[Graeme]

The Secret World of Oil

Oil powers our cars and our economy. But it’s also a fuel source for bribery and corruption across the globe. Ken Silverstein, an award-winning investigative journalist and former Washington editor of Harper’s Magazine, shines a light on the industry’s darkest secrets in his new book, “The Secret World of Oil”. In this Squaring Off, we ask Silverstein five questions about what he discovered during his investigation, and what we can do to fight back against corrupt oil tycoons.

Q1: You argue that the oil industry is actually the most corrupt industry in the world. How?

Since the Foreign Corrupt Practices Act was passed in 1977, there have been more bribery cases involving the energy industry than any other sector. The energy business has also been hit with greater collective fines under the FCPA than any other industry.

If you’re selling widgets, you make a small amount of money on a lot of contracts. When you’re in the oil business, you’re chasing a small number of huge deals that can be worth tens of billions of dollars. “Corruption isn’t endemic in the energy business because people in the industry are more corrupt or have lower morals but because you’re dealing with huge sums of capital,” Keith Myers, a London-based consultant and former BP executive, told me. “A million dollars here or there doesn’t make any difference to the overall economics of a project, but it can make a huge difference to the economics of a few individuals who can delay or stop or approve the project.”



Q5: Are there specific organizations or individuals working to expose the industry’s corruption? If so, what can we do to support them in their fight?

There are lots of great organizations out there. I’d highlight Global Witness (which is based in London and has offices in DC): It does original, first-rate investigations about corruption in the natural resources industry – work as good as anything being done at top media investigative units. Human Rights Watch also does amazing investigations about corruption in the energy industry. There’s a Swiss outfit called the Berne Declaration that does a great job tracking the commodities business. With the traditional media business retracting, the work of groups like these are more and more important.

theepochtimes

[BobInget]

I realize focus of "Secret World of OIL" Is corruption. In light of current events, powerful struggles for world oil---- linkages should become THE daily topic.. Books, even e.books can become dated hours
after release. The theme remains the same; oil is the most vital of all commodities.

Disturbances we are seeing almost worldwide HAVE BEEN BREWING for years. The fact that we are witnessing a pot boiling over now means only the heat has been on too high too long.

Wars, all wars must be ultimate corruption's. People are either asked to give up their lives for false reasoning or in the case of civilians lives are taken on false premise. "WE are only defending ourselves, the 'enemy is hiding among the population, besides the US, UK do the same all the time".
Ultimately it's ALWAYS civilians that do the suffering. Does anyone doubt oil wars in Syria, Ukraine, Libya,
Gaza, Nigeria, Iraq are about something else?

[JMB]

Yes, the oil industry is corrupt, but name one industry that isn't.

Going into the oil business isn't corrupt, in itself - it's not illegal. I would say central banking (the Fed) is corrupt, first because of the way it was criminally seized by the banksters, from government control and regulation. Second, by the way it is run; bailouts, money printing, insider trading, crony deals, etc. Thirdly, the money scale involved is much bigger.

[Graeme]

oil industry is actually the most corrupt industry in the world

[rockdoc123]

what a complete load of BS

There is corruption everywhere...it exists in the US gov't it exists in the Canadian gov't and pretty much everywhere. It comes down to where you want to look for it. The Foreign Corrupt Practices Act was put in place to get rid of most of that internationally and it was targeted at oil/gas and mining and surprisingly it looks at Foreign Corrupt Practices not Domestic Corrupt Practices. I know the law very well and over the years the companies I worked for always spent an inordinate amount of time making sure we were compliant. And the recent changes which eliminate facilitating payments are the classic (you have to behave like us regardless of your culture) approach that ignores that this methodology has been one that has worked in places like Indonesia for as long as anyone can remember. Is it right or is it wrong.....that's a perception. Outright bribing of gov't officials is obviously a wrong thing, but paying someone a few ringhat to make sure he actually shows up to work the day he is supposed to is just part of the culture.

Oil companies get hung with this picture of corruption mainly because they are basically the only companies who have been out there trying to do business in places like West Africa, the Middle East, FSU etc......places where what we call corruption is just the normal way of doing business for them. I don't agree with it but the fact is most of these places don't see anything wrong with it as it has been the way they have always done business. While trying to do deals in Libya (as an example) I was approached numerous times by individuals who said they could guaranty this or that for a payment and my response always was we would not do that. Never heard from them again. The problem becomes that amongst all of the oil companies working overseas there are invariably a few that are run by individuals with low moral and respect for the law. This isn't dissimilar to any business anywhere...the vast majority are honest, law-abiding business people there are just a few who think they can play the edge and get away with it. Also in large companies there is always someone who has criminal intentions who inadvertently ended up in a position he shouldn't have.

