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BRITISH PETROLEUM VS. THE NIGERIAN GOVERNMENT: THE CAPITAL GAINS TAX DISPUTE, 1972–9*

Published online by Cambridge University Press:  02 November 2010

CHIBUIKE UCHE
CHIBUIKE UCHE
Affiliation:
University of Nigeria, Enugu Campus
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Abstract

This article documents a landmark dispute between British Petroleum (BP) and the Nigerian tax authorities that occurred over a N130 million (£100 million) capital gains tax assessment arising from an intra BP Group transfer of its 50 per cent shareholding in Shell/BP Nigeria. This was necessitated by a BP transaction in Abu Dhabi. This tax assessment, which was more than twice the yearly cash flow of BP's Nigerian operations at the time, ignited a chain of events and schemes that saw the British government covertly and overtly providing support to BP, with the primary goal of influencing the outcome of the dispute in order to protect the interests of both the British government and BP. Evidence in this article highlights the complexities of postcolonial relationships between centre countries and African ex-colonies.

Keywords

Nigeriabusinesseconomicoilpostcolonial
Type
Research Article
Information
The Journal of African History , Volume 51 , Issue 2 , July 2010 , pp. 167 - 188
Copyright
Copyright © Cambridge University Press 2010

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References

1 ‘In its most general sense, control can be defined as the ability of an actor to determine outcomes in a regularized (but not necessarily institutionalized) manner with a reasonable degree of certainty over matters of importance’ (T. Biersteker, Multinationals, the State, and Control of the Nigerian Economy (Princeton, 1987), 3).

2 See, for instance, R. Tignor, Capitalism and Nationalism at the End of Empire: State and Business in Decolonizing Egypt, Nigeria, and Kenya, 1945–1963 (Princeton, 1998), 18. See also idem, ‘Decolonizing and business: the case of Egypt’, Journal of Modern History, 59 (1987), 479CrossRefGoogle Scholar.

3 See Lipson, C., Standing Guard: Protecting Foreign Capital in the Nineteenth and Twentieth Centuries (Berkeley, 1985), 4Google Scholar. Some home states, however, still have reactionary and clandestine powers. See, for instance, Frynas, J. and Mellahi, K., ‘Political risks as firm specific (dis)advantages: evidence on transnational oil firms in Nigeria’, Thunderbird International Business Review, 45 (2006), 541–3CrossRefGoogle Scholar.

4 See Sklar, R., ‘The nature of class domination in Africa’, Journal of Modern African Studies, 17 (1979), 531CrossRefGoogle Scholar; Hoogvelt, A., ‘Indigenization and technological dependency’, Development and Change, 11 (1980), 257–8CrossRefGoogle Scholar. ‘It … is possible for the MNC [multinational company] to maximise the profits of the parent company rather than that of its subsidiaries given the environment in which MNCs operate and thrive … because Third World countries are “less developed” or “under-developed”. In an institutional context, “less-developed” meant: 1. that there is a dearth of well qualified civil servants to ensure that business laws are “faithfully” executed; 2. that these laws themselves as well as taxation practices are archaic or have remained far too long in the statute books to take cognisance of changing situations; and, 3. that organised labour is non-existent or at best weak. What these implied is that there is no effective check on the powers of the MNC in the Third World compared to what … obtains in the industrialised countries of the “North”.’ See Akinsanya, A., ‘Multinational corporations in Nigeria and issues of development’, Geneva Africa, 23 (1984), 83Google Scholar.

5 S. Howe, Empire: A Very Short Introduction (Oxford, 2002), 31. Neo-colonialism has been defined as the ‘survival of the colonial system in spite of the formal recognition of political independence in emerging countries which become the victims of an indirect and subtle form of domination by political, economic, social and military or technical means’ (laid out by the 1961 All-African People's Conference, quoted in C. Leys, Underdevelopment in Kenya: The Political Economy of Neo-colonialism (London, 1976), 26). A contrary theory is the ‘corporate doctrine of domicile’. This argues that it is ‘logical to expect the subsidiaries of a multinational business group to harmonise their policies with the interests of various host governments insofar as they seek to survive and prosper in the host countries concerned’ (Sklar, R., ‘Postimperialism: a class analysis of multinational corporate expansion’, Comparative Politics, 9 (1976), 84CrossRefGoogle Scholar). As will be seen below, evidence in this study suggests that the neo-colonialism theory provides a better explanatory framework for the behaviour of multinationals.

