Motivational Tuesdays – Fitness #5

5 - Workout Quote


WWN#32 – Kenya’s August Election Ruled Invalid! Kenyatta vs. Odinga

What’s been happening?

Kenya President Uhuru Kenyatta was re-elected in August amid accusations of election fraud by the opposition. The opposition leader Raila Odinga has claimed the results were rigged, echoing claims made against Kenyatta in the 2013 elections. In 2013, Kenyatta won with a wafer-thin margin of 50.03 percent, a result that Odinga disputed unsuccessfully but peacefully in court.

Official results this time around show that Kenyatta won by a comfortable margin of 1.4 million votes (54.27%). However, Odinga and his opposition party immediately rejected the results and appealed to the Supreme Court for a new election.

What Now?

Kenya’s Supreme Court has declared Uhuru Kenyatta’s victory in the presidential election last month invalid. The six-judge bench ruled 4-2 in favour of a petition filed by Odinga who had claimed the electronic voting results were hacked and manipulated in favour of the incumbent. A new vote is to be held on October 17 after the Court found there were “irregularities and illegalities” in the election.

Hours after the Supreme Court ruling, President Kenyatta addressed the nation, saying that he respects the court’s decision but personally disagreed with the decision. However, he has called for peace and respect for the rule of law. “Amani, Amani, Amani! (Peace, peace, peace!)” – Kenyatta

Odinga and his party welcomed the decision but said that they preferred the new election to take place later on October 24 or 31 in order to provide the Independent Electoral and Boundaries Commission (IEBC) with enough time to fix its problems.

What’s Next?

More will be revealed when the full judgment of the court is released within 21 days of the ruling. In the meantime, a weakening currency and plunging stock market indicate that the extended political uncertainty will inevitably have a negative impact on the country’s economy.

Organising another election will also be costly. The original vote cost around $500 million and involved more than 300,000 temporary workers. Now the IEBC has to repeat it and under heavier pressure to prove that results are reliable and accurate.

Another election is likely to mean more violence on the horizon. After a flawed presidential election in 2007, more than 1,000 people died and half a million people were displaced in the post-election violence and street protests. If Odinga loses this election as well, it is possible that he may challenge the results again or worse still, incite his supporters to take action through violent means.


WWN#31 – An Ongoing Conflict in India: Aadhaar Cards & Privacy

Aadhaar Card ExampleSource

What’s Been Happening?

In 2009, the Indian government introduced identity cards known as an Aadhaar card and rolled out by Prime Minister Narendra Modi in 2014. An Aadhaar is a 12 digit unique-identity number issued to all Indian residents based on their biometric data such as finger prints and eye scans and demographics. It is the world’s largest biometric ID system with over 1.1 billion enrolled members as of 15 August 2017. The Unique Identification Authority of India (UIDAI) is the regulatory body that oversees the Adhaar project and does not charge any money for any stage of the registration.

In 2015, a Supreme Court order had ruled that the registration for Adhaar was a purely optional program and that it could not become mandatory. In 2016 however, parliament passed the Aadhaar Act which allowed the government to require identification for government services.

Citizens have been notified that they will need to prove their identity using this card to be eligible to use certain services such as:

  • Filing income tax returns and having a permanent account number (PAN). This is similar to Australia’s requirement of a unique tax file number (TFN) for every individual that is lodging their tax return.
  • Subsidised fuel services
  • Hassle-free passport services
  • Concessional rail ticket booking
  • Hassle-free pension services

As the card was rolled out, concerns arose about privacy and data security, with the former becoming a hot topic as the government argued that privacy isn’t protected by India’s constitution in its attempt to make the national identity cards mandatory. The matter was taken to the Supreme court of India in 2012.

What Now?

A nine-member bench of India’s Supreme Court announced that individual privacy is a fundamental right, a verdict that will impact the way companies handle personal data and the roll out of the Adhaar card.

The court ordered that two earlier rulings by large benches that said privacy was not fundamental in 1954 and 1962 be overruled and declared privacy as “an intrinsic part of the right to life and liberty” and “part of the freedom guaranteed” by the constitution.  Those opposed to the growing demand for Aadhaar data cheered the ruling.

India’s Law Minister Ravi Prasad stated that the ruling was an affirmation of the government’s stance that privacy is a fundamental right but subject to reasonable restrictions. He said that it was not a setback to the government’s plans for Aadhaar and notes that the court is separately looking into the legality of the Aadhaar Act.

What’s Next?

The latest ruling means that the government may not have as much leeway to make signing up for the ID program mandatory. While the validity of the Aadhaar Act is still being challenged, this latest verdict will empower those already challenging the biometric platform by petitioning for a stay on the various ways in which Aadhaar is currently being used and where the government is trying to compel the use of Aadhaar (e.g. opening bank accounts with Aadhaar).

Apart from Aadhaar, the government’s power to collect and handle data will consequently be diluted and subject to change. Although a battle has been won, the war is far from over.


WWN#30 – Chevron admits defeat in Landmark Tax Case

What’s Been Happening? A Multinational Oil Giant Makes A Loan to Itself

In June 2003, a $2.5 billion credit facility was agreed between Chevron Australia and a U.S. subsidiary called Chevron Funding Corporation. Under the terms of the loan, CFC borrowed at 1.2 percent in the U.S. but on-lent the money at 9 percent which led to $1.1 billion in profits for CFC between 2004 and 2008. The profits were not taxed in either Australia or United States.

The Australian Taxation Office (ATO) issued amended assessments for each of the 2004 to 2008 tax years which amounted to an extra A$340 million tax bill owed but Chevron objected to the ATO’s assessment. The assessments were made on the basis that the interest paid by the Australian company was greater than it would have been if it was a dealing made between two independent parties that had no relationship to each other. In September 2014, a trial began and was subsequently ruled in favour of the ATO by the Federal Court in October 2015.

Chevron appealed the Federal Court decision in April this year but lost the appeal with the full bench of the Federal Court reaffirming the ATO’s position. The appeal was dismissed although Chevron continued to pursue to the matter to the next level by appealing to the High Court.

What Now? Undisclosed settlement

Chevron has withdrawn its appeal to Australia’s High Court following an agreement reached with the Australian Taxation Office on the loan transfer pricing dispute. Both parties declined to comment on the size of the settlement. As a settlement has been reached for these tax years, it is likely that terms have been agreed for future years as well which would push the total tax paid by Chevron to over $1 billion. In fact, the ATO had already audited returns from 2008 to 2013 over the same issues with a total of $1.062 billion in dispute.

The ATO’s initial estimates are that the Chevron decision will bring in more than $10 billion dolalrs of additional revenue over the next 10 years in relation to transfer pricing of related party financing.

What’s Next? Case Set As A Precedent, More targets for the ATO

The decision has direct implications for a number of cases the ATO is currently pursuing in relation to related party loans as well as indirect implications for other transfer pricing cases. ATO figures for 2014-15 reveal that Australian arms of multinationals had $420 billion in related party borrowings, meaning billions of dollars in interest payments could be subject to challenge and increasing scrutiny by the ATO. The receipt of funds from this case is a much needed windfall for the Australian government who holds over $700 billion in debt.

KPMG tax partner Grant Wardell-Johnson further commented that the case has meant that companies could no longer say that the subsidiary is completely independent of its parent. A transaction between related parties needs to be carefully considered to ensure that the transaction is dealt at arm’s length.