Does this mean the industry as a whole is corrupt? Hardly. It suffers from the same thing every other part of our world does....corrupt individuals in places of power. I guess you can choose to put laws in place to sort those folks out after the fact or alternatively you can engender a society that doesn't accept that sort of behavior.

[Graeme]

Increasing global demand is driving new oil and gas discoveries. Over the next 20 years, it’s expected that 90 per cent of production will come from developing countries. Yet many countries rich in oil and gas are home to some of the world’s poorest people. How can this happen? Too often, wealth stays in the hands of politicians and industry insiders. Revenues don’t get published. Payments made to governments to exploit resources remain secret. Bribery and embezzlement go unchecked. 

Many oil and gas companies protect the identities of their equity holders and subsidiaries. This allows corrupt leaders to hide stolen funds unnoticed. Inadequate financial statements make it easy to disguise corrupt deals, and impossible for any of us to monitor them. Many oil and gas companies don’t publish information country by country. This allows them to hide the royalties, taxes and fees they pay. But without this information, we can’t hold governments to account for the money they receive.

transparency.org

Royal Dutch Shell: The World’s Dirtiest Oil Company

“[Royal Dutch Shell PLC a.k.a. Shell Oil Company a.k.a.] Shell is a corporate member of the American Legislative Exchange Council (ALEC) as of 2011.  G. Edward Pickle, Senior Government Affairs Counsel of Shell Oil Company, is Shell’s representative to ALEC’s Civil Justice Task Force.  It was a ‘Chairman’ level sponsor of the 2011 American Legislative Exchange Council Annual Conference, which in 2010, equated to $50,000.  Shell also sponsored the Plenary Session speeches on August 4th, 2011, by ALEC ‘scholars’ Arthur B. Laffer and Stephen Moore…  ALEC is not a lobby; it is not a front group.  It is much more powerful than that.  Through ALEC, behind closed doors, corporations hand state legislators the changes to the law they desire that directly benefit their bottom line.  Along with legislators, corporations have membership in ALEC.  Corporations sit on all nine ALEC task forces and vote with legislators to approve ‘model’ bills.  They have their own corporate governing  board which meets jointly with the legislative board.  (ALEC says that corporations do not vote on the board.)  They fund almost all of ALEC’s operations.  Participating legislators, overwhelmingly conservative Republicans, then bring those proposals home and introduce them in statehouses across the land as their own brilliant ideas and important public policy innovation – without disclosing that corporations crafted and voted on the bills.  ALEC boasts that it has over 1,000 of these bills introduced by legislative members every year, with one in every five of them enacted into law.  ALEC describes itself as a ‘unique,’ ‘unparalleled’ and ‘unmatched’ organization.  It might be right.  It is as if a state legislature had been reconstituted, yet corporations had pushed the people out the door.  Learn more at http://ALECexposed.org “

[rockdoc123]

Since the Foreign Corrupt Practices Act was passed in 1977, there have been more bribery cases involving the energy industry than any other sector. The energy business has also been hit with greater collective fines under the FCPA than any other industry

I did an experiment to check the voracity of the claim that oil companies are at the forefront of corruption by checking to see what percentage of companies currently under Foreign Corrupt Practices Act investigation are oil companies.

In 2014 there were 4 out of 103 companies under investigation that were oil and gas companies, in 2013 there were 5 out of a total of 91 and in 2012 there were 4 out of 88.

That’s about 5% or so on average….hardly seems to be the vast majority of perps.

If you compare it with other industries Banks and Financial institutions you see that in 2014 they made up about 8% of the total…..entertainment also figured as prominently as oil companies with the likes of Comcast, Dreamworks, National Geographic Universal Entertainment, Viacom and Walt Disney corp all showing up on the list of companies being investigated.

When you look at the list of top ten enforcements 3 of them are oil companies. Brown & Root for payments made to Nigerian officials in 1995, Total for payments made to officials in Iran in 1995 and Weatherford in Iraq for violation of the oil for food program. Digging through the year by year enforcements, however, doesn’t show that oil companies are more prominent in the number of violations or enforcements….the total value of the enforcement to oil and gas ends up being higher simply because the nature of the offense has large value not because there are more charges. At least that’s according to the FCPA lists.