6 Cf. A. Akinsanya, ‘State strategies toward Nigerian and foreign business’, in I. Zartman (ed.), The Political Economy of Nigeria (New York, 1983), 145.

7 F. Cooper, Colonialism in Question: Theory, Knowledge, History (Berkeley, 2005), 44.

8 See, for instance, Price, R., ‘Neo-colonialism and Ghana's economic decline: a critical assessment’, Canadian Journal of African Studies, 18 (1984Google Scholar); Joseph, R., ‘The Gaullist legacy: patterns of French neo-colonialism’, Review of African Political Economy, 6 (1976)Google Scholar; S. Amin, Neo-colonialism in West Africa (New York and London, 1974).

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10 See, for instance, Ellis, S., ‘Writing histories of contemporary Africa’, Journal of African History, 43 (2002), 12CrossRefGoogle Scholar.

11 Because of the poor state of record keeping, it has not been possible to access the official Nigerian records on this dispute. No doubt this would have enhanced the robustness of this study.

12 See British National Archives (BNA), FCO 65/1796, confidential notes by M. Holding (Foreign and Commonwealth Office, FCO), 8 July 1976. Aside from its stake in Shell/BP Nigeria, BP also had a fully owned Nigerian subsidiary that was involved in oil marketing: British Petroleum Nigeria Limited (BPN). This investment was not affected by the above transaction.

13 See Budget Broadcast by His Excellency, General Yakubu Gowon, Head of the Federal Military Government, Commander in Chief of the Armed Forces of the Federal Republic of Nigeria (Lagos, 1 Apr. 1973), 18; BNA FCO 65/1925, M. Heath to P. Mansfield, confidential memo, 5 May 1977.

14 A similar provision was contained in the Mineral Oil Ordinance Number 17 of 1914, which was promulgated after the unification of Northern and Southern Nigeria in 1914. See J. G. Frynas, Oil in Nigeria: Conflict and Litigation between Oil Companies and Village Communities (Hamburg, 2000), 9–13.

15 G. Jones, The State and the Emergence of the British Oil Industry (London, 1981), 63. See also J. K. Onoh, The Nigerian Oil Economy: From Prosperity to Glut (London, 1983), 42; R. Onwuka, A Political Economy of the Control of Transnational Corporations in Nigeria (Owerri, 1992), 29.

16 Frynas, Oil, 9–13.

17 R. W. Ferrier, The History of the British Petroleum Company: Volume 1, the Developing Years (Cambridge, 1982), 5.

18 APOC changed its name to the Anglo-Iranian Oil Company (AIOC) in June 1935. The company's name was finally changed to British Petroleum (BP) in December 1954. See L. Turner, Oil Companies in the International System (London, 1983), 11.

19 See M. A. Bunter, The Promotion and Licensing of Petroleum Prospective Acreage (The Hague, 2002), 30.

20 Frynas, Oil, 9.

21 See J. Bamberg, The History of the British Petroleum Company: Volume 2, The Anglo Iranian Years, 1928–1954 (Cambridge, 1994), 172. Royal Dutch Shell Group of companies was created in 1908 with the merger of Royal Dutch Petroleum Company and the Shell Transport and Trading Company Ltd of the United Kingdom. See J. Jonker and J. Zanden, From Challenger to Joint Industry Leader, 1891–1939: A History of Royal Dutch Shell, Volume 1 (Oxford, 2007), ch. 1, for a detailed study of the merger.

22 See J. Bamberg, British Petroleum and Global Oil, 1950–1975: The Challenge of Nationalism (Cambridge, 2000), 110; S. Howarth and J. Jonker, Powering the Hydrocarbon Revolution, 1939–1973: A History of Royal Dutch Shell, Volume 2 (Oxford, 2007), 191.

