The Shell Petroleum Development Company of Nigeria (SPDC) and the Bodo community in Gokana Local Government Area of Rivers State have separately claimed victory in a compensation case filed against the company in a London High Court.
A London-based senior High Court had delivered its ruling on the Bodo preliminary issues trial brought against SPDC in a United Kingdom court.
The SPDC claimed that the senior judge, Mr Justice Akenhead had ruled that the interpretation of Nigerian law by SPDC is correct in all the crucial points argued before the court.
Shell claimed that Akenhead accepted that the Nigerian Oil Pipelines Act provides a comprehensive and complete regime for compensation for oil spills, adding that the judge’s decision limits the scope of the litigation to an assessment of actual damages sustained as a result of the operational spills.
The company said the judge dismissed attempts by the Bodo community’s UK legal representatives to add a range of additional claims over and above the compensation due under the clear Nigerian statutory regime.
It also said that the court addressed the perennial issue of liability for environmental damage caused by oil theft and criminality, and found that the Oil Pipelines Act does not hold pipeline operators responsible for damage caused by oil theft.
He identified rare, “theoretical” but “difficult to prove” exceptions, for example in the event a pipeline operator knew the time and location of a planned attack by criminals and decided not to inform the police, and also accepted that no compensation is payable for oil spilled as a result of illegal oil refining, the company said.
The Judge further recognised the significant jurisdictional problems that arise when claims relating to Nigerian land are brought in England rather than in the Nigerian courts that have jurisdiction in relation to such land.
The Tide gathered that these issues will need to be addressed during the main trial next year.
Managing Director of SPDC, Mutiu Sunmonu said: “From the outset, we’ve accepted responsibility for the two deeply regrettable operational spills in Bodo.
“We want to compensate fairly and quickly those who have been genuinely affected and to clean up all areas where oil has been spilled from our facilities, including the many parts of Bodo which have been severely impacted by oil theft, illegal refining and sabotage activities.
“We hope the community will now direct their UK legal representatives to stop wasting even more time pursuing enormously exaggerated claims and consider sensible and fair compensation offers”, he said.
He added: “We’ve consistently maintained that the Bodo community’s UK legal representatives have a fundamental misunderstanding of Nigerian law, and today, the Judge has agreed with us. It’s disappointing that we’ve had to go through this process, which has involved a significant amount of wasted time and legal expense.”
But in contrast to the Shell position, the Bodo community argued that the groundbreaking legal ruling means that SPDC could be legally liable for illegal bunkering of its pipelines, if it failed to take reasonable steps to protect its infrastructure.
The judgment follows a ‘preliminary issues hearing’, which took place in May this year, which considered a range of complex legal arguments prior to a full trial in 2015.
The central issue being argued was whether Shell should take reasonable steps to protect its infrastructure given the foreseeable risk of bunkering, illegal hacking into pipelines to steal the oil.
This is the first time Shell has had to face formal court proceedings in the UK for its environmental record in the Niger Delta, following two massive oil spills in 2008 and 2009 which resulted in the largest loss of mangrove habitat ever caused by an oil spill.
The legal action is being taken by London law firm, Leigh Day, which is representing 15,000 Ogoni fishermen and the Bodo community, which was devastated by the oil spills, in one of the largest environmental law cases ever brought.
At the hearing, President of the Technological and Construction Court, Leigh Day, argued that under the Nigerian Oil Pipelines Act, anyone who suffered damage can claim compensation if he can show evidence that Shell was guilty of neglect in failing to ‘protect, maintain or repair’ the pipeline.
The people argued that Shell has duty of care to take reasonable steps to protect its pipelines and that it could do much more to prevent the spillage of oil when its pipelines are drilled into by criminal gangs.
However, in the ruling, the judge found that whilst Shell did not have an obligation to provide policing or military defence (which is the function of the state), it could be legally liable if it has failed to take other reasonable steps to protect the pipeline such as the use of appropriate technology (leak detection systems), a system of effective surveillance and reporting to the police and the provision of anti-tamper equipment.
