“Surely it is inappropriate to appoint Rob Gerard to the Reserve Bank
board when he is embroiled in a major dispute with the tax office
involving allegedly ‘sham’ transactions.”

We know, we know … that’s what almost every commentator and Opposition politician has been saying for the past ten days.

But those words weren’t written in the past ten days. They were written 32 months ago, on 31 March 2003. In Crikey.

Yup,
that’s right. We’ve just trawled through the 8.6-million-word Crikey
archive to dig up our 2003 stories about Gerard, tax and the Reserve
Bank. Stories that include a very strong condemnation of Gerard’s
appointment by Crikey.

So the dots being joined in December
2005 – Gerard + Reserve Bank board + tax investigation = indignation –
were actually joined by Crikey almost three years ago, just after his
appointment was announced.

So what was Peter Costello thinking then? Did he miss the Crikey stories and strong commentary about Gerard in 2003?

Surely not – after all, this is the Treasurer who told Federal
Parliament in 2002: “Those of you who follow Crikey.com as closely as I
do … I recommend Crikey.com … It includes very good reading.”

CRIKEY’S 2003 STORIES

25 March 2003: Huge liberal donor joins Reserve Bank board

Peter
Costello has appointed one of the biggest Liberal donors to the board
of the Reserve Bank. Rob Gerard from the Adelaide-based Gerard
Industries scored the five year appointment this morning.

Gerard
Industries has been the biggest donor to the South Australian Liberals
over the past few years and his contributions are now pushing $1
million.

Costello also appointed Hugh Morgan to the Reserve
Bank a few years back and his former company WMC is another huge
Liberal donor.

We don’t like this strong correlation between
vital government board appointments and the list of Liberal donors.
It’s grubby and there oughta be a law against it.

31 March 2003: Rob Gerard’s Tax Troubles

Meredith
Booth had a very interesting story in Friday’s Adelaide Advertiser
about the tax troubles of the newest Reserve Bank director Rob Gerard.

Here are some of the choice bits:

“ONE
of South Australia’s largest private companies, Gerard Industries,
faces a Federal Court battle over a $70.3 million tax bill.

The
controlling company of all Gerard entities has made a $70.2 million
provision in its accounts in case the tax office is successful in
retrieving the amount.

It comprises $32.5 million for primary tax plus $37.7 million in penalties and interest for the year to June 30, 2001.

It is believed the tax concerns relate to tax deductions made over 13 years from the 1985-86 financial year to 1997-98.

On
one of the matters, the tax office claims in its defence that Gerard
Industries paid between $600,000 and $1.7 million in annual insurance
premiums over the 13-year period to a Caribbean-based tax shelter
company.

The Netherlands Antilles incorporated company,
International Insurance and Risk Finance Corp (IIRF), changed its name
to FAI Insurance NV in May, 1986. It has no connection with the former
Australian public company FAI Insurance Ltd.

These payments –
which average almost $1 million annually – seem to be the focus of the
dispute between Gerard Industries and the tax office.

The tax
office alleges the amounts claimed by Gerard Industries as a tax
deduction were $1.5 million each in 1985-86 and 1986-87, $1.1 million
in 1987-88 and again in 1988-89, $600,000 in 1989-90 and 1990-91, $1.25
million in 1991-92, 1992-93 and 1993-94, $1.41 million in 1994-95, $1.3
million in 1995-96, $1.4 million in 1996-97 and $1.7 million in
1997-98.

The tax office claims in documents filed with the
Federal Court in Melbourne that the payments were “shams” and should
not have been claimed by the company as a tax deduction.

CRIKEY:
Surely it is inappropriate to appoint Rob Gerard to the Reserve Bank
board when he is embroiled in a major dispute with the tax office
involving allegedly “sham” transactions. Then again, Gerard was
single-handedly responsible for keeping the South Australian Libs
afloat for a few years with donations topping $1 million. We reckon
these donations helped secure the Reserve Bank directorship and it is
completely inappropriate. We’ve also heard that Gerard had a meeting
with Labor’s Mike Rann after he became South Australian Premier and
basically told him how to run the state.

2 April 2003: More tax trouble for Rob Gerard

Does
new Reserve Bank board member and generous Liberal donor Rob Gerard
face battles with the Tax Office on more than one front? News broke
just after his appointment of Federal Court action over a tax claim of
more than $70 million involving his business interests and a
Caribbean-based tax shelter company.

Now, the rumour mill says
that there are some film schemes that are also in the sights of the
ATO. Not what the Treasurer would like to hear.