Selva Ozelli

Selva Ozelli Esq, CPA is a legal and finance executive with diversified experience dealing with highly complex issues in the field of international taxation and related matters within the banking, securities, Fintech, alternative and traditional investment funds (investing in equity, debt, real estate, derivatives, credit instruments, mortgage backed securities) and aerospace industries.  Her first of its kind legal analyses involving tax laws, Foreign Corrupt Practices Act (FCPA), blockchain technology have been published in journals, books and by the OECD. Her writings have been translated in to 15 languages. 

  • Do you have any papers related to environment and tax?   

Yes, I have published-- in tax treatises and tax publications-- several first of its kind legal analyses which globally altered the transnational adjudication and disclosure of (1) corporate polluting activity; (2) lobbying payments made to foreign government officials to change environmental laws/tax policies of countries.  And other articles as detailed below.

Industrial growth, technological advancement and globalization has boosted the world’s economy but depleted the earth’s resources. The inception of industrialization fueled with hydrocarbon energy created the highest levels of CO2 pollution which causes environmental calamities such as hurricanes, drought and wild fires which cause deforestation, giving us a glimpse at the downside of industrial growth and how the environment has been side-lined and deemed as a byproduct given the vast amount of economic power of polluter companies —kept  in play with the abundant transnational lobbying and bribery payments made to politicians to erode environmental laws/tax policies of countries.  

According to a report, just 100 multinational companies have been identified as accountable for more than 70% of the world’s greenhouse gas emissions that travel beyond national borders. Accordingly, in my tax articles further detailed below, I addressed the following international/transnational environmental issues:

Adjudication of transnational polluter companies    

In the U.S., in the absence of mechanisms to address the failure of free-markets to consider environmental costs and damages, these costs are typically shouldered by shareholders of companies causing environmental damage which pushes the polluter company’s stock value down.  Therefore, an effective tool in the fight for environmental change has been class action lawsuits.  

Rule 10b of the Securities Exchange Act gives shareholders the right to bring a lawsuit to recover economic loss sustained as a result of fraud related to the trading of their investments in stocks or bonds. This fraud can come in many forms, including corporate mis-governance involving bribery, lobbying, bid-rigging, tax evasion, a lack of effective internal controls over corruption prevention, poor financial record keeping including statements regarding future environmental liabilities and climate change impacts.  

I wrote the first of its kind legal analysis using U.S. international tax provisions and tax treaties which extended the application of U.S. laws to offshore matters allowing transnational enforcement proceedings, as well as U.S. shareholders class action lawsuits against polluter companies in the U.S. justice system.  

As a result, U.S. government agencies such as the Department of Justice (DOJ), the Internal Revenue Service (IRS), and the Securities Exchange Commission (SEC) have been able to investigate and litigate and U.S. shareholders have been able to successfully bring class actions suits against polluter companies for offshore fraud to recover damages from:

  • U.S. companies that violate environmental and other laws in foreign countries --such as Enron the fraudulent energy giant which has become synonymous with corporate corruption, accounting tricks, influence peddling, and environmental negligence.  Enron not only hid corporate debt, bribery payments in offshore entities to boost its U.S. financial statements, but it also bulldozed over environmental, human rights concerns to build a Bolivian pipeline which burst on January 2000, leaking 30,000 barrels of oil into a river in the Andean highlands; 
  • Foreign companies that violate environmental and other laws -- such as World’s worst oil spill by British Petroleum for the Deepwater Horizon Oil Spill, Volkswagen for the Diesel Emissions Fraud scandal, and Royal Dutch Shell PLC’s for their plan to drill in the Arctic Ocean. 

Class actions lawsuits are a uniquely American invention, and historically they were not allowed in most other countries. Although that has changed in recent years-- with more than two dozen countries permitting some type of class, collective or group action in a rising tide of climate/environmental litigation against major fossil fuel producers worldwide.   Unlike earlier cases, these cases are not only being launched by shareholders, but also by environmental non-government entities, cities and counties. For example, the Netherlands has become a central battleground for class action suits in the EU against hydrocarbon companies, legally compelling these companies to address their role in the climate crisis.  

The threat of multiple jurisdictional class action law-suits stemming from environmental liabilities motivated nearly 1,400 companies around the world to adopt an internal carbon price/tax and disclose them in their financial statements. This includes more than 100 Fortune Global 500 companies with collective annual revenues of roughly $7 trillion which have aligned with the UN Global Compact’s Caring for Climate Business Leadership Criteria on Carbon Pricing, as well as major oil companies which committed to adopting a carbon pricing/tax disclosure after a personal appeal from Pope Francis at the Vatican to avoid “perpetrating a brutal act of injustice” against the poor and future generations. Because internal carbon pricing has emerged as an important tool to help companies manage climate risks and identify opportunities in the low-carbon economy transition.  