At paragraph 92(g) the Court held: “Short of a policing or military or paramilitary defence of the pipelines, it is my judgment that the protection requirement within Section 11(5)(b) involves a general shielding and caring obligation. An example falling within this would be the receipt by the licencee of information that malicious third parties are planning to break into the pipeline at an approximately definable time and place; protection could well usually involve informing the police of this and possibly facilitating access for the police, if requested. Other examples may also fall within the maintenance requirement such as renewing protective coatings on the pipeline or, with the advent of new and reliable technology, the provision of updated anti-tamper equipment which might give early and actionable warning of tampering with the pipeline.”
According to the United Nations Development Programme (UNDP), more than 6,800 spills were recorded between 1976 and 2001. The number of spills has significantly increased in recent years and Shell recorded 3,000 spills between 2007 and 2012.
Speaking after the hearing, Martyn Day, the senior partner at Leigh Day, said: “This is a highly significant judgment. For years, Shell has argued that they are only legally liable for oil spills which are caused by operational failure of their pipelines and that they have no liability for the devastation caused by bunkered oil.
“This judgment entirely undermines that defence and states in clear terms that Shell does have potential liability, if it fails to take reasonable steps to protect its pipelines.
“This will have broad implications since Shell is now potentially liable for the mass pollution of the Niger Delta in which it has pumped and spilt oil over, at least, the last 20 years, not just for operational oil spills.”
The Bodo community is a rural coastal settlement consisting of 31,000 people who live in 35 villages. The majority of its inhabitants are subsistence fishermen and farmers.
Bodo community claims that 1,000 hectares of mangroves have been destroyed by the spills and a further 5,000 hectares have been impacted.
In 2011, Shell admitted liability for the spills but continues to dispute the amount of oil spilled and the extent of the damage caused.
Leigh Day began the multi-million pound legal action at the High Court in March, 2012, after talks broke down over compensation and a cleanup package for the community.
According to the claimants’ lawyers, the spills have destroyed the fishing industry, just as they claim that Shell has failed to speedily compensate the people of Bodo and have prevaricated for years.
The United Nations Environment Programme’s Environmental Assessment of Ogoniland 2011 backed up these findings. It surveyed pipelines and visited all oil spill sites, including the Bodo creek.
The UNEP report found hydrocarbon contamination in water in some sites to be 1,000 times higher than permitted under Nigerian drinking water standards, and recommended a comprehensive clean up of Ogoniland.
However, three years after the UNEP report, Shell said more than half of the polluted sites in Ogoni has been cleaned up and remediated while the few remaining ones are being progressed.
Other measures, including emergency water provision to affected communities, and the implementation of integrated water infrastructure projects, with one in Eleme already commissioned by the Rivers State Government.
RSG, Not FIRS, Entitled To Collect VAT, Related Taxes In Rivers -Court
The Federal High Court sitting in Port Harcourt has declared that it is the Rivers State Government, not the Federal Inland Revenue Services (FIRS), should collect Valued Added Tax (VAT) and Personal Income Tax (PIT) in the state.
The court, presided over by Justice Stephen Dalyop Pam, also issued an order of perpetual injunction restraining the Federal Inland Revenue Service and the Attorney General of the Federation, both first and second defendants in the suit, from collecting, demanding, threatening and intimidating residents of Rivers State to pay to FIRS, PIT and VAT.
Pam made the assertion while delivering judgement in Suit No. FHC/PH/CS/149/2020, filed by the Attorney General for Rivers State (plaintiff), against the Federal Inland Revenue Service (first defendant) and the Attorney General of the Federation (second defendant).
The court, which granted all the 11 reliefs sought by the Rivers State Government, stated that there was no constitutional basis for the FIRS to demand for and collect VAT, Withholding Tax (WHT), Education Tax and Technology Levy in Rivers State or any other state of the federation, being that the constitutional powers and competence of the Federal Government was limited to taxation of incomes, profits and capital gains, which do not include VAT or any other species of sales, or levy other than those specifically mentioned in Items 58 and 59 of the Exclusive Legislative List of the Constitution.
The judge dismissed the preliminary objections filed by the defendants that the court lacks jurisdiction to hear the suit and that the case should be transferred to Court of Appeal for interpretation.
