My story on James Hardie’s $378 million tax scam (24 November, item 5) must have hit a nerve with the company’s Chief Financial Officer Russell Chenu as his limp-wristed attempt to discredit the story on Monday (27 November, comments) attests. However I understand the company has a directive from its Chairman Meredith Hellicar to reply to any negative press the company receives in the media.
In any event I’m sure Hardie shareholders would prefer Chenu to concentrate on what he is paid to do – fiscal responsibility, not playing company spin doctor. It has been said a habitual use of spin is an obstacle to honest reflection, and to learning from mistakes and constructive criticism.
Let’s deal with some of the ancillary issues Chenu raised, like Hardie not being critical of the ATO. Perhaps he was busy writing a press release and didn’t notice when his CEO Louis Gries said after Hardie’s original charity status was rejected by the ATO: “We continue to believe – and have unequivocal advice from a number of leading counsel – that the SPF satisfies the requirements to be recognised as a tax exempt charity. However, if the ATO is unable to confirm the tax exempt status in the near term, we believe the Federal Government should intervene to reduce the anxiety caused to future claimants.”
That’s what I call criticism – not to mention intimidation! Furthermore I’m told privately it was worse, as ATO officers labeled Hardie negotiators “rude, abrasive and stand-over merchants.”
Chenu is clearly in denial about the failed Netherlands venture as well as taxpayers sharing the funding of Hardie’s victims. If you won’t believe me, Mr Chenu, then what about the Australian Treasurer Peter Costello, who is in charge of Australia’s tax system:
“Well I think the situation has now been clarified and this is an enormous financial advantage for James Hardie – let’s get that clear. The money that it pays to the victims and the victims deserve every cent will be fully tax deductible. The effect of that of course is that after deducting tax at 30 cents, James Hardie will be paying 70% of the compensation and will be getting a tax deduction for the remainder. That is of enormous financial advantage for James Hardie.”
“James Hardie will be up every tax rort it can find. After trying to defeat the victims it has moved itself out to the Netherlands to get out of the Australian tax system. It tried to cheat the victims then cheat the taxman.”
In terms of the amended tax assessment, shareholders don’t care if you have a reasonably arguable position, Mr Chenu. The fact is you are currently holding in your hot little hands a $378m bill from the ATO for a tax avoidance scheme your company was involved in, and in my opinion you have Buckley’s of winning it on appeal.
Your Part IVA contrived artificial scheme was referred to the ATO’s General Anti-Avoidance Rules (GAAR) Panel whose membership at the time included the best ATO technical brains and two eminent external members Jim Momsen.
You had an opportunity to present your case to the panel but you obviously didn’t impress them because they still sent you the big tax bill of which you have already paid 50%.
I stand by my assertion that the company’s corporate governance is under a cloud with this latest chapter of the tax avoidance scheme and bill. The company needs a fresh start and that should start at the top to effect major change for the betterment of the company’s future reputation.