23 See J. G. Frynas, M. P. Beck, and Mellahi, K., ‘Maintaining corporate dominance after decolonization: the first mover advantage of Shell-BP in Nigeria’, Review of African Political Economy, 85 (2000), 410Google Scholar. See also Shell BP, The Shell BP Story (Port Harcourt, 1965) for further information on Shell/BP's operations in Nigeria at the time.

24 See, Uche, C., ‘Oil, British interests and the Nigerian Civil War’, Journal of African History, 49 (2008), 134CrossRefGoogle Scholar.

25 See Collins, P., ‘Public policy and the development of indigenous capitalism: the Nigerian experience’, Journal of Commonwealth and Comparative Politics, 15 (1977), 127CrossRefGoogle Scholar.

26 T. Biersteker, ‘Indigenization in Nigeria: rationalization or denationalization?’ In Zartman, Political Economy, 187.

27 Federal Republic of Nigeria, Second National Development Plan 1970–74: Programme of Post-war Reconstruction and Development (Lagos, 1970), 239 and 289.

28 See Adeniji, K., ‘State participation in the Nigerian petroleum industry’, Journal of World Trade Law, 11 (1977), 160Google Scholar. See also Federal Republic of Nigeria, Second National Development Plan, 133–4. The right of states under international law to regulate economic activity within their boundaries is well established and cannot be seriously challenged, and is regarded as an attribute of statehood itself: see Beveridge, F. C., ‘Taking control of foreign investment: a case study of indigenisation in Nigeria’, International and Comparative Law Quarterly, 40 (1991), 302CrossRefGoogle Scholar.

29 K. Sluyterman, Keeping Competitive in Turbulent Markets, 1973–2007 (Oxford, 2007), 15. See also Jabber, P., ‘Conflict and cooperation in OPEC: prospects for the next decade’, International Organisation, 32 (1978), 378CrossRefGoogle Scholar.

30 See BNA FCO 65/1681, letter from A. Willingale (BP London) to Chief Inspector of Taxes (Nigeria), 19 Sept. 1975. The government initially acquired 35 per cent of Shell/BP in April 1973. This was increased to 55 per cent in April 1974.

31 See BP Annual Report and Accounts for 1973, 9.

32 BP Annual Report and Accounts for 1971, 6.

33 See BP Annual Report and Accounts for 1972, 10.

34 BNA FCO 65/1681, Slater (Treasury) to Heath (FCO), notes attached to letter dated 7 May 1975.

35 See 1972/1973 Federal Government Budget Speech by General Yakubu Gowon, reproduced in New Nigerian Newspaper, 3 Apr. 1972, 2.

36 Finance (Miscellaneous Taxation) Provissions Decree Number 47, section 2(a).

37 BNA FCO 65/1796, J. Williams (British high commissioner) to Heath (FCO), confidential telegram, 7 July 1976.

38 See BNA FCO 65/1796, A. Odueyungbo to Managing Director Shell/BP Nigeria, 16 June 1976.

39 See letter to the FBIR, 21 March 1975, quoted in BNA FCO 65/1681, letter from Ekukinam to British high commissioner, headed ‘BP Japan Oil Development Co. Ltd.: Taxation of Capital Gains’, 11 Dec. 1975.

40 Bribing of government officials was a well-known tool used by multinationals in developing countries. See Akinsanya, ‘Multinational corporations’, 81. Vincent Ogunba (chairman of the FBIR) was also believed to have in the past ‘received a large sum of money from Mobil … in settlement of a turnover tax’: see BPA 4320, notes by R. Tottenham Smith on discussions with I. Sims, 17 Feb. 1977. For a brief biography of Ogunba, see A. Ogunde, ‘Tribute to V.O.A. Ogunba: funeral oration delivered by the President [of the Institute of Chartered Accountants of Nigeria] Otunba A.O. Ogunde at the farewell service of songs held in the council chamber, on Thursday, September 12, 1985, for the late Vincent Obajimi Adebisi Ogunba Esq. FCA’, Nigerian Accountant (October–December 1985), 68–9.

