New Delhi: UK-based Cairn Energy PLC said Tuesday it will drop litigations to seize Indian properties. The properties are located in countries ranging from France to the US. Cairn Energy said it can drop the cases within a couple of days of getting a USD 1 billion refund resulting from the scrapping of a retrospective tax law.
Cairn gave India its biggest onland oil discovery. The company termed ‘bold’ the legislation passed last month to cancel a 2012 policy. The policy gave the tax department power to go back 50 years and slap capital gains levies wherever ownership had changed hands overseas but business assets were in India.
The offer to return money seized to enforce retrospective tax demand in lieu of dropping all litigations against the government ‘is acceptable to us’, Cairn CEO Simon Thomson told this agency in an interview from London.
Cairn will drop cases to seize diplomatic apartments in Paris and Air India airplanes in the US in ‘a matter of a couple of days’ after the refund Thomson said. He added Cairn’s shareholders are in agreement with accepting the offer and moving on.
“Some of our core shareholders like BlackRock and Franklin Templeton agree (to this). Our view is supported by our core shareholders (that) on balance it is better to accept and move on and be pragmatic. Rather than continue with something negative for all parties which could last for many years,” Thomson informed.
Also read: India mulls offering Cairn Energy $1bn refund
The government last month enacted new legislation to drop Rs 1.1 lakh crore in outstanding claims against multinationals. Among them are telecom group Vodafone, pharmaceuticals company Sanofi and brewer SABMiller, now owned by AB InBev, and Cairn.
About Rs 8,100 crore collected from companies under the scrapped tax provision are to be refunded. It will be done if the firms agree to drop outstanding litigation, including claims for interest and penalties. Of this, Rs 7,900 crore is due only to Cairn.
“Once we get to final resolution, part of that resolution is us dropping everything in terms of litigation. We can do that within a very short period of time, just a matter of a couple of days or something,” Thomson said. “So we are preparing on the basis of getting this resolution quickly, all these cases being dropped, and putting all this behind,” he added.
Thomson informed that all enforcement proceedings brought because of the Government of India’s refusal to honour an international arbitration award asking it to return the value of money seized to enforce the retrospective tax demand, will be dropped. “Everything will be dropped. There will be no more litigation, that will be it. It will clear the matter up,” asserted the Cairn CEO.
Cairn in its half-yearly report Tuesday said it will return up to USD 700 million out of the Rs 7,900 crore (USD 1.06 billion) it is supposed to get from the Indian government, to ‘shareholders via special dividend and buyback’.
Thomson was asked if Cairn would make a comeback to India. He said India will become another potential investment destination once the issue is closed. “If there is right opportunity, why not,” he asked.
“We were pleased when the Government of India made what we thought was a pretty bold move, in terms of enactment of the legislation,” Thomson said. “The intention of the government, we are obviously aligned with it, is to get this resolved as quickly as possible. Hopefully, that means within the next few weeks. It is good not only for us and our shareholders but also importantly for India,” he signed off.
