Cairn accepts USD 1 billion refund offer, to drop cases against India within days: CEO Simon Thomson

UKbased Cairn Energy PLC said it will drop litigations to seize Indian properties in countries ranging from France to the US within a couple of days of getting a USD 1 billion refund resulting from the scrapping of a retrospective tax lawThe firm which gave India its biggest onland oil discovery termed bold the legislation passed last month to cancel a 2012 policy that 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 IndiaThe 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 PTI in an interview from LondonCairn 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 he said adding Cairns shareholders are in agreement with accepting the offer and moving onSome of our core shareholders likes 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 he saidSeeking to repair Indias damaged reputation as an investment destination the government last month enacted new legislation to drop Rs 11 lakh crore in outstanding claims against multinationals such as telecoms group Vodafone pharmaceuticals company Sanofi and brewer SABMiller now owned by AB InBev and CairnAbout Rs 8100 crore collected from companies under the scrapped tax provision are to be refunded if the firms agreed to drop outstanding litigation including claims for interest and penalties Of this Rs 7900 crore is due only to CairnOnce 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 behindHe said all enforcement proceedings brought because of the Government of Indias refusal to honour an international arbitration award asking it to return the value of money seized to enforce the retrospective tax demand will be droppedEverything will be dropped There will be no more litigation that will be it It will clear the matter up he saidCairn in its halfyearly report on Tuesday said it will return up to USD 700 million out of the Rs 7900 crore USD 106 billion it is supposed to get from the Indian government to shareholders via special dividend and buybackAlso Read India offers Cairn Energy USD one billion refundPayment of the tax refund would enable a proposed return to shareholders of up to USD 700 million via a special dividend of USD 500 million and a share buyback programme of up to USD 200 million The remainder of the proceeds would be allocated to further expansion of the lowcost sustainable production base it saidThomson said Cairn has had a good open and transparent line of communications with the Government of India on finding a resolution to the retro tax issue Our aim was to get to a resolution something which would be acceptable to our shareholdersWe were pleased when the Government of India made what we thought was a pretty bold move in terms of enactment of the legislation he 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 IndiaThe resolution will bury the ghost of retro tax and help move on We are keen to get back to Cairn being talked about in terms of success in Rajasthan I think moving on from this will allow us to do that he said referring to the prolific oil discovery the firm made in BarmerIn accepting the terms of the new legislation in India Cairn would be required to withdraw its international arbitration award claim interest and costs and to end all legal enforcement actions in order to be eligible for the refundIt will mean we will forego interest and penalty in terms of the original arbitration award The important thing for us is it returns the value that was taken from us From our perspective it is the right thing to do be pragmatic put this behind us move on he said adding this would help wipe away a factor negatively impacting investment for many years to comeThe 2012 legislation was used to levy a cumulative of Rs 110 lakh crore of tax on 17 entities including UK telecom giant Vodafone but nearly 98 per cent of the Rs 8100 crore recovered in enforcing such a demand was only from CairnAn international arbitration tribunal in December overturned a levy of Rs 10247 crore in taxes on a 2006 reorganisation of Cairns India prior to its listing and asked the Indian government to return the value of shares seized and sold dividend confiscated and tax refund withheld This totalled USD 12 billionplus interest and penaltyThe government initially refused to honour the award forcing Cairn to identify USD 70 billion of Indian assets from the US to Singapore to enforce the ruling including taking flag carrier Air India Ltd to a US court in May A French court in July paved the way for Cairn to seize real estate belonging to the Indian government in Paris All these litigations will be dropped he addedThis story has been sourced from a third party syndicated feed agencies Midday accepts no responsibility or liability for its dependability trustworthiness reliability and data of the text Midday managementmiddaycom reserves the sole right to alter delete or remove without notice the content in its absolute discretion for any reason whatsoever