41 See BNA FCO 65/1681, Williams (BHC) to Foreign and Commonwealth Office, confidential telex, 23 May 1975. See also BNA FCO 65/1681, letter from J. Littler (HM Treasury) to D. Lewis (FCO), 16 Sept. 1975.

42 See BNA FCO 65/1796, letter from Odueyungbo to Managing Director Shell/BP Nigeria, 16 June 1976. In arriving at this figure, the FBIR used the dividend figures contained in the annual accounts of Shell/BP for 1971 and 1972. Based on an assumed average rate of return of 20 per cent on Nigerian investments at the time, the FBIR estimated that the net worth of Shell/BP was N1·4 billion. The 50 per cent shares of BP in the company were therefore valued at N700 million. The capital gains of N650 million was arrived at after subtracting the N50 million that represented the original cost of the shares. The N130 million capital gains tax liability was obtained by applying the 20 per cent capital gains tax rate prescribed in the decree to the N650 million capital gains. See BNA FCO 65/1681, letter from Odueyungbo (FBIR) to Willingale (BP London), 10 Oct. 1975.

43 For a brief biography of Rotimi Williams, see Nigerian Guardian editorial, ‘Frederick Rotimi Alade Williams, (1920–2005)’, Guardian Newspaper (2 Apr. 2005).

44 BNA FCO 65/1681, file notes by J. Williams (BHC), 7 July 1975.

45 See BNA FCO 65,1681, file notes by Williams, 11 June 1975.

46 Quoted in BNA FCO 65/1681, letter from Willingale to Chief Inspector of Taxes, 5 Dec. 1975. See also letter from Willingale to Chief Inspector of Taxes, 19 Sept. 1975. Point (iii) was especially important because, as already mentioned, the Nigerian government emphasised book value in its acquisition of 55 per cent of Shell/BP. This was in line with the OPEC policy at the time. The Nigerian computation of the capital gains tax, however, was in line with the enabling decree, based on market value. BP highlighted this discrepancy throughout the dispute.

47 BNA FCO 65/1681, Williams (BHC), file notes, 21 July 1975.

48 See BNA FCO 65/1681, letter from Heath (FCO) to Slater (Treasury), 9 May 1975. In a letter to Beaven (BHC), dated 14 May 1975 (BNA FCO 65/1681), Mr Glaze (FCO) stated that the threat was not ‘foolish or idle’ and ‘was most likely intended to underline the company's determination to resist the claim’.

49 BNA FCO 65/1681, letter from Glaze (FCO) to Beaven (BHC), 14 May 1975.

50 BNA FCO 65/1681, letter from Slater (Treasury) to Heath (West African Department, FCO), 7 May 1975.

51 BNA FCO 65/1796, confidential telegram from J. Williams (BHC) to Heath (FCO), 7 July 1976.

52 BNA FCO 65/1925, letter from P. Roberts (FCO) to Thompson (BHC), 30 May 1977.

53 See BNA FCO 65/1681, letter from Glaze to British high commission, Lagos, 14 May 1975.

54 Aluko, O., ‘Nigeria and Britain after Gowon’, African Affairs, 76 (1977), 303CrossRefGoogle Scholar. Events immediately following the change of government also raised concerns among the foreign oil companies operating in the country. In a memo to the chairman of BP, Mr Sutcliffe wrote: ‘There is a worrying situation developing in Nigeria which I think I should mention to you. In the last two weeks van Wachem [the Dutch managing director of Shell/BP] has been receiving approaches from individuals claiming to be talking on behalf of the new Head of State and asking for details of the secret payments made to officials in the former regime by Shell-BP. In fact, there were no such payments. This is clearly regarded as incredible by the new government in a country where corruption is so rife. The emissaries have even hinted that if the financial arrangements with former officials were to be continued with the new Government, all would be well. Van Wachem has consistently denied that any payments were made to former officials. He has now had his passport taken away’ (BPA 8377, memorandum from Sutcliffe to BP Chairman, 1 Sept. 1975).

55 BNA FCO 65/1681, confidential memorandum from Mitchell to Principal Private Secretary of the Chancellor, 3 Sept. 1975.