In the past two years, there has been particularly strong increase in corporate internal carbon pricing initiatives in China, Japan, Mexico, and the U.S.  Companies which haven’t yet adopted an internal price/tax will soon have to do so, as investors demand more and more insight into the risks of climate disruption according to a report prepared by the Task Force on Climate-related Financial Disclosures (TCFD).

Adjudication of corrupt corporate transnational payments to foreign government officials to thwart environmental laws/taxes   

One of the major hindrances to switching from hydrocarbon to clean energy is the lobbying/corruption efforts of the hydrocarbon industry.   The OECD says that, one in five cases of transnational bribery occurs in the oil, gas and mining sectors which account for $2.3 trillion in contracts and licenses, production, revenue collection, revenue allocation, and social and economic spending.  Every year, the world’s five largest publicly owned oil and gas companies spend approximately $1 billion of shareholder funds on misleading climate-related branding and lobbying payments to politicians designed to control, delay or block binding climate-motivated policy in various countries. This has hindered governments seeking to implement green energy policies in the wake of the Paris Agreement which are vital in meeting climate change targets according to a report.   

To bolster worldwide adjudication of transnational lobbying/corruption payments by companies that attempt to sway implementation of green energy policies, I wrote the first of its kind legal analysis using U.S. international tax provisions and tax treaties which extended the application of foreign corrupt practices act (FCPA) to offshore matters, allowing the cross-border enforcement of it.  The FCPA was originally a U.S. law but has been adopted by 41 countries.  It criminalizes bribery of foreign officials by companies and individuals pursuing business in foreign countries requiring them to create and maintain proper accounting controls and accurate records of their financial dealings by subjecting violators to civil and criminal penalties and the risk of losing the benefits of doing business with a government agency. As a result globally there has been a dramatic increase in:

  • Cross-border FCPA enforcement actions against the world’s largest 28 hydrocarbon companies;
  • Cross-border FCPA enforcement actions against heads of state who  accepted lobbying/bribery payments to change their country’s climate policy, as I wrote about in another article;
  • Class action lawsuits against FCPA violating foreign hydrocarbon companies.
Mutual Connection Between Taxes and Environmental Problems

For example Brazil’s  Operação Lava Jato (Operation Car Wash) which is world’s largest corruption investigation, involves an ongoing criminal investigation of corruption at state-controlled oil company Petroleo Brasileiro SA (Petrobras), where a vast and intricate web of political and corporate racketeering involved the heads of states of 12 countries: Brazil, Peru, Guatemala, Argentina, Ecuador, Mexico, Chile, Colombia, Dominican Republic, Venezuela, Panama and the UK trade minister who lobbied the company on behalf of oil giants to relax Brazilian environmental and tax laws.  

So far, Operation Car Wash has resulted in more than 300 indictments, 100 convictions of businessmen and politicians, including but not limited to former Brazil President Luiz Inacio Lula da Silva, who is serving a 12-year prison sentence; former Brazil President Michel Temer, who has been arrested; former Brazil President Dilma Rousseff, who was impeached; former Peru President Alan Garcia who shot and killed himself moments before the police attempted to arrest him.  

Petrobras paid criminal penalties to the U.S. and Brazilian authorities a combined total of $1.8 billion to resolve the U.S. government’s investigation into violations of the FCPA in connection with Petrobras’s role in facilitating payments to politicians and political parties in Brazil, as well as a related Brazilian investigation.  And  $2.95 billion to settle a U.S. class action corruption lawsuit, in what was said to be the biggest such payout in the U.S. by a foreign entity for making materially false and misleading statements to U.S. investors in a $10 billion stock offering completed in 2010.  

Transparency to corrupt corporate transnational payments to foreign government officials to thwart environmental law/tax   

On the topic of lobbying and corruption payments made to influence environmental laws/taxes, I co-authored with Roger Russell, Esq an article published by the OECD after the U.S. rescinded in 2017 a U.S. Securities Exchange Commission rule that would have required oil companies to disclose details of their payments to international governments in connection with oil and gas production and also withdrew its efforts to be validated under the Extractive Industries Transparency Initiative (EITI).  

