Heritage Oil's Ugandan assets
In 2010, Tullow paid Heritage Oil $1.45 billion for its 50 percent share in two huge Ugandan oil fields - Blocks 1 and 3A. The Ugandan government initially demanded $405 million from Heritage in capital gains tax, and, with Heritage's agreement, Tullow paid the Ugandan Revenue Authority (URA) $121.5 million. This was a third of the original tax demand, as Ugandan tax rules required a one-third payment before Heritage could challenge the demand.[20] Tullow placed the remaining $283.5 million into an escrow account, pending the outcome of the challenge, which left a reduced $1.045 billion payment that went directly to Heritage in exchange for the assets.[20] However, in 2011, Tullow complied with another URA demand for a further $313.5 million payment, which was the balance of the original tax demand, plus an extra $30 million which the URA had added to the bill.
Tullow signed a Sale and Purchase Agreement with TOTAL and CNOOC on 30 March 2011.[21] The second payment to the URA was made on 7 April 2011. The farm down to TOTAL and CNOOC was completed over 10 months later on 21 February 2012.[21] The Total-CNOOC transaction netted Tullow $2.9 billion in a farm-down arrangement sanctioned by the government. Heritage claims that Tullow was motivated to pay the $313.5 million by the desire to help the deal go through.[22]
In March 2013, court proceedings at London's High Court commenced after Tullow Oil sued Heritage Oil in a claim that it was forced to pay Heritage's $313 million tax bill after Tullow acquired Heritage's Ugandan assets.[23] During the trial, it emerged that senior directors at Tullow had discussed making an "undocumented" $50 million payment to the Ugandan government before considering funding parts of President Yoweri Museveni's re-election campaign.[24] Angus McCoss, an exploration director at Tullow, suggested to other executives in a group email in April 2010 that the company should pay for an oil licence to "meet the short term needs and demands" of President Museveni.[24] Graham Martin, Tullow company secretary, responded firmly in court, saying this was an "outrageous suggestion".[25]
Tullow's vice president for Africa, Tim O'Hanlon, was also alleged to have suggested that Museveni slur Heritage as part of a deal to settle the tax dispute. Additionally, it was brought up that Tullow's CEO, Aidan Heavey, is a known donor to the Conservatives, having donated more than £50,000.[26] President Museveni denied the bribery claims in an official statement on 18 March 2013. The statement caused some controversy for the court case as he went on to claim within that Tullow Oil completed the tax payment in order to successfully transact business within the country, a claim that Tullow denied in court.[27] In a public statement in Uganda, Jimmy Mugerwa (Tullow Uganda) deeply regretted the embarrassment caused by "false allegations" and quoted a personal letter from Aidan Heavey to President Museveni, which stressed Tullow's history of "fair and ethical dealings".[28]
During the court case, Graham Martin, Tullow's General Counsel, was criticised by Heritage's QC for disposing of hand-written notes potentially relevant to the proceedings. Martin rejected the criticism and stated that he had destroyed the notes when he had periodically cleared his office in Kampala in 2010–12.[6] On 14 June 2013, it was announced that Tullow Oil won the arbitration of the court case with Heritage Oil.[29]
