Govt tax advisor told Westpac how to cheat on taxes

Written By: - Date published: 10:17 am, October 22nd, 2009 - 3 comments
Categories: business, capitalism, crime - Tags:

ceo_120_050608_rfJohn Shewan is a member of the Government’s Tax Working Group. A decade ago he was advising Westpac what minimal amount of tax it should pay to avoid arousing IRD’s suspicion as it perpetrated the single biggest tax rip off in New Zealand history.

Here’s the key bit from the High Court judgment:

[563] In March 2002 Mr Mataira [Westpac’s head of NZ group tax] understood that the bank’s pre-tax profit for the year ended 31 September 2001 was about $610m; and that an overall tax loss of $25m would be incurred. He requested Mr Shewan’s advice on the amount of tax that it should be paying and on an appropriate response to the market if the actual level of tax paid became widely publicised, on the ramifications with the public and the Commissioner in this event, and the level of tax which should be paid (as opposed to reported) for an organisation of Westpac’s size.
[564] Mr Shewan recommended that Westpac pay $30m-$40m annually (tax shelter consumption at that time was around $346.9m), even though that sum represented a rate of only 6.5% against the reported profit.

and here’s how seriously Bill English took the matter in the House yesterday:

Dr Russel Norman: Is he concerned that, according to the Auckland High Court, Mr John Shewan advised Westpac to use tax reduction measures in order to pay a tax rate of only 6.5 percent instead of the corporate rate of 30 percent, and that those tax reduction measures were subsequently found to be unlawful tax avoidance?

Hon BILL ENGLISH: I do not intend to make comment on the case in any way that might compromise the Crown’s position. As I said before, from the Government’s point of view the advice of the Tax Working Group will stand or fall on its merits, regardless of who offered that advice.

On Shewan’s advice, Westpac paid a minimal amount of tax to avoid scrutiny and got away with stealing hundreds of millions of dollars until now.

If an ordinary person were part of perpetrating a rip-off of even a fraction of this magnitude, they would be locked up. Shewan shouldn’t be advising the government. He should be in jail.

3 comments on “Govt tax advisor told Westpac how to cheat on taxes ”

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  1. roger nome 1
    22 October 2009 at 10:43 am

    Well, David Farrar has been known in the past to be in an uproar about teachers’ organisations using public schools for meetings without paying for it, so surely he’ll be apoplectic about this monumental tax-payer rip off ….

    heh

  2. Craig Glen Eden 2
    22 October 2009 at 12:04 pm

    Shewan should be in Jail I agree.

    These people are viewed by many on the right as smart/ successful. They are neither of these things they are thieves, criminals.

    I am waiting for Garth McVicar to comment on the lack of length of sentence with regards to this matter.

    This bloke could surely benefit from some container accommodation,chain gang work by day, porridge for breakfast and vegetable water for lunch. No Dinner because as we know Donkey is telling public servants money is tight.

  3. RedLogix 3
    22 October 2009 at 6:18 pm

    This is very dissapointing. Shewan is not just a member of the Tax Working Group, but is it’s chairman as I understand it.

    At this point it’s not clear if Shewan was responsible for the actual tax avoidance arrangements that generated such an absurdly large tax loss, but rather he was consulted as to what would be an appropriate level of payment in order to deflect public criticism. It appears that Shewan attempted to steer something of a middle path between claiming the full tax loss and paying full company tax on the pre-tax profit. It’s not entirely clear in this context if he is the bad guy here.

    Nonetheless it’s very unfortunate that he has been so closely associated with these now notorious transactions and he may well have some explaining to do.