Pam, who also dismissed objection raised by the defendants that the National Assembly ought to have been made a party in the suit, declared that the issues of taxes raised by the state government were issues of law that the court was constitutionally empowered to entertain.
He declared that after a diligent review of the issues raised by bothplaintiff and the defendants, the plaintiff had proven beyond doubt that it was entitled to all the 11 reliefs sought in the suit.
The court agreed with the Rivers State Government that it was the state and not FIRS that was constitutionally entitled to impose taxes enforceable or collectable in its territory of the nature of consumption or sales tax, VAT, education and other taxes or levies, other than the taxes and duties specifically reserved for the Federal Government by Items 58 and 59 of Part 1 of the Second Schedule of the 1999 Constitution as amended.
Also, the court declared that the defendants were not constitutionally entitled to charge or impose levies, charges or rates (under any guise or by whatever name called) on the residents of Rivers State, and indeed, any state of the federation.
Among the reliefs sought by the Rivers State Government, was a declaration that the constitutional power of the Federal Government to impose taxes and duties was only limited to the items listed in Items 58 and 59 of Part 1 of the Second Schedule of the 1999 Constitution as amended.
The Rivers State Government had also urged the court to declare that, by virtue of the provisions of Items 7 and 8 of the Part II (Concurrent Legislative List) of the Second Schedule of the Constitution, the power of the Federal Government to delegate the collection of taxes can only be exercised by the state government or other authority of the state, and no other person.
The state government had further asked the court to declare that all statutory provisions made or purportedly made in the exercise of the legislative powers of the Federal Government, which contains provisions which are inconsistent with or in excess of the powers to impose tax and duties, as prescribed by Items 58 and 59 of the Part I of the Second Schedule of the 1999 Constitution, or inconsistent with the power to delegate the duty of collection of taxes, as contained in Items 7 and 8 of Part II of the Second Schedule of the Constitution, were unconstitutional, null and void.
Lead counsel for the Rivers State Government, Donald Chika Denwigwe (SAN), who spoke to journalists after the court session, explained that the case was all about the interpretation of the Constitution as regards the authority of the government at the state and federal levels to collect certain revenues, particularly, VAT.
“So, during the determination of the matter, some issues of law were thrown up like, whether or not the case should be referred to the Court of Appeal for the determination of some issues.
“The court noted that the application is like asking the Federal High Court to transfer the entire case to the Court of Appeal. In which case, if the court so decides, there will be nothing left to refer back to the Federal High Court as required by the Constitution.”
According to Denwigwe, the court refused that prayer, and decided that the case was in its proper place before the Federal High Court, and was, therefore, competent to determine it.
Speaking on the implications of the judgement, Denwigwe said it was now, unlawful for such taxes as VAT in Rivers State to be collected by any agency of the Federal Government.
“In a summary, it is a determination that it is wrong for the Federal Government to be collecting taxes which are constitutionally reserved for the state governments to collect. The implication of the judgement is that the government (federal and state) as an authority under the constitution,should be advised by the judgement that it is the duty of all government authorities to comply with and obey the law so long as the court has interpreted it and said what that law is.
“So, in other words, the issue of Value Added Tax (VAT) in the territory of Rivers State and Personal Income Tax should be reserved for the government of Rivers State.”
Counsel to FIRS, O.C. Eyibo said he will study the judgment and advise his client.
90% Of Money Laundered Via Real Estate, EFCC Reveals
The Economic and Financial Crimes Commission (EFCC) says about 90 per cent of money laundering is done through the real estate sector.
The commission’s Chairman, Abdulrasheed Bawa, stated this while featuring on Channels TV’s Sunrise Daily, yesterday,
According to him, although the sector is monitored via the special control unit, more needed to be done.
According to Bawa, “One of the problems we have now is the real estate. 90 to 100 per cent of the resources are being laundered through the real estate.”
He said there are so many issues involved, but that they were working with the National Assembly to stop what he called “the gate keepers” as there would be reduction in looting if there is no one to launder the money.