56 See BNA FCO 65/1681, letter from Heath (FCO) to British high commissioner, 17 Sept. 1975.

57 The value of the shares was determined using the N131 million paid by the Nigerian government for its 55 per cent stake in Shell/BP. An outstanding N240 million loan to Shell/BP at the time of the intra-BP group share transfer was also deducted. See BNA FCO 65/1681, letter from Willingale (BP London) to Chief Inspector of Taxes (Nigeria), 19 Sept. 1975.

58 BNA FCO 65/1681, letter from Odueyungbo (FBIR) to Willingale (BP London), 10 Oct. 1975.

59 See BNA FCO 65/1796, confidential telegram from J. Callaghan to British high commission, Lagos, 6 Feb. 1976. See also BNA FCO 65/1925, background note by the West African Division of the FCO, 23 Aug. 1976, 3.

60 See BNA FCO 65/1681, letter from British high commissioner to Ekukinam, 15 Oct. 1975. See also BNA FCO 65/1681, confidential telex from British high commissioner to FCO, 25 Nov. 1975.

61 See BNA FCO 65/1681, letter from Willingdale to Chief Inspector of Taxes, 5 Dec. 1975.

62 BNA FCO 65/1681, letter from Ekukinam to British high commissioner, 11 Dec. 1975.

63 See BNA FCO 65/1681, confidential telex from Callaghan to British high commissioner in Nigeria, 18 Dec. 1975.

64 BNA FCO 65/1681, telex from M. Le Quesne to FCO, 18 Dec. 1975.

65 BNA FCO 65/1681, confidential telex from British high commissioner to Callaghan, 22 Dec. 1975.

66 See BNA FCO 65/1681, Heath to E. Denza, 3 Dec. 1975.

67 BNA FCO 65/1681, Denza to Heath, 3 Dec. 1975.

68 BNA FCO 65/1681, letter from Roberts (FCO) to Chivers (HM Treasury), 11 Dec. 1975. On another occasion, BP's strategy to ensure that they had their way was explained by Mr Heath in a confidential FCO memo (BNA FCO 65/1796, dated 22 June 1976) thus: ‘They do have one card up their sleeve. Together with Shell they are drawing towards the successful conclusion of negotiations with the Federal Ministry of Mines and Power to place very substantial investments in an ambitious long term LNG export scheme. A BP emissary … will ensure that the Nigerians are put on notice that the imposition of financial penalties on any of the BP companies would make it very difficult for BP to participate in the LNG scheme. If BP's bluff was called, their withdrawal will set the project back considerably … The Nigerians would be obliged to look for new partners who would hardly be allowed to remain unaware of the JODCO case or of their action against BP.’ This plan failed, however, as Shell, to the displeasure of BP, backed out after receiving a ‘tough letter’ from the Nigerian government. See BNA FCO 65/1796, FCO confidential memo from Heath to Roberts, 14 Sept. 1976. See also BNA FCO 65/1796, secret memo from Heath to Aspin, 8 July 1976.

69 See BNA FCO 65/1796, note of meeting between BP Representatives and Rotimi Williams on 7 Jan. 1976.

70 BNA FCO 65/1796, letter from British high commissioner to J. Wilton (FCO), 13 Jan. 1976.

71 BNA FCO 65/1796, letter from Q. Morris (BP London) to J. Hussey (BP Nigeria), 6 Feb. 1976.

72 See BNA FCO 65/1796, letter from Olopade to Managing Director BP JODCO, 7 Feb. 1976.

73 See BNA FCO 65/1796, letter from Sutcliffe to Ogunba, 12 Jan. 1976.

74 BNA FCO 65/1796, letter from Tottenham Smith to J. Hussey, 15 March 1976.

75 There is no evidence that Britain was part of the coup. The British–Nigerian relations further deteriorated when Britain refused to extradite General Gowon to face trial in Nigeria for his alleged involvement in the failed coup. As a consequence of this, it took several months before Le Quesne's replacement, Mr Falle, was appointed. For an excellent review of the British–Nigerian relations after the coup, see Aluko, ‘Nigeria and Britain’, 303–20. On the Nigerian side, General Obasanjo replaced Muhammed as head of state.

