08.12

A closed-door London arbitration tribunal between Heritage Oil and the Government of Uganda denies Ugandans the right to information about the management of the country's critical oil wealth, claim campaign groups and civil society leaders. On the day of the opening of the tribunal, the groups are calling for the proceedings and the case’s outcome to be open to the public.

The tribunal will decide whether UK-listed Heritage Oil should pay US$435 million in capital gains tax to the Government of Uganda – an amount equivalent to 10% of this year’s Ugandan Government expenditure. Under tribunal rules the proceedings will take place ‘in camera’ meaning that there is no public access and that all documents, proceedings and outcomes will be confidential.

“Oil could be a blessing or a curse for Uganda. But the sector has been marred by secrecy, close executive control and corruption allegations from the start,” said Mr. Henry Bazira, the chairperson of the Civil Society Coalition on Oil. “This closed-door arbitration compounds things by robbing Ugandans of access to vital information about how their resources are being managed. Greater transparency now is vital to restoring confidence in the Government’s handling of the sector.”

The tax dispute dates back to Heritage Oil’s sale of rights to two oil blocks in Uganda’s Lake Albert region to the UK-listed Tullow Oil in July 2010. The Ugandan Revenue Authority claims Heritage Oil owes US$435 million in capital gains tax from the US$1.45 billion sale. Heritage Oil disputes this assessment. The case has already been heard by the Uganda Tax Appeals tribunal, which ruled in favour of the Government.

“Ugandans do not understand why their Government is being forced to spend millions of pounds on a tax dispute thousands of miles away in London when it has already been decided by Uganda’s courts,” Said Dickens Kamugisha, chair of the Oil Watch Coalition of NGOs. “They understand even less why the dispute is taking place behind closed doors and this secrecy is making them deeply mistrustful.”

Uganda is in the process of passing crucial new oil laws, and will soon begin allocating the remaining rights to its oil fields. Civil Society Organisations are now calling for changes in the proposed laws to ensure that all future deals stipulate arbitration takes place in public view, and that oil contracts and associated documents are made public.

“If Heritage Oil win this case and avoid paying tax, there will be a deep sense of injustice in Uganda for many years to come,” said George Boden, a Campaigner at Global Witness. “Last year the UK provided 84 million pounds in aid to Uganda. As one of the country’s biggest donors we need to question the hypocrisy of a London arbitration process which deprives Ugandan civil society of the ability to hold their own Government to account on vast public assets.”

ENDS_______________________________________________________________

For further information please contact:

George Boden on +44 (0) 7808 767 134 or gboden@globalwitness.org,

Andie Lambe on +44 (0) 7809 616 545 or alambe@globalwitness.org,

Henry Bazira on +256 (0)702 859 475 or watergovinst@gmail.com,

Dickens Kamugisha on +256 (0)782 407 085 or dkamugisha@afiego.org

(PWYP) Winifred Ngabirwe on +256 (0) 771621017 or globalrightsalert@yahoo.com

Notes to editors:

  1. The groups wrote to both the Government of Uganda and Heritage Oil on the 10th of August 2012 to request access to the tribunal proceedings and the outcome, at time of publication no response had been received by either party. A copy of those letters can be found here: http://bit.ly/PIysdJ and here: http://bit.ly/SqJXr7
  2. There is also a concurrent case in London’s commercial court between Tullow Oil and Heritage Oil, regarding a related dispute. For further details please visit: http://www.carbonweb.org/documents/uganda/2011_Royal_Courts-Tullow-v-Heritage_claim.pdf
  3. Global Witness is a UK based NGO which investigates and campaigns to prevent natural resource-related conflict and corruption and associated environmental and human rights abuses
  4. The Oil Watch Network Uganda is a network of over 110 organizations and individuals committed to ensuring that Ugandans, especially the local communities benefit from their country's oil through good governance.
  5. Publish What You Pay Uganda is a coalition of over 50 national and community based civil society organisations advocating for improved transparency and accountability in the utilization and management of extractives and other natural resource revenues for the well being of Ugandans.
  6. The Civil Society Coalition on Oil is a network of member organizations who seek to collaborate in order to ensure that the use of Uganda’s country’s oil and gas resources contributes to early achievement of poverty eradication and creates lasting value to society.
  7. Additional signatories are; Advocates Coalition for Development and Environment (http://www.acode-u.org/), Greenwatch (http://www.greenwatch.or.ug/), International Alert (http://www.international-alert.org/ourwork/regional/greatlakes/uganda) and National Association of Professional Environmentalists (http://www.nape.or.ug/) .