Thursday, 17 November 2016

Cash calls

African treasuries, cash-strapped after the commodity price crash, are trying to recoup their losses by launching law suits against multinational companies. The most sensational is a court ruling in Chad on 5 October that a consortium led by Exxon Mobil should pay the government a fine of US$73.4 billion for non-payment of royalties.

According to the court, the royalties amounted to 44 trillion CFA francs ($808 million) but Exxon Mobil disputed the payments. Exxon Mobil and Malaysia's Petronas, also in the consortium, have appealed the judgement and are now negotiating with President Idriss D├ęby Itno's government.

The ambitions of Zambia's state-owned ZCCM Investments are more modest: it is suing Canada's First Quantum for $1.4 bn., claiming the company took an unauthorised loan of $2.3 bn. at below market rates from the Kansanshi copper mine and underpaid its tax bills. First Quantum, which started negotiating with the government after its share price started falling on the Toronto exchange, said the claims were 'inflammatory, vexatious and untrue'.

Uncharacteristically, Nigeria's legal claims are the most modest in the current round of law suits. It is suing Total and Chevron for undeclared oil shipments amounting to over $600 mn. in 2011-14. And it is seeking a further $400 mn. from ENI, Petrobras and Shell for undeclared shipments in the same period.

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