76 See BPA 4819, Ogunba to Sutcliffe, 9 Apr. 1976.

77 BNA FCO 65/1796, confidential telegram from J. R. Williams to Heath, 11 May 1976. See also BNA FCO 65/1796, S. L. Egerton, ‘Notes on Luncheon with Mr. Sutcliffe’, 12 May 1976. Earlier on, Le Quesne had reported that a member of his staff had been approached by Ogunba through an intermediary, suggesting that he was ‘prepared to settle with BP for substantially less than the sum claimed’: see BNA FCO 65/1681, telegram to FCO, 8 Dec. 1975. According to Mr Mansfield of the FCO: ‘Mr. Ogunba … is corrupt and indicated to BP that if they paid him some £10 million he would assess their liability at about £20 million’ (see BNA FCO 65/1925, confidential note by P. Mansfield, 18 May 1976).

78 See BPA 4819, BP JODCO to Secretary, Body of Appeal Commissioners.

79 BNA FCO 65/1796, Odueyungbo to Managing Director, BP Nigeria, 16 June 1976. A similar letter was also sent to Shell/BP: see BNA FCO 65/1796, letter from Odueyungbo to Managing Director, Shell/BP, 16 June 1976.

80 BNA FCO 65/1221, confidential letter from Pope (BHC) to McMeekin, 5 May 1972.

81 BNA FCO 65/1796, confidential FCO memorandum from Holding to Young, 15 July 1976. See also BPA 4819, recorded notes of meeting with Awoniyi by Mr Grassick, 14 July 1976.

82 BNA FCO 65/1796, letter from Williams to Heath, 15 July 1976.

83 BNA FCO 65/1796, letter from British high commission to Diamond, 7 Oct. 1976. See also BNA FCO 65/1796, internal memo from Heath to Roberts, 14 Sept. 1976.

84 ‘Ian Sims had suggested to Ogunba in early October 1976 that further progress might be possible if an adviser such as Akintola Williams was allowed to join the discussion. Ogunba refused and said that if we pressed this point, the “without prejudice” discussions would immediately be ended’ (BPA 4320, undated secret file notes by A. P. Ravenscroft, 28 June 1977). Akintola Williams, the first Nigerian chartered accountant, was the elder brother of Rotimi Williams: see M. Anibaba, A Short History of the Accountancy Profession in Nigeria (Lagos, 1990), 15. For a detailed history of Akintola Williams and the firm he founded, see E. Inanga, A History of Akintola Williams and Co. (Lagos, 1992).

85 BNA FCO 65/1796, letter from British high commission to P. Roberts, 7 Oct. 1976.

86 BNA FCO 65/1796, confidential telex from Crossland to British high commission, 22 Oct. 1976.

87 See BNA FCO 65/1796, confidential telegram from Ravenscroft to Grassick, 19 Nov. 1976. On Ogunba's refusal to see Akintola Williams, a BHC official wrote: ‘Mr. Ogunba may well have made a powerful enemy by refusing to see him’ (BNA FCO 65/1796, confidential telegram by Mr Williams, 22 Nov. 1976).

88 See BNA FCO 65/1796, letter from Heath to Roberts, 8 Nov. 1976. See also BNA FCO 65/1796, confidential telegram from Crossland to British high commission, 22 Oct. 1976.

89 See BNA FCO 65/1796, confidential telegram from Williams to FCO, 18 Nov. 1976.

90 See BNA FCO 65/1796, confidential telegram from Ravenscroft to Sims, 3 Dec. 1976.

91 BNA FCO 65/1796, confidential telegram from Sims to Tottenham Smith, 20 Nov. 1976.

92 See BNA FCO 65/1796, confidential telegram from Sims to Ravenscroft, 16 Dec. 1976.

93 See BNA FCO 65/1925, confidential telegram from Ravenscroft to Grassick, 11 Feb. 1977; and confidential telegram from Ravenscroft to Sims (BP), 14 Feb. 1977.

