The Australian
deserves a pat on the back for devoting resources to the extraordinary
unfolding court case between Village Roadshow and its former director,
Peter Ziegler, who put together a $900 million tax-effective film
financing operation and is seeking a $76 million bonus for his efforts.

Village managing director Graham Burke took the stand for the first time yesterday and was extremely colourful as you see from this story in The Australian. This
followed a gruelling five days on the stand for Village Roadshow
chairman Robert Kirby. Check out the coverage of his final day here.

You
have to wonder why on earth Village didn’t settle? When was the last
time a company chairman spent five full days in court? The ATO will be
all over the transcripts, as Village was arguably the most aggressive
tax planner on the ASX over the last 15 years and much of their dirty
linen is now being aired by the architect of some of the schemes.

Burke was really calling a spade a spade yesterday, as The Australian explains:

Testifying in Village’s defence against a $76 million
lawsuit from former executive director Peter Ziegler, Mr Burke said
that during the mid-1990s the company operated tax-effective investment
schemes under the euphemism of “private investor film financing”.

“At
the time, ‘private investors’ was used to cover up what were tax
schemes,” he said. “It was people in tax rorts, they had no interest in
films.”

Mr Burke said that Mr Ziegler, a former tax adviser with Ernst & Young, had the idea of referring to the schemes this way.

Village
has long been regarded as having the worst corporate governance of any
top 100 company, although its performance is now so poor that it no
longer ranks in the top 100. Burke came up with the lovely line on
Monday that Ziegler was “a cabinet minister” and was good at “sourcing
OPM (other people’s money) through tax opportunities and other
innovative and creative ways.”

There have even been allegations of anti-semitism, as this extract The Australian on Monday demonstrates:

Mr Ziegler told an earlier hearing that during a discussion
in May 2000, Mr Burke had told him “that f…ing Jew isn’t getting $500
million of our money, he never expected it and we don’t intend to give
it to him.”

Mr Burke then said he was referring not to Mr
Ziegler but to Village Roadshow Pictures chief executive Bruce Berman,
adding that Village was “happy for you to have a couple of hundred
million dollars for having created this opportunity for us,” Mr Ziegler
told the court.

Burke completely rejected this claim in court yesteday and said that most of the people he dealt with in Hollywood were Jewish.

The
Packers are also in an interesting position, having hired Ziegler last
year while remaining mates with the Village Roadshow crew. A letter
written by Burke in 2002 included the claim that his “good friends
Kerry and James Packer sure as hell would not be trying to buy half of
it right now” if the (film finance) division was not doing well.