Something else that should be pointed out is any public company in Canada or the US has to submit audited financials each year. It is pretty much impossible to hide large payments. In Canada the end of this year will see formal requirements for all companies to post all payments made to foreign entities along with normal filings on SEDAR. Many companies such as Shell, Tullow, Talisman etc already volunteer that information.


http://www.fcpablog.com/blog/2014/4/2/the-corporate-investigations-list-april-2014.ht

[ROCKMAN]

Doc - True story: about 6 years ago someone accidentally showed me a printed Chinese budget for dealing with their efforts to gain drilling rights in a particular African country. Along with the typical categories of drill pipe, transportation, etc. and dozens of other categories in a very formal Excel ss there was one line that caught my eye: "Bribery Account for Local Politicians". You have to give the Chinese credit for being up front when it comes to how a company has to do business with many foreign govts.

Heck, about 40 years ago on a field trip to Mexico the official at the border crossing told my professor for $X we wouldn’t have to unload all our equipment. Being poor students with a cheap professor we spent two hours unloading our equipment. Once unload the official just walked past the equipment and put several white chalk checkmarks on some of the equipment. And then we spent 2 hours reloading it all.

So had he paid would the professor be subject to legal action because he “bribed” a foreign gov’t official?

[rockdoc123]

So had he paid would the professor be subject to legal action because he “bribed” a foreign gov’t official?

up until recently no, this would have been classified as a facilitating payment which were legal as long as documented. The new law makes even faciltating payments illegal. A facilitating payment is basically something you should be entitled to anyway and you are paying to "expedite" it. This sort of thing is very common in SE Asia so there is some problems companies down there are now facing.

As a young geologist I used to put a couple of cartons of cigarettes in my duffle bag on top of everything else. I never smoked but when I went through cutoms in various parts of North Africa the customs agent would open my duffle without a word take out the cigarettes and set them aside, zip up my bag and wave me through. Meanwhile the various tourists were getting their bags torn apart and given the third degree. Can't do this anymore either.

[Graeme]

The Price of Oil: Corruption

When you have a bad argument, the only way to win is to corrupt the decision-making process. And that’s exactly what the fossil fuel industry does: in order to feed their greed for massive profits, the oil, gas, and coal corporations buy support for their polluting practices.

A recent Financial Times article (subscription) noted that “[t]he oil and gas industry was subject to the most prosecutions for bribery and graft in the UK of any sector over the past four years” and that “most of [these cases] involved payments made abroad, or kickbacks to foreign government officials.”. In the United States, regulations and legislation to promote transparency and fight corruption was opposed for years by the oil industry. The worldwide trend of corruption surrounding oil and gas projects is well documented.

The United States is no exception to this global rule.

The fossil fuel industry undoubtedly has a stranglehold on U.S. democracy, bribing elected officials with campaign contributions and pressuring them with millions of dollars of spending in strong-armed lobbying. In return, the industry is provided massive subsidies while raking in mind-boggling profits and giving their executives lavish compensation packages.

Oil companies in particular have been enjoying boom times, while many Americans struggle. In just the first half of 2012, the five biggest oil companies earned $62.2 billion in profits. That’s $341 million each day. So it is clear they have plenty to spend on corrupting politics to feed their greed.

Between January 2011 and June 2012, dirty energy companies spent at least $43.5 million on influencing federal elections in America. This figure includes money spent not only on contributions to sitting members of Congress, but also to congressional candidates who lost elections, presidential races, and the money flowing into Super PACs that cannot go directly to candidates but funds ads and campaigns, giving us a better picture of how much money these companies spend. And that figure quickly and dangerously skyrocketing as the 2012 Presidential election season picks up.

What’s more, the fossil fuel industry spends millions upon millions lobbying the members of Congress that they spend so much money in helping to get elected. In 2011, the oil and gas industry alone spent nearly $150 million in lobbying Congress.

priceofoil.org

[Graeme]

I just about fell off my chair when I saw this report. It seems that our government is following the US! Hilarious if it wasn't so tragic.

Oil companies hosted during Rugby World Cup

Energy and Resources Minister Simon Bridges says the "modest amount" of money spent promoting New Zealand for oil exploration has paid off significantly for the country.

Mr Bridges confirmed today New Zealand Petroleum and Minerals spends around $200,000 a year on promotions, including bringing oil executives to New Zealand and sending staff to conferences overseas.

A Wall Street Journal article says the Government brought 10 oil company executives to New Zealand for the Rugby World Cup in 2011 at the taxpayers' expense.