94 BNA FCO 65/1925, confidential memo from Heath to Mansfield, 7 March 1977.

95 BNA FCO 65/1925, confidential telegram from Sims to Ravenscroft, 28 Jan. 1977. Akintola Williams later reported that Ogunba had been placed on ‘indefinite leave – a step which … is normally followed by dismissal’. He subsequently learned, however, that the ‘Head of the Civil Service and Ekukinam … had pleaded on Ogunba's behalf. As a result Obasanjo had overruled the Commission and decided that Ogunba should remain in office but the accusations against him should be referred to the police for investigation’ (BPA 4320, BP secret notes on non-legal discussions of the BP-JODCO capital gains tax, March 1977).

96 ‘The Head of State then referred to the abuse of power by multinational companies who, like … CIA, would not hesitate to use their influence to bring down governments … Obasanjo stated that BP would not be allowed to avoid the payment of tax on technical arguments as to its basic liability of jurisdiction and that if necessary a special decree would be introduced to ensure that recovery occurred’ (BPA 4320, BP secret notes).

97 BNA FCO 65/1925, confidential telegram from Ravenscroft to Sutcliffe and Grassick (BP), 15 March 1977. For detailed analysis of the exploitative tendencies of multinational oil companies, see M. E. Ahrari, OPEC: The Failing Giant (Lexington, KY, 1986), ch. 1; E. Penrose, The Large International Firm in Developing Countries: The International Petroleum Industry (London, 1968), 34–46. For examples specific to Nigeria, see New Nigerian Newspaper (15 Dec. 1975), 1; P. Asiodu, ‘The future of the petroleum industry in Nigeria’, paper presented at the Economic Development Plan Seminar, March 1971.

98 See BNA FCO 65/1925, confidential telegram from Sims to Ravenscroft (BP), 28 March 1977.

99 It was also asserted that ‘RW not optimistic we can produce any stronger legal argument but he contends this [is] a unique case and that this factor should carry weight’ (BNA FCO 65/1925, confidential telegram from Sims to Ravenscroft (BP), 13 Apr. 1977).

100 See BNA FCO 65/1925, confidential telegram from Ravenscroft to Sutcliffe (BP), 20 Apr. 1977.

101 The disappointing judgment was explained thus by BP: ‘Sims commented to us that he was surprised at the BP JODCO judgement delivered by the Commissioners which left an impression of bias and suspicion of BP's motives. He understands from Akintola (one of whose partners is a former deputy chairman of the Federal Board of Inland Revenue) that, of the 8 appeal commissioners, the chairman and one other were impartial while the others were sympathetic to the FBIR's case … The prospects for a better judgement in the Federal Revenue Court or Court of Appeal would depend largely on which of the judges was appointed to preside.’ See BNA FCO 65/1925, secret telegram from British High Commission to FCO, 27 Apr. 1977.

102 See BNA FCO 65/1925, secret telegram from British high commission to the FCO, 27 Apr. 1977. A BP secret file note dated 27 Apr. 1977 stated that ‘Odubiro, the tax manager of Akintola Williams saw Obi, Chairman of the Appeal Commissioners, privately for more than one hour on the 20th April. Obi told him that but for his insistence on a strict application of the law, the majority of the Commissioners would have ruled against BPN on the Agency Appointment’ (BPA 4320).

103 See BNA FCO 65/1925, confidential telegram from Ravenscroft to Sims (BP), 25 Apr. 1977.

104 BNA FCO 65/1925, confidential telegram from Johnson (BHC) to FCO, 6 May 1977.

105 See BNA FCO 65/1925, confidential telegram from Sutcliffe to Ravenscroft (BP), 24 May 1977. Rotimi Williams later confirmed that ‘HOS clearly stated that he now sees NSO investigation as essential first step following which he will ensure fair enquiry into quantum’ (BNA FCO 65/1925, telegram from Sims to Ravenscroft, 23 June 1977).

