Anthony Pratt

Jan 1, 2021 | Secret Rich List

Top 200 Rich List (2020)No. of Dark Companies:
10
Political Donations since FY 1998-99
Rank: 3Visy Paper Technology Pty. Ltd.Labor Party: $3,124,870
Wealth: $19.75b
Visy Board Properties Proprietary LimitedCoalition: $5,987,723
Wealth (2019): $15.57b
Visy Industries Australia Pty LtdIndependent: $30,000
YoY wealth change:26.8%Pratt Holdings Proprietary LimitedTotal: $9,146,368
Pratt Investments Proprietary Limited
Visy Industries USA Pty Ltd
Pratt Finance Proprietary Limited
Visy Board Proprietary Limited
Visy Industries Holdings Pty Ltd
Pratt & Co. Security Proprietary Limited

Amassing a fortune of $19.75 billion, Anthony Pratt is Australia’s third-richest person. Dubbed Australia’s “cardboard king”, Pratt is by far the most significant political donor with grandfathered companies, having donated $9.1 million since the 1998-99 financial year. 

Last year Pratt Holdings Pty Ltd donated $3 million to the major political parties – $1.59 million to Labor and $1.44 million to the Liberal Party. Pratt Holdings also donated $55,000 to The Menzies Research Centre, a think tank associated with the Liberal Party. 

Pratt is no stranger to hedging his bets when it comes to political leadership. Having portrayed himself as a “centre-left philanthropist” over the years, Pratt quickly adapted to the Trump presidency, taking out full page ads commending Trump’s contribution to job creation.

Last year, Pratt was pictured cosying up alongside President Trump and Scott Morrison at the opening of his factory in Ohio. Following Trump’s corporate tax cuts, Pratt’s personal wealth increased by $2 billion.

Pratt is privy to the privileges enjoyed by elite donors both at home and abroad. Ten of Pratt’s company benefit from the grandfathered exemption and are therefore exempted from disclosing their financial statements to ASIC. 

Earlier this month, Pratt’s Visy received a $10 million grant from the Bushfire recovery fund to purchase a “stacker reclaimer system”. At the same time, hundreds of Australians impacted by the fires last year continue to struggle with grant applications.

According to tax transparency data, one of Pratt’s companies, Pratt Consolidated Holdings, made $16 billion in revenue between the 2013-14 and 2018-19 financial years. Despite having a combined taxable income of $467 million, Pratt Consolidated Holdings paid zero tax for four of the six years. In 2016-17, they paid $18.8 million of tax on $133.3 million of taxable income and in 2018-19, they paid $9.4 million of tax on $80 million of taxable income. This equates to an effective tax rate of 14% in 2016-17 and 12% in 2018-19, both significantly below the headline corporate tax rate of 30%.

Pratt’s generosity as a political donor appears to be paying off. Not only are ten of his companies part of an elite group exempted from lodging financial statements, he also enjoys the luxury of being first in line for taxpayer grants and the comfort of political access.

 

How we compiled the Secret Rich List

What are they trying to hide? This is the driving question behind our ‘Secret Rich List’ project at Michael West Media.

Our aim is to shine the spotlight on the 1,119 large proprietary companies that continue to enjoy a privileged exemption from having to lodge financial reports to the Australian Securities and Investments Commission (ASIC).

An exemption from any new law or regulation is commonly referred to as ‘grandfathering’. In this case, the exemption from having to lodge audited accounts effectively creates two classes of Australian citizens; large proprietary companies that have to comply with government legislation, and the remaining 1,119 companies that by definition are required to do the same, yet enjoy an antiquated free pass from full public transparency.

What was issued as a “temporary measure” by the government of Paul Keating in 1995 has placed these companies above the law for more than 25 years. We believe it is in the public interest to put an end to this outdated government legislation once and for all.

Although ASIC  defines the companies enjoying the exemption as as grandfathered large proprietary companies, we prefer the term ‘Dark Companies’; it is a more fitting description of old wealth empires whose financial accounts are cloaked by this provision, shadowed from the public eye.