The executives were wined and dined, including sailing and wine tasting.

However, Mr Bridges says the Government didn't make a secret of the fact it wanted to use the World Cup to encourage business opportunities.

"Ultimately, yes, we know people came to the Rugby World Cup. The Government wanted to see our opportunities leveraged from the World Cup and the dividends have been in the billions of dollars," he says.

But the Green Party has criticised the Government for its crony capitalism.

3news

[Keith_McClary]

any public company in Canada or the US has to submit audited financials each year. It is pretty much impossible to hide large payments.

How about giving lucrative jobs or contracts to the politicians' relatives?

[Graeme]

Documents: Cheniere Fuels ALEC’s New Push for Fracked Gas Exports

Today, legislative and lobbyist members of the American Legislative Exchange Council (ALEC) voted on model legislation promoting both exports of gas obtained via hydraulic fracturing (“fracking”) and vehicles powered by compressed natural gas (CNG).

Dubbed a “corporate bill mill” by its critics, ALEC is heavily engaged in a state-level effort to attack renewable energy and grease the skids for exports of U.S. oil and gas. Today's bills up for a vote — as conveyed in an ALEC mailer sent out on June 25 by ALEC's Energy, Environment and Agriculture Task Force — are titled “Resolution In Support of Expanded Liquefied Natural Gas Exports“ and “Weights and Measures and Standards for Dispensing CNG and LNG Motor Fuels.”

An exclusive investigation conducted by DeSmogBlog reveals that Cheniere — the first U.S. company to receive a final liquefied natural gas (LNG) export permit by the U.S. Federal Energy Regulatory Commission (FERC) — has acted as the lead corporate backer of the LNG exports model resolution.

Further, Clean Energy Fuels Corporation, owned by energy baron T. Boone Pickens, of Pickens Plan fame, and trade associations it is a member of, served as the main pusher of the CNG model resolution.

ALEC has served as a key vehicle through which the fracking industry has curried favor and pushed for policies favorable to their bottom lines in statehouses nationwide. Now ALEC and its corporate backers have upped the ante, pushing policies that will lock in downstream demand for fracked gas for years to come.

With Cheniere becoming an ALEC dues-paying member in May 2013 and with America’s Natural Gas Alliance (ANGA) — the fracking industry's tour de force — crowned an ALEC member in August 2013, it looks like many more fracking-friendly model bills could arise out of ALEC in the months and years ahead.

LNG exports will serve as the focus for part one of this series, while CNG vehicles will serve as the focus for part two.

desmogblog

[Graeme]

Big Oil Companies Pay Just A 11.7 Percent Tax Rate, Report Finds

Big oil companies pay 23.3 percentage points less in tax than the rate typically imposed on corporations, according to a new report.

The report, published by Taxpayers for Common Sense, found the U.S.’s 20 largest oil and gas companies paid 11.7 percent in taxes from 2009 to 2013. That’s significantly less than the statutory corporate tax rate of 35 percent, which is typically what corporations pay if they make more than $18.3 million in a year. And the smaller oil firms — those smaller than major firms like ExxonMobil or Chevron — paid even less tax — 3.7 percent, according to the report.

The companies achieved this low rate largely due to “special provisions” in the tax code that allow them to defer large amounts of their taxes. In many cases, the companies were able to defer “more of their federal income taxes than they actually paid during the last five years,” the report stated.
“If an independent oil and gas company constructs an asset like an oil rig, for example, it can claim a tax deduction for all of its intangible drilling costs (IDC), which include the costs of designing and fabricating drilling platforms,” the report explained. “This allows the company to immediately deduct all of these costs from its taxable income.”

Many of these provisions that allow the oil and gas companies to defer their taxes aren’t available to other U.S. taxpayers. Therefore, these provisions give the companies “a significant tax advantage.”
“In effect, these companies are financing significant parts of their business with interest-free loans from U.S. taxpayers,” the report reads.

thinkprogress

[rockdoc123]

The misunderstanding of what is a subsidy or a tax incentive, why it was put in place and who all benefits from it runs rampant in the activist press. A bit of reality check is worthwhile

http://www.forbes.com/sites/davidblackm ... r-big-oil/

The truth is that the oil and gas industry receives the same kinds of tax treatments that every other manufacturing or extractive industry receives in the federal tax code. There is nothing uncommon or out of the mainstream of tax treatments about any of the provisions that have been repeatedly proposed for repeal.

