Senate urges suit against Chevron alleging tax fraud
By Lynda Arakawa
Advertiser Capitol Bureau
The Senate yesterday approved resolutions urging Gov. Linda Lingle's administration to sue ChevronTexaco Corp. for alleged tax evasion.
Advertiser library photo • April 30, 2002
Supporters of the resolution said litigation is necessary to recover hundreds of millions of dollars in unpaid taxes owed to the state and that state officials need to stand up against tax fraud and protect consumers' tax dollars.
Sen. Sam Slom said he would have no problem with a resolution urging the administration to find more information.
Those who opposed the resolution called the move a "witchhunt" and questioned whether a lawsuit is justified now.
The Senate voted 20-4 to approve the resolution. Sen. Paul Whalen, R-3rd (Kohala, Kona, Ka'u), was the only one of five Senate Republicans who did not oppose the resolution.
Gov. Linda Lingle said she's waiting for a report from the state attorney general's office and that she met with two key deputy attorneys general who have been looking the issue for a couple of weeks.
"The reason for the time lapse is that they're continuing to get documents from both the IRS and as well as from Chevron, to convince themselves that there is in fact something to pursue," Lingle said. "We haven't reached that decision yet."
Lingle said she expects the report in about a month.
The company allegedly paid inflated prices for crude oil through an Indonesian operation, allowing it to avoid U.S. taxes using both foreign tax credits and an offsetting rebate in the form of oil. The allegations were raised last year in a report by former University of Michigan professor James Wheeler.
ChevronTexaco has denied the charges.
The Internal Revenue Service took Chevron to court on similar allegations in 1994. Chevron settled that case for $675 million. Texaco also settled similar issues with the IRS. The two companies have since merged.
Senate Commerce, Consumer Protection and Housing Committee Chairman Ron Menor, D-17th (Mililani, Waipi'o), said there is substantial evidence that ChevronTexaco carried out a tax evasion scheme and that it's time for the state to take decisive action.
Sen. Sam Slom, R-8th (Kahala, Hawai'i Kai), said he would have no problem with a resolution urging the administration to find more information, adding that the administration is doing that. But "that's a long way from, 'Let's have litigation based on supposition and allegations,' " he said.
Reach Lynda Arakawa at larakawa@honoluluadvertiser.com or 525-8070.
