In part one of this series we saw that by late 1982 then Western Australian opposition leader Brian Burke proposed to the Western Australian Legislative Assembly that a special task force be established to investigate tax avoidance schemes in Western Australia.

Burke detailed the role that the Darwin Shuffle played in West Australian tax avoidance practices. Noting that 700 Western Australian companies that had been sent to the bottom of the harbour to avoid or evade tax and that prominent Liberal Party members had played a key role in such schemes, Burke referred to “another rort that directly deprived the State of Western Australia of legitimate income to which it was entitled,” noting that the Darwin Shuffle, when “married … to a bottom-of-the-harbour scheme, is part of an operation that is costing Western Australian millions of dollars.”

Burke also noted that — as with the NT — Brian Maher had promoted tax avoidance schemes in Western Australia since 1973 and, “within a very short period taxation avoidance had become a major growth industry in Western Australia … millions of dollars that are being lost through the use of Darwin in the share transfer operations.”

Burke and his parliamentary colleague David Parker named two Darwin accountancy firms — Peat Marwick Mitchell and Fell and Starkey — as being involved in the share transfers that formed a key part of avoidance behaviour, naming prominent West Australian Liberal Party member Denis Horgan among others.

Horgan — a former chairman of the WA Liberal Party’s finance committee — had been appointed by the federal Liberal government to the boards of a number of Commonwealth authorities, including the Australian Industry Development Corporation, Aussat Ltd and the ABC. Horgan had also been named in the McCabe-La Franchi report.

Two months later, Michelle Grattan reported in The Age that Denis Horgan was under considerable pressure to resign from a number of federal government bodies because he had been “named in relation to bottom-of-the-harbour tax avoidance”. The Darwin Shuffle and Brian Maher’s tax avoidance schemes were both mentioned in federal parliament in relation to Smorp Pty Ltd, a company associated with Horgan, that, while originally registered in Western Australia was subsequently transferred to Darwin, sold to interests based in Queensland, then resold to people in Victoria and Western Australia.

Read the full second part of the series here.

Peter Fray

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