History behind the 1995 grandfathering exemption

This grandfathering regime was issued in response to The First Corporate Law Simplification Act 1995, a 1995 amendment to the Corporations Law at the time.

Before this amendment, whether a company had to prepare and lodge financial accounts with ASIC was determined by whether they were an exempt or non-exempt proprietary company (exempt meant the company did not have to publish accounts).

 ASIC defines exempt proprietary companies as:

“companies where there was no direct or indirect public ownership; that is, they were essentially owned by private individuals. The companies were not required to lodge financial reports where those financial reports were subject to audit and sent to members.”

 

Under the First Corporate Law Simplification Act 1995 the measure of whether a company had to lodge financial accounts with ASIC changed from the reporting entity test (exempt/non-exempt system) to what became known as the ‘small/large test’.If the company was considered a ‘large’ proprietary company, then it must lodge its accounts.

As of the law in 1995, an Australian proprietary company was ‘large’ if it satisfied two of the following three criteria:

  • consolidated gross assets of $5 million or more;
  • consolidated gross revenue of $10 million or more;
  • the company and the entities it controls (if any) have more than 50 employees at the end of the financial year.

The criteria for the small/large test has since been updated.

The new legislation meant that a significant number of previously exempt organisations now had to prepare and lodge their financial accounts.

The explanatory memorandum for the Bill notes: “To avoid disrupting established commercial arrangements, those existing exempt proprietary companies which have their annual accounts audited, which are large and which elect to continue operating under the existing rules, will not need to lodge their accounts with [ASIC].”.

Thus was born the concept of the grandfathered list - or Secret Rich List as we like to call it. In 1995, it was home to more than 2,000 large proprietary companies.

Significant Global Entities

Some 12 of the 1,119 Dark Companies are considered ‘significant global entities’ (SGE). An entity becomes an SGE if it fits at least one of the two following criteria:

  • a 'global parent entity' whose 'annual global income' is A$1 billion or more,
  • a member of a group of entities consolidated (for accounting purposes) where the global parent entity has an annual global income of A$1 billion or more.

These entities must prepare and lodge general purpose financial accounts with ASIC. This requirement is no different for the 12 SGEs on the Secret Rich List as their SGE status overrides the grandfathering exemption.

 

MWM Methodology

Using both the ASIC and Australian Electoral Commission (AEC) databases we have conducted more than 5,000 searches and counting.

Through the ASIC searches we have been able to collate the necessary information for every company on the grandfathered list, ranging from company directors, shareholders (both persons and organisations), a company’s auditor and much more. This has all been incorporated into our database, which is designed to map out these Dark Companies and tackle our driving question.

We also used the AEC database to generate an extensive list of political donations from these Dark Companies that date from the 1998-99 financial year to the present. We have designed a separate database for these figures, listing political donations from the entity itself, its directors and/or its shareholders. Each donation has been separated into recipient categories to better display the amounts funnelled to the Liberal and Labor parties and their constituencies.

The donations help indicate why the exemption, which ensures such a lack of transparency, has stood the test of time despite numerous attempts over the years from both sides of Parliament, the cross bench, the Greens, Treasury, corporate regulator ASIC and a joint parliamentary inquiry, which have all called for the exemption to be abolished. Both databases created by Michael West Media complement each other to bolster the narrative of the stories that follow.

In a similar approach to our Q.E.D. and Revolving Doors series, we will be releasing a profile each day that highlights directors of these Dark Companies, many of whom appear on the 2020 Australian Financial Review Rich List.

The ‘Secret Rich List’ project will provide considerable evidence to shore up the next attempt to repeal the grandfathering exemption, which Independent Senator Rex Patrick is scheduled to move before the Senate in early 2021.

If you have information about this or other entries in the Secret Rich List, contact us in full confidence via ProtonMail - click here.

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