Basically, Percentage Depletion is the oil and gas industry’s version of a depreciation deduction for its main asset, which is the oil and natural gas in the ground, commonly known as its reserves. Every industry of any kind is allowed a depreciation deduction on its assets under the U.S. Tax Code, but, far from being a “subsidy” for “big oil”, this tax treatment was in fact repealed for all integrated oil companies, i.e., ExxonMobil, Shell, BP, etc., in 1975, and is today available only to independent producers and royalty owners. So repeal of this extremely long-standing, completely common tax treatment would have no effect on “big oil” at all, and would in fact hit small producers and royalty owners harder than anyone else.
Another great example of the specious mischaracterization of these tax treatments is the Manufacturer’s Tax Deduction, more commonly referred to as Section 199. The Section 199 provision was enacted by congress in 2004 as a means of encouraging manufacturers to relocate overseas jobs to the U.S., and is in no way specific to or limited to the oil and gas industry. In fact, the oil & gas industry’s ability to take advantage of this provision has already been singled out for limitation – in 2008, Congress reduced the industry’s deduction under this provision to 2/3rds of what other manufacturing industries are allowed to deduct.
The tax code contains a couple of credits related to the oil and gas industry – the Enhanced Oil Recovery (EOR) Tax Credit, and the Marginal Well Tax Credit. Far from being “subsidies” to “big oil”, these tax credits are used almost exclusively by small to mid-size independent producers who tend to become the operators of marginal oil and gas fields as they age and are divested by the larger companies. The EOR credit was implemented in 1990, and the Marginal Well Credit was signed into law by President Bill Clinton in 1994.

Finally, let’s talk about Intangible Drilling Costs (IDCs), another feature of the federal tax code that will enjoy its’ 100th birthday in 2013. Basically, IDCs are the costs incurred by the oil and gas industry in the drilling of its wells. Since drilling wells is the only means of finding oil and natural gas, IDCs essentially amount to what any other industry would be able to deduct as a part of its cost of goods sold, a concept of accounting and tax law as old as the tax code itself.
Independent producers and royalty owners are allowed an election to either a) expense these costs in the year they are incurred, or b) amortize them over a 5-year period. Again, most media reports commonly characterize this as a “subsidy” for “big oil”, as does the Obama Administration. The truth is that “big oil” – the ExxonMobils, Chevrons, Shells and BPs of the world – benefit much less from this tax treatment, it having been severely limited to them by congress in 1986, and again in 1992. And the truth also is that IDCs are not a “subsidy” to anyone engaged in the oil and gas business

What is also lost on those who want tax incentives removed from oil and gas is the concept of who actually benefits from those incentives. Oil and gas activities in North America provide a significant amount of jobs both directly and indirectly through the service industries and other trickle down economic impacts. IF the consumer still needs energy and the tax incentives are removed then that energy is going to cost more. It might surprise you but the return on capital in the oil and gas industry is much lower than other industries such as high tech. Additional costs to the producer (which in this case would be due to removal of tax incentives) would result in immediate higher costs to the consumer through necessary higher energy costs. Higher taxes in the US or Canada will drive domestic producers to do more and more business overseas which ends up having the opposite result that would be hoped from removing tax incentives....rather than taxes from oil companies rising they would actually fall.

[StarvingLion]

Look Graeme, the business leaders are threatening to leave again. If only these professional liars would keep their promise and actually leave, but no, they are liars, afterall. The engineers (I don't mean the phoney petroleum "engineers") wouldn't shed a tear.

[Graeme]

Well, it appears that some have already left or at least they're listing the companies as off-shore-entities to avoid paying tax! No wonder tax rates as so low for "smaller" o/g companies. Notice the ones listed below that are o/g companies; not all of them are however.

These are the companies abandoning the U.S. to dodge taxes

It is a tax trick that has been around for years, but the pace of companies moving their headquarters overseas to lower their tax rate has sped up in the last decade.

American firms have moved overseas at a time when a growing number of countries have reduced tax rates. These "inversions" have been taking place as Congress remains at odds over lowering the corporate tax rate of 35 percent, one of the highest rates in the world.

The Obama administration and many lawmakers agree that tax inversions, shelters and all other maner of tax alchemy are an outgrowth of a broken corporate tax code. Yet they say the failings of the tax system are no excuse for companies not to pay their fair share.

Democrats on the House Ways and Means Committee recently posted a nifty chart of companies that have inverted to lower their tax bills since 1983. We took the information a step further by adding where the companies moved their headquarters, and when available how much revenue they earned last year.

washingtonpost

[rockdoc123]

Well, it appears that some have already left or at least they're listing the companies as off-shore-entities to avoid paying tax! No wonder tax rates as so low for "smaller" o/g companies. Notice the ones listed below that are o/g companies; not all of them are however.

