Attorney general seeks lawyers to sue oil companies

By Karen Blakeman
Advertiser Staff Writer

State Attorney General Earl Anzai announced yesterday that he is seeking applications from lawyers who want to represent the state in a lawsuit against Chevron and Texaco, oil companies accused of bilking Hawai'i out of a half-billion dollars in tax money.

Anzai made the announcement through a written statement and through a job posting on the state Web site. He did not return phone calls.

According to the statement, the state has already received, "serious expressions of interest by numerous national law firms."

Gov. Ben Cayetano ordered Anzai to pursue the lawsuit based on a report written by two accounting professors, James E. Wheeler of the University of Michigan and Jeffrey Gramlich of the University of Hawai'i.

In the report, the professors outline their beliefs that Chevron and Texaco — companies that are now merged — bought oil from Indonesia at inflated prices, a step that allowed them to take bigger deductions on their taxes.

Then, the report says, Indonesia would slip extra oil to Chevron and Texaco to make up for the overcharge.

The professors contend the practice continued for 30 years and the U.S. taxes evaded amounted to $3.35 billion. Hawai'i would be owed a little more than $500 million.

Chevron officials have said they settled with the IRS nearly a decade ago, when the federal government allowed them to file amended tax returns with additional payments of $675 million.

Cayetano said the federal government settled out of "foreign policy considerations," and that such consideration do not affect state governments.

The professors' report can be viewed at www2.hawaii.edu/~gramlich/caltex/home.html.

Anzai's job announcement is at www.state.hi.us/ag/job_opportunities.htm.