November 15, 2019

Worry over ARCO and GE’s unending dispute

By Silas Akpo

THERE is reason to believe that the long-drawn dispute between GE International Operations in Nigeria, GEION and Arco Petrochemical Engineering Company may soon escalate into a full-blown crisis with the potential to seriously threaten the national economy.

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The reason is not far to seek: two leading unions in the oil sector have already issued an ultimatum to go on nationwide strike over the matter. It is a worrisome scenario unfolding rather rapidly in spite of the intervention of the Ministry of Labour and Productivity which on September 24 hosted a settlement meeting in that regard.

The bone of contention is the N1,891,752,241.48, $7,326,125.99, and €328,189.32, withholding tax which General Electric, G.E., deducted from ARCO Group PLC and claimed to have remitted to the Federal Internal Revenue Service, FIRS.

But the grouse is that GE over-reached itself by deducting at 10 per cent instead of the statutory at five per cent for several years in spite of repeated protest in writing by ARCO. The protest had attracted the intervention of the FIRS which in a letter signed by its Chairman, Mr. Tunde Fowler, on August 7, 2019, advised GEION that the applicable deduction was five per cent.

ARCO claims that General Electric is indebted to it to the tune of N1,891,752,241.48, $7,326,125.99, and 328,189.32, being sums comprising over-deduction of withholding tax at 10 per cent instead of the statutorily stipulated five per cent. This is supported by a letter from the Ministry of Labour and Productivity dated October 4, and signed by the Director, Trade Union Services and Industrial Relations, Mrs. O.U. Akpan. The letter reads in part: “All deductions made by GEION on behalf of ARCO substantiated with documentary evidence with the objective of remitting to FIRS, but which were not remitted to FIRS should be refunded to ARCO within three weeks.”

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In the September settlement meeting, with  members of the National Union of Petroleum and Natural Gas Workers, NUPENG; the senior staff union, PENGASSAN; and the Federal Inland Revenue in attendance, it was decided that: “GEION should within seven days apply to the FIRS and request for the refund of the over-deducted sums paid to FIRS as agreed during the reconciliation exercise.” But the meeting obviously failed to achieve its envisaged objective as the multinational company reportedly ignored the decision taken.

Before this  drama began, ARCO was the maintenance subcontractor to NAOC and GEION in the OBOB/Kwale/Ebocha contract. Things, however, fell apart when GEION later terminated the contract, with ARCO accusing the multinational of not only refusing to pay the redundancy and overhaul allowances, but also poaching its staff, and also unilaterally deducting 10 per cent as withholding tax from its transactions with the company.

The face-off soon spiralled into a serious dispute with the FIRS and later the ministry wading in. Indeed, FIRS, the taxing and receiving authority, later denied receipt of a huge chunk of the over-deducted sums. Meanwhile, G.E. continues to be  evasive in its response, failing to provide evidence that it actually remitted the amount it claimed to have deducted on behalf of FIRS.

It is, however, frustrating to note that in spite of the letters by FIRS stating the position of the law on withholding tax in the GEION/ARCO contract, and another letter on January 14, 2019, giving the multinational a seven-day deadline to defray its liabilities or provide evidence of payment, nothing has been done. This is in spite of the letter peremptorily declaring that: “Failure to defray the above liability (225,097.11 euros; $2,626,970.38; N237,443,292.60) or provide evidence of payment within the stipulated time will result to enforcement action taken against you.”

More worrisome is the fact that the over-deductions left ARCO unable to settle the terminal benefits of its workers who are members of NUPENG and PENGASSAN, the two unions which are now poised to embark on a nationwide strike over the injustice arising from this. With mobilisation at full swing, there are indications that the Nigeria Labour Congress, NLC, and the Trade Union Congress, TUC, are also being wooed to embrace and support the planned strike.

But one is also at a loss why the Federal Ministry of Labour and Employment appear reluctant to wield its authority in calling GE to order since it is clear that the multinational company has, apart from the wrongful taxation, taken actions that are detrimental to ARCO and its Nigerian workforce! It should not allow itself to be hoodwinked this way. Instead it has the constitutional mandate to ensure that justice is done to a Nigerian firm and its workers. Indeed, I support the demand that the matter be immediately escalated from the level of the Directors to the office of the Minister and Minister of State for immediate and concerted action.

ARCO and its minders also continue to insist that the claim the case is merely one of wrongful assessment or computation of taxes payable and due does not hold water. Available evidence supports their position on this.

From every indication, what has happened is a deliberate act to shortchange ARCO, its workers and by extension, the Nigerian economy. This possibly explains why the multinational has been employing every conceivable delay tactics to buy time while exploring various ways of escaping sanction.

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One is also not impressed by report that GE has challenged ARCO to go to court if it feels genuinely aggrieved. This has been described as a ruse to prolong the matter, and I agree because there simply does not exist any civil dispute for ARCO to take G.E. to court. Since the conduct is perceived to be of a criminal nature, any case arising therefrom should be between the offending party and the state.

This is why I enjoin all relevant government establishments, to,in the interest of the affected Nigerian workers, make haste to exert their authority in compelling the offending multinational company to return the amount it arbitrarily and wrongfully deducted from ARCO as withholding tax.