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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.

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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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