Jul 19, 2010

Our wealthy magnificent seven are more take than give

Not only do Australia’s rich give away a relatively small proportion of their wealth -- but when they do, the donations are often made in unusual circumstances by businessmen with chequered histories.

Adam Schwab — Business director and commentator

Adam Schwab

Business director and commentator

Former founding chairman of eCorp and Microsoft executive Daniel Petre’s brilliant article in Crikey detailing the astonishing lack of Australian philanthropy among the wealthy was well overdue. But not only do Australia’s rich give away a relatively small proportion of their wealth -- but when they do, the donations are often made in unusual circumstances by businessmen with chequered histories. Consider our seven richest people (from this year’s BRW Rich List). Frank Lowy -- One of Australia’s best-known philanthropists, who (together with fellow immigrant John Saunders) built Westfield into one of Australia’s greatest business success stories. But despite his lofty reputation for charity, Lowy’s public donations of $15 million each year amount to less than one half of one per cent of his net worth.  Not only that, but much of the money he donates comes directly from Westfield shareholders who pay Lowy and his sons the extraordinary remuneration of $30 million annually to run the shopping centre developer -- this is despite Westfield shares being about half their 2007 levels. Lowy conceded as much at the company’s AGM this year, when he noted "I don’t keep that money I get from the company, I give it away to a lot more deserving causes. I don’t think Westfield shareholders are a deserving cause to give them an extra cent." Then there are Lowy’s pesky tax issues. In 1995 Lowy paid $25 million to settle a $50 million tax bill, while a US Senate Committee alleges that Lowy concealed $US68 million from the ATO (which Lowy claims to have given, ironically to Israeli charities). When questioned by the US Senate, Lowy’s son, Peter, refused to answer questions on the incident, claiming the 5th amendment (which gives people the right not to answer questions that may incriminate them). Gina Rinehart -- Not a well-known public donor to charities despite an inheritance now valued at $4.75 billion. She didn’t appear on a BRW list of Australia’s top 50 charitable donors in 2005. Pratt Family -- One of Australia’s best-known philanthropic families. Led by patron of the arts Jeanne Pratt, the family gives upwards of $12 million each year. Admittedly, the generosity of the Pratt family pales in comparison to the claims that Richard Pratt’s private company, Visy, benefited by as much as $600 million from the operation of an illegally cartel with rival Amcor (Visy accepted a $36 million fine over the long-running incident). Pratt was also involved in a series of dubious corporate manoeuvres in the 1980s involving John Elliott’s Elders IXL and the Occidental and Regal insurance businesses. Andrew "Twiggy" Forrest -- Twiggy is one of Australia’s true colourful business characters who has built two mining enterprises almost from scratch and a very well known donor to various charities. Sadly, alongside Twiggy’s public generosity comes controversy. After being allegedly forced out of his role at Anaconda Nickel, Forrest made a $3.5 million donation to a charity called "Leaping Joey" and claimed a tax deduction. The ATO unsuccessfully challenged the donation, claiming that it was actually a termination payment and Forrest should have paid income tax on the payment. Twiggy also garnered much favourable press in 2007 when he made an $80 million donation (consisting of Poseidon Nickel options and Fortescue Metals shares) to the Australian Children’s Trust. Sadly for the children, the $80 million in shares and options are now worth about $40 million. Fortunately for Forrest, he would have been most likely able to collect a substantial tax deduction based on the value of the gift before the Poseidon options become worthless. Harry Triguboff, like Sydney neighbor and contemporary Lowy,  has built a $4 billion property empire. Triguboff has remained a relative clean-skin and is believed to donate about $10 million to charities. This is about 0.2 percent of his wealth. James Packer has not made a name as a public giver to charity, but father Kerry always preferred to give his random generosity extremely private. Packer also doesn’t take a salary (like Kerry). That said, Packer may well have been better off donating some of the billions he garnered from the exquisitely timed sale of his media interests than investing in Las Vegas casinos. Clive Palmer has accumulated $3.92 billion from his resource interests but is most well known for his donations to the Liberal Party (he is believed to donate $800,000 annually). Perhaps coincidentally, the Opposition was a vocal opponent of the Resources Super Profits Tax. Admittedly, some would reasonably argue that Queensland’s Liberal National Party is a suitably disadvantaged group.

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4 thoughts on “Our wealthy magnificent seven are more take than give

  1. zut alors

    As Michael R James points out in a letter under Comments Corrects etc in today’s Crikey, Australia’s greatest philanthropist must surely be Charles ‘Chuck’ Feeney. He’s an American now resident in Brisbane. Feeney has shown extraordinary and unprecedented generosity by donating in excess of $400M to medical research in Queensland. He is humble, keeps an extremely low profile and doesn’t have anything named after himself.

    With the exception of Dame Elisabeth Murdoch I suspect Australia’s richest would blanch if even a fraction of Feeney’s $400M+ were suggested to them.

  2. John Bennetts

    What an uninspiring lot!

  3. Michael R James

    @ZUT ALORS at 4:32 pm
    Correct except I don’t think Feeney resides in Brisbane. He owns a modest apartment on the river in the CBD but only spends a small part of the year here.
    Crikey edited out the last part of my submission, which cited Atlantic Philanthropies (Feeney’s charity) philosophy: to spend the funds down to nothing before he dies, because he considers it the personally responsible thing to do. I believe he is correct and Bill Gates might be doing something similar (though with so much money he may fail!). You can consider it a kind of ecological recycling thing: capital is limited and should not be locked up in trusts, even charities. The term of a natural lifespan is about right.

    The other thing that strikes one, and evident from Schwab’s list, is how little of lasting significance is or has been created (again notable exception of Dame Elizabeth also the Morgan mining wealth that created WEHI). What giving our rich do, seems perfunctory and mere tokenism expected by, and done to enhance, their position in society. Perhaps the sheer numbers of super-rich in the US distorts the picture (ie. perhaps most of their rich are no different) but some of the greatest institutions (of the world not just the US) were created by rich US benefactors (including Sir Henry Wellcome, an expat American in the UK, who created the Wellcome Trust which was the world’s largest biomedical research charity/funder until Bill came on the scene). (Excuse my geekdom here but maybe not many realize the role of the WT as key catalyst behind the Human Genome Project, and more importantly, in keeping the information in the public domain.)

    In the current era (ie. other than the historic era of robber-barons, the Carnegies, Vanderbilts, Rockefellers, Stanfords) I think this might also have something to do with (warning, gross self-interested generalization follows:) the fact that our super-rich are a distinctly unimpressive lot making their dosh from essentially striking gold. A bit (lot) different from the technologists or smart investors one sees in the US: Bill Gates, Paul Allen (another MS benefactor, there are lots more), Beckman, Whitehead, HHughes etc. A very current example would be Eon Musk (PayPal billionaire) who has used almost all his wealth in trying to create an electric vehicle.

  4. terry100

    adam is a jurno who does not reasearch his facts and owes clive palmer for one an apology mr palmer suports the duke of edinbrough awards for young australians with 6 million dollars announced this year he has set up a 100 million dollar trust for aboriginals and medical research and donated over 10, million to others in need as well as substantial amounts to schools in brisbane adam needs to be more professional and less bias i am sure he did not even check with the 7 subjects i wonder how much adam gives to charity probably nothing

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