While former Worldcom boss Bernie Ebbers has just been found guilty of a $14 billion accounting fraud, the Australian Government and all the former Ozemail shareholders should say a little prayer of thanks to Baptist Bernie, the lanky Mississippi milkman made good, who now faces a 20-year stretch inside.

The member for Wentworth, Malcolm Turnbull, wrote out a cheque for more than $20 million to the taxman a few years back after Bernie’s fraud-propelled Worldcom agreed to buy Ozemail, a profitable market leader at the time, for a crazy $520 million as dotcom mania took hold.

The “Ozemail Three” – Sean Howard, Trevor Kennedy and Malcolm Turnbull – were the biggest winners, and while some of Trevor’s $60 million profit might have finished up in a Swiss bank account, Malcolm is understood to have paid full freight in capital gains tax on the $60 million he made.

The stake was apparently held in a corporate subsidiary of Turnbull & Partners, and the sale pre-dated the cut in the company tax rate to 30% and the halving of CGT for individuals who hold assets for more than 12 months. This means Malcolm would have handed over 36% of his cash profit – about $22 million – something Treasurer Peter Costello, now his erstwhile parliamentary colleague, would have no doubt enjoyed receiving.

The Federal Government shouldn’t expect any more CGT cheques out of the reincarnated Worldcom any time soon as the Ozemail residential business, which is still profitable, was sold to iinet for $110 million last month and the residual corporate business is worth nothing like $410 million.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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