Bawa, the EFCC boss, gave an example of a minister who expressed interest in a $37.5million property a bank manager put up for sale.
He said, “The bank sent a vehicle to her house and in the first instance $20million was evacuated from her house.
“They paid a developer and a lawyer set up a special purpose vehicle, where the title documents were transferred into.
“And he (the lawyer) is posing as the owner of the property. You see the problem. This is just one of many; it is happening daily.”
The EFCC chairman also revealed that he receives death threats often.
Asked to respond to President Muhammadu Buhari’s frequent “Corruption is fighting back” expression, Bawa said he was in New York, USA, last week, when someone called to threaten him.
“Last week, I was in New York when a senior citizen received a phone call from somebody that is not even under investigation.
“The young man said, ‘I am going to kill him (Bawa), I am going to kill him’.
“I get death threats. So, it is real. Corruption can fight back,” he said.
On corruption in the civil service, he said there were a lot of gaps, especially in contracts processing, naming “emergency contracts” as one.
Bawa said, “A particular agency is notorious for that. They have turned all their contracts to emergency contracts.”
However, he said, EFCC has strategies in place to check corruptions, one of which is “corruption risk assessments of MDAs”.
According to him, “I have written to the minister and would soon commence the process of corruption risk assessments of all the parastatals and agencies under the Ministry of Petroleum Resources to look at their vulnerability to fraud and advise them accordingly.”
Asked if the scope of corruption in the country overwhelms him, Bawa, the EFCC boss said, “Yes, and no.”
We’ve Spent N9bn To Upgrade RSUTH, Wike Confirms
The Rivers State Governor, Chief Nyesom Wike, says his administration has spent N9billion in upgrading structures and installation of new equipment at the Rivers State University Teaching Hospital (RSUTH).
He said the fact that 40 per cent of the 2021 budget of the state is dedicated to provision of quality healthcare delivery was a further demonstration of the priority placed on the sector.
Wike made the explanation at the foundation laying ceremony for the construction of a Renal Centre at RSUTH, last Friday.
The governor said he made promise to Rivers people that the best would be provided to them in all sectors of the society within his capability because of the mandate they gave to him.
“As we came on here, I just looked around and I see the changes in this teaching hospital. I can say that we have put not less than N9billion in this teaching hospital.
“If you look at the budget, the health sector alone, what it’s taking from the Rivers State Government is not less than 40 percent of the 2021 budget.”
Speaking further, Wike said the state government cannot afford to implement free medical service programme in the present economic circumstance.
While dismissing the request for a subvention for RSUTH, Wike, however, commended the chief medical director and his team for their commitment to turnaround the fortunes of RSUTH.
“I have never seen anywhere that health services can be totally free. They’re telling me that people who come here can’t pay. I have never declared that this state is going to take over the health fees of anybody.”
Also speaking, the former Minister of Transport, Dr. Abiye Sekibo, who performed the flag-off, noted that Wike’s achievements in the health sector in particular, surpass what former governors of the state had done.
Sekibo said that the governor has given equal attention to every section of the health sector by providing complete health infrastructure that was positioning the state as a medical tourism destination in Nigeria.
Earlier, the Rivers State Commissioner for Health, Prof Princewill Chike, lauded Governor Nyesom Wike for his interest in the health of Rivers people.
He noted that the renal centre, when completed, would become another landmark development project in the health sector that would handle and manage all kidney-related ailments.
In his remarks, the Chief Medical Director of the Rivers State University Teaching Hospital, Dr. Friday Aaron, commended Wike for approving the renal centre.
Aaron explained that chronic kidney disease was a major burden globally with estimated 14 million cases in Nigeria.
According to him, over 240,000 of these cases require renal replacement therapy in the form of dialysis and renal transplant.
The CMD said the building that would house the centre was expected to be completed in six months and consists of two floors.
The ground floor, according to him, would house the haemodialysis unit with eight haemodialysis machines.
He further explained that the first floor of the centre would house the surgical component where most of the sophisticated equipment for kidney transplant would be installed.
Aaron said Wike has released the funds required to build, equip the centre as well as for the training of personnel locally and internationally.
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