Australian tax office finally backs down after huge prosecution effort based on mere suspicion

$300 million of taxpayer money wasted, for what? They never stood to recoup a fraction of that anyway. The bunglers thought they were Eliot Ness but ended up being revealed as Keystone Kops. But no heads will roll. You can rely on that.

The nation's largest tax fraud inquiry has been dealt a major blow with the repayment by the Australian Taxation Office of about $1 million to one of its main targets - celebrity lawyer Michael Brereton. The backdown comes after authorities spent six years and millions of dollars investigating Mr Brereton, whose clients have included Kylie Minogue, Men At Work and Mushroom Records. Mr Brereton's offshore dealings sparked the $300 million Wickenby investigation into tax fraud, which has so far claimed onlyone high-profile scalp, that of music entrepreneur Glenn Wheatley.

The settlement between the tax office and Mr Brereton, pictured yesterday with the ATO repayment cheque, relates to arrangements the tax office once believed were part of a massive tax fraud involving millions of dollars being sent offshore. Mr Brereton, once accused of tax fraud, remains under investigation by the Australian Crime Commission. However, despite receiving the large refund cheque yesterday from the authorities, he is planning to sue the "oppressive" tax office and the "venomous" ACC over their actions.

In an exclusive interview with The Australian, Mr Brereton revealed that he had moved overseas after being pursued by "overzealous" investigators, who he believed made fundamental mistakes early in the inquiry. "They probably thought I was acting for Philip Egglishaw just because I knew him," Mr Brereton said. Mr Egglishaw is the Swiss accountant who came to attention following a raid on his Melbourne hotel room in February 2004. His firm, Strachans, organised offshore structures for hundreds of Australian clients. The raid was conducted in an attempt to find documents relating to Mr Brereton, but it unexpectedly resulted in a treasure trove of documents found on a laptop computer. Names of Strachans clients such as Wheatley, actor Paul Hogan and his artistic collaborator John Cornell, and of other lawyers, entertainers and high-profile business people and files relating to their business dealings, were on the laptop. Hundreds of Australians - many from the top end of town - were said to have used Strachans to send money offshore to avoid paying tax in Australia, sparking the Wickenby investigation.

A record $300 million in additional funding was given to the tax office, the ACC, the Australian Federal Police and the Australian Securities and Investments Commission to work together to combat tax fraud and money laundering. But despite the promises so far, the only Strachans client of any note to be charged and jailed is Wheatley, who pleaded guilty last year to tax-related offences.

"I think I was a terribly small fish," Mr Brereton said. "They went around saying I was low-hanging fruit. If I was low-hanging fruit it can't be a very good crop." Mr Brereton has long fought against the authorities who targeted him, and controversial retrospective legislation was even rushed through parliament after he won a crucial court victory against the crime commission. Those amendments to the Crime Commission Act have subsequently been the subject of a Senate inquiry, which has recommended they be repealed. A spokesman for Home Affairs Minister Bob Debus said the Government was still considering the matter and consulting with state agencies, and hoped to have a response early next year.

Mr Brereton has never been charged with any criminal offence, although a crime commission officer recently told the Federal Court during a separate matter that its pre-Wickenby investigation, which relates to Mr Brereton, continues.

The crime commission told The Australian yesterday that it was still pursuing nine people, or groups of people, as part of Wickenby. Mr Brereton has, however, been the subject of three tax office revised assessments. Two have been resolved and one is still being negotiated. "They just knocked out everything I claimed," he said.

Yesterday, Mr Brereton received a cheque for the disputed amount for two of those years, plus interest. "They have now agreed to refund the money plus interest on the judgment, and over time I intend to sue them on other things," he said.

One of the disputes with the tax office related to the musical theatre production Jolson, which Mr Brereton produced. An offshore company, Westminster Finance, provided the finance but Westminster, set up by Strachans, was alleged to have been a front for Mr Brereton. "I am not Westminster," he told The Australian.

Although Mr Brereton's life once consisted of a brilliant legal career, glittering opening nights with celebrity friends such as Hugh Jackman, and sitting on the boards of various charities, the Wickenby investigation has put an end to that. Mr Brereton is hopeful this week's tax office settlement is the end of Wickenby for him. "We have settled with them (the tax office) and the objection was ruled in my favour," he said.

As for criminal charges, Mr Brereton maintains he has done nothing wrong. "You would think if they had something, they would have done something about it," he said. "In reality, I think it's dead. If it's not dead it should be ... I will make it dead in a legal way."

He also pointed out that none of his celebrity clientele was ever charged. "Not one of my clients has been prosecuted in any way as a result of Wickenby, even though they have had the opportunity to go through each and every one of my clients," Mr Brereton said.

Although he has had a victory against the tax office, he is still fighting authorities on other fronts. ASIC recently disqualified him for three years from being a company director. He is appealing that decision in the Administrative Appeals Tribunal. "I would be surprised if we don't do well out of that," he said.

Mr Brereton is also appealing the finding that he misappropriated money from his trust fund account. Again, he is confident of a result in his favour. But despite the fighting attitude - and yesterday's cheque - Mr Brereton says the past five years of his life have been destroyed by the Wickenby investigation. "If they wanted to achieve something they have done it; the operation was successful but the patient almost died," he said. "The career of Michael Brereton as it was is no more and can never be. That's a fact and I would be kidding myself if I didn't see that."

Original report here. (Via Australian Politics)




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