Monday, July 21, 2008

Who Pays The Piper? And Who Listens?

Ian Verrender doesn't expect Peter Lowy will have much to say to the US Senate on Thursday:
Peter, who has not taken a high-profile role in business since his less than spectacular performance as the head of Northern Star Holdings - the owner of the Ten Network in the late 1980s - was unavailable to appear before the committee last week.

Perhaps he's been busy rehearsing his answers. Perhaps they go something like: under the advice of my lawyers, I decline to answer that question on the grounds it may incriminate me.

He wouldn't be the first to "take the fifth". The Lowy case is one of just seven test cases US authorities have decided to put to the blowtorch of public examination. Of the three others that so far have been compelled to appear, two have invoked their Fifth Amendment rights - refusing to answer - and the other failed to show.

Peter Lowy hasn't played a prominent role in the Westfield juggernaut for quite some time.

His younger brother, Stephen, is the Lowy who has been in control of the rapidly growing US operations for most of the past decade. But unlike Stephen, Peter became a US citizen. That puts him in the firing line of US authorities, And it is Peter who was the chairman of a Delaware corporation that has attracted the attention of the Internal Revenue Service.

According to US authorities, the Delaware-based company, Beverly Park Corporation - owned by another Lowy trust - was directing Luperla, an entity run through the tax haven of Liechtenstein which US regulators allege was established to hide assets and avoid tax.
Verrender also has this observation:
It is fair to say the Lowys would never have been subjected to this sort of public scrutiny in Australia.

Despite being the bastion of free enterprise, America takes a much harder line on corporate behaviour. Any form of malfeasance is pursued vigorously and in public.

That's not always the case here. Australia's corporate regulation is among the most lax in the developed world. White-collar crime is not taken as seriously as in other OECD nations. And unlike actions in the US, big corporate cases take far longer to bring to prosecution and often have a lower success rate.

Perhaps it is partly because Australia is a smaller pond. And the bigger fish in the business world often forge close links with both sides of politics, neither of which is keen to pursue tougher corporate regulation.
Indeed. I was looking at Westfield's political donations over the years to both Labour and Liberal parties, at both state and federal level. We're talking tens of thousands of dollars, year after year, to numerous party offices around the country.

As Liberal backbencher Ken Aldred told Parliament on October 25, 1995:
"The Government owes honest Australian taxpayers an explanation for the Lowy taxation scandal."
We are still waiting. Verrender says Peter Lowy might provide an explanation this week. But don't hold your breath.

I am surprised (I know - I shouldn't be) that this story is not getting more attention in the blogosphere. Have we all become so conditioned to corruption that we no longer even hope for justice to prevail?

Are people scared to criticize a man as powerful and rich as Frank Lowy in public? Is it the fear or being labelled an anti-Semite? Or do they just not realize the potential implications of this story?