Halliburton takes KBR to court over $256 mln tax dispute

July 27 Fri Jul 27, 2012 3:54pm EDT

July 27 (Reuters) - Halliburton Co and KBR Inc are battling in court over a $256 million tax dispute, as the two companies seek to put to bed the various issues lingering from their corporate break-up five years ago.

Especially in relation to work done for the U.S. military in Iraq, Halliburton, the world's second-largest oilfield services company, and its engineering spin-off have found themselves in court a number of times since their split, usually on the same side.

Separately, Halliburton said in a regulatory filing on Friday that it was investigating payments to third-party agents relating to customs and visa matters in Iraq, as well as payments made to an agent related to customs in Angola.

It gave no more details, except to say this was disclosed to U.S. authorities last quarter during a meeting about a separate investigation of Halliburton's Angola unit over possible Foreign Corrupt Practice Act violations.

As for the Halliburton/KBR tax-sharing agreement, it covers taxes for 2001 through their 2007 separation, which can only be finalized once the tax authorities and both companies have analyzed the results, Halliburton said.

Halliburton said it requested last quarter the appointment of an arbitrator, in accordance with the agreement, to find that KBR owed it $256 million.

But KBR denied it owes anything, arguing that Halliburton actually owes it money under the agreement, and that the dispute should be settled under the master separation agreement instead.

So on July 10, Halliburton filed suit in the District Court of Harris County, Texas, to compel KBR to arbitrate it under the tax sharing agreement. KBR said in its quarterly filing with regulators this week that it was evaluating its response.

It is not the first time they have tussled over the terms of their split. In 2010, Halliburton threatened to scrap its indemnification of KBR for corruption charge penalties if KBR decided to take control of a certain investigation.

That probe was related to some bribes on $6 billion worth of contracts awarded to KBR for Nigeria's Bonny Island liquefied natural gas project, a matter on which Halliburton finally closed the book last year.

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