By Stephen Mayne, doing an Alan Ramsey:
interesting aspect of the Rob Gerard affair is the way the press failed
to put anything like the same amount of pressure on Westfield boss
Frank Lowy in June 1995 when he was first appointed to the Reserve Bank
board by the Keating Government, albeit one month after settling his
tax dispute with the ATO. Then SMH reporter and current AFR China correspondent Colleen Ryan was the only person to have a go – and this is part of her story on July 3, 1995:
Mr Frank Lowy, the newest member of the Reserve Bank board,
saved an estimated $25 million when his family settled its long-running
dispute with the Australian Tax Office in May. The dispute involved two
amounts of $42.8 million and $5 million received by a Lowy family
company, Cordera Pty Ltd, in January 1987 and November 1988. Cordera is
the primary vehicle for the family’s shareholding in Westfield Holdings
The Lowys claimed that the money was a capital injection
from an unknown investor. The Tax Office claimed it was income.
Elements of the dispute went before the Administrative Appeals Tribunal
on May 9, and several days later the case was settled.
family company Cordera Pty Ltd was liable for primary tax of $21.4
million on the disputed income. Penalties at 40 per cent were expected
to be $8.5 million, while interest at 14 per cent a year compound was
expected to be about $20 million. The total for tax, penalties and
interest outstanding for Cordera was estimated within the Tax Office to
be $50 million to $51 million.
However, the Lowy family reached
a settlement with the ATO to pay a total of $25 million. The settlement
caused consternation among Tax Office staff. Two investigators involved
in the investigation took stress leave after the settlement decision.
ATO staff were upset primarily on equity grounds. They saw the
settlement as yet another example of the Tax Office having one rule for
the ordinary people and another for the big boys. They claim that if
the case involved a coffee shop owner or some other small business
operator the ATO would pursue interest and penalties without hesitation.
Administrative Appeals Tribunal hearing in May revealed key details of
the case. The documents related to transactions with a
Lichtenstein-based entity, Yelnarf, which the ATO believed may have
been linked to the Lowys, who have a number of companies with the word
Franley (Frank and Shirley Lowy). “Yelnarf” is “Franley” spelt
Crazy former Liberal backbencher Ken Aldred
had waged a long battle with Frank Lowy over the years, and he repeated
some of these claims in federal parliament on October 25, 1995,
generating another story in the The SMH which included the following:
The Leader of the Opposition, Mr Howard, has defended
Westfield boss Mr Frank Lowy after a Liberal backbencher alleged Mr
Lowy’s appointment to the Reserve Bank board, shortly after he had
settled a multi-million-dollar tax dispute, was a scandal.
Howard described Mr Lowy as a good friend and disassociated himself
from the attack in Parliament by Victorian MP Mr Ken Aldred.
Howard, angered by Mr Aldred’s allegations, carpeted the MP and told
him he had “a very high regard for Mr Lowy … who has been a great
success story and who has made a very philanthropic contribution to the
A spokesman for Mr Howard said Mr Aldred
had not informed Mr Howard he was going to make the allegations. Mr
Aldred told Parliament on Wednesday that Mr Lowy had settled an
outstanding dispute with the Australian Tax Office, just before his
appointment to the Reserve Bank board.
A Lowy family company
settled an outstanding matter with the ATO earlier this year for $21.4
million despite an earlier assessment for tax interest and penalties of
more than $50 million.
The dispute with the ATO related to
amounts totalling $47.8 million being paid to the Lowy family company
in January 1987 and November 1988. The ATO claimed it was taxable
income. But, according to Mr Aldred, “Mr Lowy claimed the money was a
capital injection from unknown international sources … how lucky can
The circumstances are not dissimilar, but
Frank Lowy is no hick Adelaide manufacturer. John Howard and four Labor
Premiers attended Westfield’s 40th birthday celebrations in 2001 and
with three common Fairfax directors for much of that period, a
sustained campaign against Westfield wasn’t a likely prospect.