106 See BNA FCO 65/1925, confidential memo by P. Mansfield, 18 May 1977.

107 BNA FCO 65/1925, secret telegram from British high commission to FCO, 23 May 1977.

108 See BNA FCO 65/1925, confidential telegram from Sutcliffe to Ravenscroft (BP), 19 May 1977.

109 BNA FCO 65/1925, confidential telegram from Sutcliffe to Ravenscroft (BP), 25 May 1977.

110 BNA FCO 65/1925, confidential telegram from Johnson to Ravenscroft (BP), 2 June 1977. Once payment had been made, the British government considered the idea of ‘registering a discreet protest’ to the Nigerian government over the matter. Mr Roberts of the FCO was, however, of the view that such protest ‘would serve only to give satisfaction to the Nigerians for having devised so painless a way of making money’ (BNA FCO 65/1925, letter from Roberts to Thompson (BHC), 30 May 1977). The British high commission also advised against any such protests, partly because ‘this would invite an admittedly legalistic rebuff and possibly a rebuke for interfering with Nigeria's right to draft her own laws’ (BNA FCO 65/1925, letter from Thompson (BHC) to Roberts (FCO), 9 June 1977).

111 See BNA FCO 65/1925, confidential telegram from Sims to Ravenscroft (BP), 22 June 1977.

112 See BNA FCO 65/1925, confidential telegram from Sims to Tottenham Smith, 16 June 1977. In July 1977 it was reported that ‘AW has received information indicating that Owodunni … has maintained close contact [with] Ogunba ever since August last year’ (BNA FCO 65/1925, confidential telegram from Sims to Ravenscroft, 7 July 1977). BPN finally dispensed with the services of Owodunni in November 1977: see BNA FCO 65/1925, confidential telegram from Sims to Tottenham Smith, 28 Nov. 1977.

113 See BNA FCO 65/1925, undated summary of notes by Mr Ravenscroft. In a secret note dated 29 Sept. 1977, Mr Ravenscroft of BP wrote: ‘According to our information, whilst they appeared to accept that our supporting evidence was consistent with the sequence and conduct of events the allegations made against O remained unproven’ (BPA 4320).

114 Referred to in minutes of the meeting held at the Cabinet Office on 11 Aug. 1977 (BPA 43202).

115 See BPA 4320. On 25 July 1977, following Rotimi Williams's letter to Ciroma, Mr Williams (BHC) sent a telegram to the FCO asserting that ‘Panel is now being set up by Ciroma to investigate quantum. Composition of Panel is known to us on confidential basis and seems relatively satisfactory as AW had opportunity pre-discussions with Acting Director FBIR who most cooperative’ (BNA FCO 65/1926). No such panel was eventually set up.

116 See BNA FCO 65/1926, confidential telegram from Williams to FCO, 15 Aug. 1977.

117 Minutes of the meeting held at the Cabinet Office, 11 Aug. 1977 (BPA 43202).

118 See BPA 4320, letter, 11 Aug. 1977.

119 See BNA FCO 65/1926, BHC confidential notes, 15 Dec. 1977.

120 BPA 4320, memorandum from Sutcliffe to BP Chairman, 9 Feb. 1978. The clearing of Ogunba may not have come as a surprise to BP. According to the company's secret internal memo dated April 27 1977, ‘Taxpayers who have met Ogunba's demands will not volunteer evidence in any investigation whilst those like BP who have resisted his approaches will have no documentary proof. Ogunba will be able to claim that the existence of allegations against him is to be expected in view of his position as the senior tax officer in Nigeria. And that in the absence of proof, the Military Council have a duty to protect an efficient public servant’ (BPA 4320).

121 According to BPA 105401, file notes by Harper, 6 Aug. 1979: ‘The official reason given was that BP, with the connivance of HMG, had supplied Nigerian crude oil to South Africa in direct contravention of a Government embargo placed on supplies to “the apartheid regime”. It was felt however that BP was being used as a “political football” and that the real reason for the move was to put pressure on HMG regarding its policy towards Zimbabwe-Rhodesia’. For a detailed exposition of this view, see O. Aluko, Essays on Nigerian Foreign Policy (London, 1981), 212. See also African Update, 24:5 (1979), 23–4.