The Biggest Robber: Crown caught and confessed as cagey Lendlease covers up

Finance & Tax||
Lendlease, Crown Resorts, Royal Commission, tax
The Barangaroo Triangle. Photo credit: the Urban Developer

Organised crime haven Crown Resorts or corporate welfare champion Lendlease? Who will win? Michael West reports on the new game show, The Biggest Robber.

Lendlease has carried out a tax fraud of $300 million. Crown has carried out a tax fraud of $480 million.  

Both Crown and Lendlease attempted to conceal their frauds from the regulator. Crown withheld information from the Victorian Regulator, and Lendlease falsified its accounts and withheld information from the Australian Tax Office.

The Crown con was accidentally revealed during the Royal Commission. The Lendlease larceny was unveiled by a tax lawyer who did the right thing, and paid a high price, yet it is still being politely debated behind closed doors even with a Tax Office ruling clearly against them. Such is the double standard.

Ordinary Australians and small businesses are routinely slapped with penalties for the tiniest of tax heists, even paying their taxes late, while corporate juggernauts get to cover up, deny and conceal. When discovered, they then argue the toss, wail about it, until finally they might concede to a settlement.

There has always been one rule for the big, another for the small. Yet, as the pandemic has sharpened inequality, double standards have now so eroded public confidence in government that it is only the gullible and political ideologues who are left to claim the Aussie fair go is still a thing.

Finally, busted and shamed at the Royal Commission, casino operator Crown Resorts has hopped onto the front foot and made reparations of sorts to the Tax Office by agreeing to stump up $61m in “unpaid taxes”. Note the language. Crown conceded it had “underpaid its taxes” and this was duly and faithfully reported in the press, that is, that it had “underpaid its taxes”, not ripped off Australia, or conned a nation, just “underpaid”.

Were the ABC to have dared to call it what it is, a gigantic swindle, its editors would have been embroiled in a long and arduous tangle of pettifogging via the ABC’s internal complains procedures.

Lendlease is still arguing the toss, still claiming the coin rolled ‘heads’ when the ATO is saying ‘tails’. After the Tax Office published a draft ruling confirming Lendlease’s larceny, Lendlease and its advisers PwC hijacked the submissions of the Law Council and the Tax Institute to attack those who had blown the whistle. The Tax Institute, to its credit, withdrew its submission and substituted a submission endorsing the ATO’s ruling.

Teachers and nurses fund Aware Super now exposed to Lendlease retirement village rorts as Tax Office dawdles

 

Both Crown and Lendlease denied the magnitude of their frauds. Yet as Counsel at the Royal Commission explained:

On 22 January 2021, Crown sent a response to the (regulator) VCGLR bearing Ms Coonan’s (Helen Coonan the chairman) signature, adopting the same defensive approach it had in the past. Ms Coonan conceded the letter was, effectively, old Crown at work and agreed with the proposition that it’s the old Crown, taking every point, arguing every issue, not accepting basic propositions of fact that are clearly open. Whatever the reason for the choice Crown made, the decision to adopt the approach represented another display of poor judgment and one which reflects poorly on Crown’s character …

It is in instances where things really matter that the true character, honesty and integrity of the licensee is on display. The combative way in which Crown conducted the Bergin Inquiry is one yardstick by which to measure its approach. 

Lendlease executes its corporate governance from the Crown playbook: try to hide it from the ATO; take every point; argue every position; claim it isn’t a fraud; argue it is allowed because someone else is taxable twice on $1 billion. And when all of it fails, it has the cheek to blame the regulator.  

Lendlease is now blaming the ATO. Senator Rex Patrick inquired about “the Lendlease issue” in the Senate Economics Committee hearing on June 2. The Second Commissioner of the ATO, Jeremy Hirschhorn, said: 

Of course, I would hope that a major company would not seek to say, ‘I get cost base notwithstanding that I claimed a deduction because I never should have received a deduction, but you are giving me that deduction because of a public ruling’.

A little background to Mr Hirschhorn’s comments. The ATO issues public rulings on its view of many tax laws. If a taxpayer relies on a public ruling in preparing his or her tax return, that taxpayer cannot be assessed differently by the ATO, even if the public ruling, and therefore the tax return, is wrong. 

The ATO published a comprehensive public ruling on retirement village operators in 2002. In that ruling, it said that amounts payable to residents upon termination of their lease agreements are allowable deductions.  

Lendlease is now saying that even though it claimed $1billion of tax deductions on the repayments of the lease premiums, it should not have been allowed those deductions. This is cynical dissembling, a key weapon in the armoury of the tax lawyer.  Lendlease just made this argument up.   

Having acted consistently with the public ruling for twenty years, having concluded a deed with the ATO to ensure deductibility, and having in fact deducted over $1 billion in payments, Lendlease now says this was all wrong! Those deductions aren’t allowable under the income tax law, and they are only available because of an ATO mistake. Such are the standards of honesty in corporate Australia, standards which are glossed over, bombarded with PR, by business lobby groups.  

Even if they were right, why hasn’t the Lendlease Board simply given the money back to the ATO?  Why keep taxpayer money if it is the ATO’s fault? The answer is because Lendlease is like Crown; and it is in instances like this that the true character of the board, its honesty and integrity, is on display.

Then there are the enablers, the guys driving the getaway cars, plotting the public robbery.

There is  PwC, who advised on the transactions in question, KPMG, who as auditor for 60 years signed off the booking of the profits from robbing Australian taxpayers, claimed it was in accordance with the accounting standards. EY is part of the gang too, omitting to mention to APG they were buying into an entity with a huge undisclosed tax liability.

EY is also auditor for Crown Resorts. It is unscathed.

When Lendlease finally fesses up, the enablers will saunter off with impunity, pretending nothing ever happened. It was all a mistake. The millions the Big Four audit and tax firms donate to political parties is their shield against accountability.

Who wins Bigger Robber? Crown directors and Lendlease, those with legal and financial responsibility, are still there. The Lendlease heist is bigger in dollar terms and the company is yet to fess up. So, Lendlease claims the mantle of Biggest Robber Australia. Its glory even more resplendent as it has paid virtually no income tax in Australia for ten years while forking out high dividends to shareholders and lavishing high remuneration on those who have presided over the robbery. 

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