Bruce Gordon and WIN Corporation

Feb 2, 2021 | Secret Rich List

Top 200 Rich List (2020)No. of Dark Companies: 6
Political Donations since FY 1998-99
Rank: 111WIN Corporation Pty LtdLabor Party: $0
Wealth: $892mWIN Television Network Pty LtdCoalition: $4,379
Wealth (2019): $728mWIN Television NSW Pty LtdIndependent: $0
YoY wealth change: 22.5%WIN Television QLD Pty LtdTotal: $4,379
Crawford Productions Pty Ltd
Crawford Productions Holdings Pty Ltd

Media mogul and Bermuda resident Bruce Gordon has ties to the Murdochs, Packers, major Hollywood studios as well as a disgraced former Italian president. He controls six Dark Companies within his regional television empire WIN Corporation which are exempt from lodging financial accounts with ASIC.

Growing up in the inner city of Sydney, Gordon spent his days learning magic tricks and juggling fruit at his father’s stall in Pitt St to lure potential customers. Honing his craft, he earned himself a performing gig with Sydney’s Tivoli Circuit in 1952 and later received a managerial position with the exhibition.

Gordon would go on to promote their shows around the country throughout the 1950s. It was during this time when he met Rupert Murdoch who was in the early stages of building his now global media empire out of Adelaide. He also became acquainted with Nine executive Bruce Gyngell; the man hired by Sir Frank Packer to establish Australia’s first commercial television station TCN-9, as well Frank’s sons, Kerry and Clyde.

His exposure in the scene and networking capabilities landed him a sales executive job at prominent Hollywood studio Desilu Productions in 1962. Gordon’s success at the company led to a promotion to president of international TV sales at Paramount in 1974, a role he maintained until his retirement in 1997.

Throughout the 1960s, Gordon had been buying stocks in Australia’s Ten network, building a stake large enough to catch Murdoch’s eye. In 1979, the growing media giant offered Gordon his company Television Wollongong Transmission Ltd in exchange for the Ten shareholdings. Thus was the birth of the WIN Corporation empire which has now expanded into every state of the country.

The Group purchased longstanding Australian media production company Crawford Productions in 1989. They also own a 50% stake in NRL club St George Illawarra Dragons. This means that the rugby league club is primarily controlled by a Dark Company.

During his 35-year tenure on the executive board for Paramount Studios, Gordon became a business associate and close friend to Italy’s longest-serving post-war president Silvio Berlusconi.

With events that transpired surrounding Berlusconi’s family holding company Fininvest, Gordon was subsequently linked to the Italian media and political figure’s arrest in 2013.

The investigation which stretched over many years revealed that Fininvest purchased TV rights from Hollywood studios including Paramount using offshore subsidiaries and sold them to Mediaset, an Italian television business owned by Berlusconi. Mediaset would purchase these rights at an inflated price, allowing the additional funds (approximately $386 million) “to be put into offshore slush funds controlled by Berlusconi and his associates, thus making Fininvest appear less profitable, and slashing its tax burden.”

Gordon was initially a suspect in the case and would provide evidence which saw the former Italian president receive a 4-year jail sentence. Although the judge determined the Australian businessman was not involved in any criminal activity, he noted that Gordon “along with other Paramount executives – was a key part of the curious mechanism whereby certain Paramount rights were sold to … Berlusconi’s Mediaset for inflated amounts”. The case received scant media attention in Australia despite the involvement of one of the country’s most prominent media figures.

Gordon has been a permanent resident within the tax haven of Bermuda (his estate pictured above) since 1985 where he enjoys certain personal tax arrangements. These arrangements require Gordon to spend more than 183 days offshore within a calendar year. During the pandemic last year, Gordon exceeded his stay in Australia, yet the ATO awarded the multi-millionaire an exemption from incurring an additional tax bill.

Through his private investment vehicle Birketu Pty Ltd, Gordon is the third-largest shareholder in media conglomerate Nine Entertainment with a commanding stake of 14.94%. He was previously a substantial shareholder in the troublesome Ten Network. Alongside Lachlan Murdoch in 2017, Gordon attempted unsuccessfully to make a joint bid for Ten, losing out to US media giant CBS.

He also holds a large stake in another regional media network, Prime, which he utilised in 2019 to block a merger between Prime and Seven.

Yet, Gordon was a big proponent of the $4 billion merger between Nine and Fairfax media in 2018. The merger was a result of changes to media ownership laws passed by the Senate in 2017. The bill abolished the existing rule “preventing one company from owning print, radio and television assets in one market, and TV broadcasters from reaching more than 75% of the population”.

ATO tax transparency data for financial years 2013/14 to 2018/19 (barring 2016/17) shows Win Corporation Pty Ltd (a Dark Company) declared an income of $1.3 billion. Over the five years, their tax payable was $35.2 million, representing 26.9% of their taxable income. However, taxable income for the period was $130.6 million, just 9.6% of their total revenue. In 2018/19, taxable income and tax payable were $0.

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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