Betty Klimenko & Monica Saunders-Weinberg

Jan 7, 2021 | Secret Rich List

Top 200 Rich List (2020)No. of Dark Companies: 5
Political Donations since FY 1998-99
Rank: 29Terrace Tower Group Pty. LimitedLabor Party: $506,338
Wealth: $2.73bTerrace Tower Holdings Pty. LimitedCoalition: $730,517
Wealth (2019): $2.37bProspect Enterprises Pty LtdIndependent: $500
YoY wealth change: 15.5%J S Securities Pty LtdTotal: $1,237,355
Eastgardens Pty Ltd

Betty Klimenko and Monica Saunders-Weinberg (right) are the daughters of Westfield co-founder, John Saunders. Their inheritance included five family-owned Dark Companies which are exempt from lodging financial accounts with ASIC and are large donors to both the Liberal and Labor parties.

The billionaire pair sit on the board of all five companies on the Secret Rich List.

Monica Saunders-Weinberg is also chairwoman of the Gold Dinner fundraiser which raised $3.2 million for the Children’s Hospital Foundation in 2019. She added to her extensive property portfolio in July 2020 after purchasing an $8 million home in North Bondi.

Ms Klimenko was adopted into the family and now owns the Erebus Motorsport team based in Melbourne.

Together, the sisters established the Saunders Family Charitable Program which ranges from donations to major not-for-profit organisations and charities, to financial support for families and individuals.

Philanthropic achievements aside, the Saunders family are also well versed in the art of political donations, granting over $1.2 million to the major parties since 1998.

In 1960, their father John Saunders co-founded Westfield Development Corporation – now a global retail empire – with fellow secret rich-lister Frank Lowy. Both men immigrated to Australia in the early 1950s to escape post-war Europe.

After selling his Westfield shares to Lowy for $21 million in the mid-1980s, Saunders stood down from the company in 1987. He used the money to build his real estate and investment operation Terrace Tower Group Pty. Limited, a Dark Company and parent to his four other grandfathered entities on the Secret Rich List.

ATO tax transparency data shows Terrace Tower Group generated a total income of $1.1 billion between the financial years 2015/16 to 2017/18. In this time the Dark Company had a taxable income of $120.9 million of which they paid $36.2 million, or 30%, in tax.

Major real estate assets in Australia include Westfield Eastgardens, Supa Centre Moore Park, and head office 80 William St Woolloomooloo (pictured above). The group also runs investment operations in the US.

Like other Westfield retail centres in Australia and across the globe, the Eastgardens complex holds the Westfield name and exhibits its famed red logo. This would have shoppers believe they were purchasing their jeans, jewellery and smartphones in a shopping centre owned by the retail empire, when in fact it was property controlled solely by a Dark Company with no affiliation to Westfield or the Lowy family.

That was until 2018, when a company controlled by Terrace Tower Group sold 50% interest in Westfield Eastgardens to ASX-listed company Scentre Group for $720 million, one of the largest single-asset retail deals conducted in Australia.

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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