- 31 -
in August 1983. Other Amoco representatives in the negotiations
included Flaherty, Chiati, and Dudley.
It was Amoco's understanding, going into the negotiations,
that it was necessary only to keep the ARE whole, based in part
on Hilal's statement at the September 28, 1980, meeting. At the
first negotiating session in late September 1980, however, Kaptan
asserted that both the ARE and EGPC should be kept no worse off.
Amoco countered that keeping EGPC whole should be taken care of
between EGPC and the ETD, and did not concern Amoco.
Because it wanted to be kept whole, EGPC objected to the
deletion of Article IV(f)(6), arguing that this provision
permitted them to take a credit for the taxes paid on Amoco
Egypt's behalf. EGPC asked what Amoco intended to do to
compensate EGPC if it lost what it viewed as its right to a
credit for Amoco Egypt's taxes. The Amoco negotiators disagreed
with EGPC's interpretation of Article IV(f)(6) and expressed the
view that the article provided for a deduction from income for
the taxes paid on Amoco's behalf. Amoco did not argue the point
because it anticipated that Article IV(f)(6) was going to be
taken out of the MCA. Amoco did not investigate EGPC's assertion
that it had been claiming credits for Amoco Egypt's taxes. At no
time during the restructuring negotiations did Amoco discuss with
EGPC the basis for EGPC's taking a tax credit.
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