This article proposed to establish a streamlined global standard for payment disclosure to foreign governments, as a part of OECD’s Country-by-Country Report (CbCR) for multinational companies, to bring transparency to lobbying and corruption payments.  The CbCR is part of OECD’s Base Erosion and Profit Shifting (BEPS) transparency initiative and is adopted in 77 countries including the U.S., to provide a template for multinational enterprises to report annually and for each tax jurisdiction in which they do business in.  Because, without payment transparency, it’s even more difficult to ensure oil deals, lobbying efforts to change a country’s climate law/tax policy, pursued by major oil companies are free from corruption.  The CbCR, is automatically exchanged with other governments and is publicly disclosed in the EU.  So far: 

  • Norway mandates hydrocarbon companies to disclose payments; and 
  • U.S. mandates all multinational companies -- including hydrocarbon companies-- to disclose cryptocurrency and property (such as gold, cryptocurrency mining machines etc.) payments on the CbCR for each tax jurisdiction in which the company conducts business in since 2017-- as I explain in detail in another article.   

Tax deduction for charitable donations in cryptocurrency for environmental disasters caused by climate change   

There is strong body of scientific evidence that most of the global warming observed over the past half century is very likely due to human-caused greenhouse gas emissions, making Atlantic hurricanes fiercer, driving up the number of storms that rapidly intensify, becoming more lethal and difficult to forecast, according to new research led by the National Oceanic and Atmospheric Administration (NOAA).

In the U.S., in the absence of mechanisms to address the failure of free-markets to consider environmental costs and damages from hurricanes, these costs are shouldered by good Samaritans who make charitable donations to fund recovery efforts from climate change related environmental disasters, such as:

  • Mike Bloomberg, U.N.’s Special Envoy for Climate Action, who donated $8.5 billion to fund his Beyond Carbon initiative to fight climate change and shutter coal-fired power plants by working across sectors and with a variety of partners globally to transition to a green energy economy by lowering the policy and market barriers to renewables and low-carbon, solar energy solutions;
  • Country music artist Kenny Chesney who composed the Song for the Saints album and is donating the proceeds from this album and tour to fund his Love-for-Love-City Foundation to finance post-hurricane Irma rescue and rebuilding projects in the U.S. Virgin Islands  including solar power projects;
  • Methodist church goers from Roanoke and New River, Virginia who contributed funds to buy solar panels for people in hurricane Irma and Maria-ravaged Puerto Rico.

I wrote an article explaining how to claim a U.S. tax deduction for charitable donations of cryptocurrency to organizations addressing environmental conditions that may have been caused, in part, by the enhanced CO2 emissions caused by coal fueled cryptomining and trading of cryptocurrency. 

  • Is Solar Power Adoption Hindered by an Inadequate Global Environmental Tax Policy?   

I wrote an article that explores how a global shift towards green energy will require the removal of the technological/infrastructural, financial and regulatory/tax policy barriers.  Since transitioning to green energy-- 69% solar-- can be accomplished globally, in an economically competitive way, to reduce greenhouse gas emissions in the energy system to zero by 2050.  My article evaluates the tax and solar policies (including space power satellites) of the top six CO2 emitting countries:  China, U.S., EU, India, Russia and Japan.

Blockchain tracks deforestation of Brazil’s Amazon rainforest Selva   

Scientific evidence suggests that climate change caused by CO2 emissions which is at its highest historic levels, has been increasing drought, the length of the fire season, the size of the area burned each year and the number of wildfires which are causing deforestation all over the world. 

Deforestation is the second leading cause of global warming and produces about 24% of global greenhouse gas emissions. Scientist say that deforestation in tropical rainforests adds more CO2 to the atmosphere than the sum total of all the cars and trucks on the world’s roads. In some countries, such as Brazil and Indonesia, deforestation and forest degradation together are by far the main source of national greenhouse gas emissions.  Combating deforestation could deliver more than a quarter of the carbon reductions needed by 2030 to avert a climate crisis and is one of the most promising and cost-effective ways to lower CO2 emissions. 

I wrote an article about Brazil’s blockchain initiatives and digital tax laws, which mentions that Brazil has developed a blockchain technology platform for property registration - for the world’s fifth largest country occupying half of South America's land mass - to protect millions of trees in the Amazon rainforest “Selva”. The aim of the initiative is to spare illicit development of the biggest, most bio-diverse nature reserve in the world. The southern city of Pelotas is among the first in Brazil to experiment with a fully computer-based Blockchain-based land-titling system.

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