When President Leonel Fernandez attended a meeting of the board of directors of the Dominican Refinery (REFIDOMSA) last week, in Haina Oriental, the agenda called for handing the President a check for RD$200 million as an advance payment on expected earnings in 2005, as reported in Clave Digital online news service.
Things didn’t turn out that way, however, with the entire meeting concentrating on just how the Dominican Republic would handle its role in the Petrocaribe accords as well as a reduction in the tension between REFIDOMSA chief Aristides Fernandez Zucco and Venezuelan ambassador Francisco Belisario Landis. Fernandez had disputed the country taking on increased costs with Venezuela handling the transportation of the fuel under the new Petrocaribe agreement, among other matters.
As a result, sources at the refinery told Clave Digital that the money would be handled through normal channels, meaning the Ministry of Finance, and thereby avoiding the ceremonial gesture of handing the money to the President. According to the source, the gesture was supposed to serve as a mediation tactic and show that under the Fernandez Zucco management the refinery, an entity that is under the financial and operational control of the Shell Company, pays its taxes on time and in accordance with its 50% of the shares n REFIDOMSA.
But, symbolism aside, there are some issues that are not visible at first glance. According to highly placed sources inside REFIDOMSA, from the beginning of the Fernandez Zucco administration a comparison of financial statements of the company has been ongoing, using both those in Shell’s London offices and those in the REFIDOMSA offices, and, apparently, there are “significant discrepancies.” As a result, the source said that “we have made Shell, that is the refinery, pay more than RD$3.2 billion that it owed the government since 1994, between interest and taxes, plus the dividends.” One of the arguments used by Shell in order not to pay part of these earnings, RD$227 million, was that “the law on the repatriation of capital does not permit this,” according to the source.
Clave Digital says that this money was paid three months ago, but what is not clear is how much interest is owed on the 15-year delay in dividend retention, and whether this was paid or if the payment of this debt only included the nominal amount of RD$227 million.
The “First Financial Report” from Refidomsa, from 2004, provides some indications as to the answers to these questions. The report shows that there were payments of RD$1.012.5 billion for “retained earnings” that corresponded to the period before 1995, and that reached RD$227 million 1990 pesos (a 4.46 differential with regard to the value of a peso in 1990 and a peso in 2004). For the 1996-2003 period, a payment of RD$785.5 million was made.
The adjustments of the numbers regarding the earnings of the refinery also included additional sums for the payment of corporate taxes that for the same time frame reached RD$1.346 billion, and logically, were not included in any fiscal reports.
Regarding the payment of interest, the report does not reveal whether there has been any payment made, and it only cites the payment of the original amounts of income earnings taxes. Sources inside the refinery told Clave Digital that there was a “lace of transparency in the Shell Company”, and that “Shell was an autonomous enclave” or a “Postage Stamp- sized State”.