- 36 -
behalf of Amoco Egypt would not affect the latter's foreign tax
credit. As a consequence of this ruling, the PPIA proposal was
abandoned, and Amoco and its outside counsel began drafting
revised amending agreements to reflect the minor changes required
by the new ruling. Nordberg prepared an initial draft, which
left Article IV(f)(6) in the agreement, based on the premise that
EGPC would continue to pay Amoco Egypt's taxes and was entitled
to receive a deduction from income. Flaherty deleted Article
IV(f)(6) from Nordberg's draft based on EGPC's having orally
agreed to such deletion in the context of the PPIA negotiations
and a general concern regarding EGPC standing by its agreement to
discontinue taking a tax credit.
In a letter to EGPC, dated September 21, 1981, Amoco Egypt
advised EGPC that it had obtained "an Internal Revenue Service
Ruling on a revised approach to amending the Concession
Agreements which we believe will satisfy all of EGPC's concerns."
Amoco Egypt stated that, under the ruling, EGPC could continue to
discharge Amoco's Egyptian tax liability on Amoco Egypt's behalf.
On September 22, 1981, a meeting was held at Amoco's Chicago
offices where it was decided that Article IV(f)(6) could be
retained in the agreement.6 Nordberg advised that the most
6 Regarding this meeting, Chiati wrote in a memo to the file:
"EGPC's credit for payment of Amoco [Egypt]'s taxes to be left as
is." Despite the literal meaning of this sentence, it appears to
be merely a shorthand way of saying Article IV(f)(6) was going to
(continued...)
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