I believe this shows a healthy misunderstanding of how this all works. Lets use Weatherford as an example. This article suggests they are incorporated in the Bahamas when in fact they moved their head office for worldwide operations to Switzerland. The US office in Houston is an office just like the one they have in about 100 other countries they operate in. As should be expected they pay taxes in each jurisdiction where they have business and they are governed by those laws. Whether their head office is in Barbados or Switzerland or Ireland it does not affect how much tax they must pay in each of those jurisdictions. Any income they make in the US from operations is subject to the same tax laws as any other company operating in the US. They are not expected to pay taxes in the US on income they incur from other jurisdictions as long as they are paying tax in those jurisdictions.

Another example in the list shows the author nor Graeme have done their homework. Triton Energy which was acquired by Hess was indeed registered in the Caribbean but it did not derive any income from US operations...all of their income came from Latin America, Africa and SE Asia. They would not have paid tax in the US on the income from those countries as they would have already been taxed there (tax treaties). When Hess acquired the company they simply acquired the registered company at the Caribbean level. Hess pays US income taxes on all of the income it generates in the US, it also pays tax in all of the jurisdictions it operates in worldwide such as Qatar, Brazil, UK etc

[Graeme]

The dispute you have is not with me but with the reporter for the Washington Post. I couldn't help notice the comment at the end of the article:

Most countries tax corporations under what is called a territorial system, under which income is taxed only in the country where it is earned. Those based in America, however, are taxed on earnings everywhere. That creates an incentive for the move Walgreen was considering, known as an inversion, as well as an incentive to keep money overseas and thereby escape the American levy.

I didn't know what a tax inversion was so I looked at wiki:

Tax inversion, or corporate inversion, is the relocation of a corporation's headquarters to a lower-tax nation or corporate haven, usually whilst retaining its material operations in its higher-tax country of origin.[1][2] The term is most frequently used in relation to U.S. corporations. Corporate inversions are a relatively recent phenomenon; although it is difficult to be definitive, the practice first became prevalent in the 1990s with U.S. corporations seeking to relocate to tax havens such as Bermuda;[3] but more recently because of changes in the U.S. law publicity has focused upon corporate inversions conducted by way of merger with companies in lower tax European or Asian countries. The issue was subjected to a great deal of publicity in April 2014 by the proposed merger between Pfizer and AstraZeneca in 2014.[4][5]

Tax inversions are a form of tax avoidance. They are driven by a combination of factors, but the most prevalent factor is that the U.S. tax code (unusually amongst developed nations) seeks to impose income tax on profits earned abroad by American corporations.[6] This creates a strong incentive for American companies with large overseas markets to seek to recharacterise themselves as a foreign corporation if they want to return foreign earnings to stockholders without double taxation.[7]

Tax inversions as a tax-reduction maneuver have become a public policy issue, as substantial tax revenues are lost.[8][9][10][11] Politicians and government officials including Barack Obama[12] and Jack Lew[13] have issued statements calling tax inversions "unpatriotic", and various proposals have been discussed to prevent tax inversions where the relevant corporation is less than 50% foreign owned. The Economist has called recent calls in America to restrict companies from relocating abroad by way of merger "misguided", and called for wider tax reform to address what it describes as more fundamental flaws in the American corporate tax system instead.[14]

[rockdoc123]

Tax inversions are a form of tax avoidance. They are driven by a combination of factors, but the most prevalent factor is that the U.S. tax code (unusually amongst developed nations) seeks to impose income tax on profits earned abroad by American corporations.[6] This creates a strong incentive for American companies with large overseas markets to seek to recharacterise themselves as a foreign corporation if they want to return foreign earnings to stockholders without double taxation.[

This seems incorrect. US oil and gas companies who pay taxes on income earned in say Indonesia would receive a foreign tax credit. The only tax that the US would charge is an amount they deemed is not covered by the FTC. As an example a US company might be working in a jurisdiction with a 27% marginal tax rate whereas its marginal tax rate in the US is 30% in which case they would have 2% tax outstanding in the US after the FTC was applied. Double taxation does not make sense.

The point I'm really making is that none of the oil and gas companies listed in this analysis have either their sole or majority of their business in the US. As a consequence their US office is simply a local country office, not a head office. Why should they be forced to have their head office in the US?