OSLO Dec 5 Rig operator Transocean and
three advisers denied charges of tax fraud in connection with
shifting assets between subsidiary companies, at the start of
their trial in Norway on Wednesday.
Norwegian authorities are suing several Transocean
subsidiaries along with their individual advisers, two of whom
are employed by consultant Ernst and Young, for 1.8
billion Norwegian crowns ($320.45 million) in damages.
Transocean is accused of having underpaid taxes in
2000-2002, when it acquired three rivals worth $27 billion and
moved its own headquarters to Switzerland from the Cayman
The alleged underpayments stem from several transactions in
connection with the sale of 12 oil rigs from Transocean's
Norwegian subsidiary to other company divisions, and the company
is accused of several instances of providing tax authorities
with incomplete and misleading information.
Transocean and its subsidiary Arcade Drilling pleaded not
guilty as the trial began on Wednesday, as did the advisers.
Transocean's Norwegian subsidiary, Transocean Norway
AS(TAS), is charged with having provided incomplete and
misleading information when it sold its Polar Pioneer drill rig
to a subsidiary in 1999.
The rig was towed from a repair yard in Norway and taken on
an eight-hour detour outside Norwegian waters, during which it
was sold. That resulted in a tax loss for the Norwegian
government of 689 million crowns, according to court documents.
The company is also accused of having given misleading and
incomplete information regarding the Norwegian subsidiary's sale
of six other drill rigs, which were bought by its holding
company registered in the Caymans.
After the transaction, both TAS and the Cayman holding
company were dissolved, while the funds were re-lent to the
parent company, Transocean Sedco Forex, with no security.
Transocean ended up paying no taxes for the transaction as a
Transocean subsidiary Aracade Drilling is charged with
giving misleading information when moving management operations
to the United Kingdom after its merger with Transocean effective
on Jan. 31, 2001, a move the prosecution claims was motivated by
a wish to avoid heavy Norwegian taxes.
Arcade Drilling was under a threat of having to pay a $28
million balancing charge for not returning one of its rigs to
the UK sectors within a specified time limit, and the
prosecution said that Aracade wanted to change tax status to
Britain to avoid this charge, while the board in effect did not
operate out of Aberdeen, as the company claimed.
The prosecution claims Norwegian authorities lost 217
million crowns as a result in 2002.
Transocean is also accused of giving false information to
Norwegian tax authorities trying to avoid both Norwegian and
Danish taxes when transferring a dividend from a Danish
subsidiary to the Cayman Islands for the year 2001.
The trial is scheduled to continue until September next