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.
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