Paul Hogan

[faceless]

Nobody's laughing now with Paul Hogan
The Daily Telegraph (Aus)
June 19, 2010

IN July 2008, Paul Hogan issued a colourful and memorable challenge to Australian authorities over their investigations into his tax affairs. "Come and get me, you miserable bastards," he dared them, the old fire in his eyes. Two years on, the Tax Office and the Australian Crime Commission (ACC) are still trying to "get" Hogan. But true to his famous blue-collar roots as a rigger on the Sydney Harbour Bridge, Australia's most famous comedian is showing no sign of backing down. As one friend of Hogan puts it: "Paul is confident. He's still baiting them. He believes he's done everything by the book."

For Hogan, it has now been five long years since it first became public knowledge in 2005 that he was under the microscope of a special investigation by the ACC and the Australian Taxation Office. The inquiries were being made as part of the high-profile Operation Wickenby, whose most famous victim has been rock promoter Glenn Wheatley (he served a 15-month jail sentence in 2007 and 2008 after pleading guilty to tax evasion). But the years of investigation have done nothing to dim Hogan's mood for the fight. His best potshots have been saved for his pursuers. Of the ACC, he said in 2008: "If the ACC interrogated me, then I couldn't tell you what they asked me, or I can't even admit they did, because I could go to jail. But the ACC has some dickhead who can leak information to the press and anyone else who's interested." Of the Tax Office, he said: "They should build a statue at the Tax Office to me and send me a Christmas card," adding that he was only targeted because he was "high profile and because I've got money".

Certainly, Hogan has made bucketloads for both himself and the taxman since his Harbour Bridge days. Aside from his other projects, the Crocodile Dundee and Crocodile Dundee II movies (from 1986 and 1988) grossed about $800 million between them. The cut of Hogan and his long-time creative and business partner John Cornell from their success was upwards of $150 million. But the big money has created an equally big headache for Hogan in the past five years over the way he structured his tax and financial affairs.

It has led him to throw big bucks at his ongoing legal battle with some of Australia's most powerful bodies. He has had a long-running wrangle with the ACC in the Federal Court over its claims he had committed tax fraud by abusing his residency status. (The ACC has never tested these claims in court, because a specific part of the case against Hogan was dropped in 2008.) In 2005, the ACC had commenced seizing thousands of documents from Hogan's tax advisers relating to his financial affairs. (Hogan and his advisers have never been charged with any tax-related offences, despite the five-year investigation.)

Part of Hogan's fight has been to keep a number of documents secret on the basis they were confidential. But this week Hogan finally lost a 22-month battle to keep a number of those documents private. The papers have provided a rare insight into Hogan's personal tax affairs. Some included advice from accounting firm Ernst & Young about how to structure his finances from a tax perspective. But there was another bombshell document he also sought to keep secret: a "schedule of inferences" against him. This document had been drawn up by the ACC, and was essentially a summary of the crime body's allegations against him three years ago - all of which were dropped. Ironically, this document had actually been submitted in evidence, not by the ACC itself, but by Hogan's own lawyers: as part of his ongoing court battles over the Wickenby investigation.

In August 2008, the country's two largest newspaper companies, Nationwide News and Fairfax Media applied to the court to see a number of the previously secret documents, including the schedule outlining the ACC's case against him. Hogan battled this application all the way to the High Court. But the court finally agreed this week that the two media organisations should be allowed to see both the schedule and the Ernst & Young documents.

What the ACC document reveals is the claims the body was making against Hogan in 2007. The main allegation made by the ACC in that document was that Hogan misled US and Australian authorities about his residency status between 2002 and 2005 to avoid paying millions in tax. The ACC papers claimed Hogan had moved to Australia in 2002, but made plans to return to the US by late 2005. But the document alleged Hogan had used his moves between the two countries to gain a tax advantage: "In 2002-03, the tax advantage lay in telling the US authorities he was coming to Australia permanently; but in 2005, the tax advantage lay in telling the Australian authorities that he came here only temporarily in 2002. Both cannot, however, be the case."

The document alleged that the ultimate effect of this was to create a six-month period in the second half of 2005 where Hogan was considered not to be either an Australian or a US resident, allowing him to avoid paying tax in either country during the period. Included in the document was a claim that Hogan was a beneficial owner of companies domiciled in the tax haven of the British Virgin Islands. The document claimed these were used in tax schemes. None of the ACC claims in the documents have been tested in court, because a bid being pursued to gain more information on Hogan at the time was dropped. It is not known what the ACC's current case against Hogan is, or whether it differs significantly from the 2007 document.

In one piece of advice to Hogan by Ernst & Young in 2005, it was noted that if he waited until after June of that year to have an $8.8 million dividend paid to him, he would pay "no further Australian tax". But if the dividend was paid to him before June, he would have been liable for a $2.3 million Australian tax bill.

The ACC was tight-lipped on Thursday about the Hogan case and the High Court decision this week. "The ACC did not play a major role in this case and has no comment to make on the outcome of the argument," Michael Outram, the ACC's executive director of serious and organised crime, said. "The decision has no bearing on the ACC's ongoing criminal investigations." But sources close to the Hogan camp claimed the ACC document had little value and reiterated it had not been tested in court.

Hogan is not alone in questioning the value of the Wickenby investigation and the five-year pursuit by the authorities of the Crocodile Dundee star, Cornell and their business adviser Tony Stewart. Former tax office audit manager Chris Seage - who now has his own tax practice - is critical of the Wickenby investigation. "I don't think it's nearly as successful as they're making out," he says. "All they've got is Glenn Wheatley and a couple of unknown Gold Coast businessmen."

Seage claims the investigation has been geared more to scaring people away from cross-border tax structures. "It's a big scare campaign to stop people from sending money overseas and hiding assets overseas," he says. "It's a witchhunt aimed at high-profile people. It's as much about the generation of publicity as actually getting people convicted." Outram denies this. "While wealthy individuals who have some connection with these schemes inevitably come to our attention, the ACC's Operation Wickenby is focused on the promoters and masterminds behind these schemes," he says.

He claims Wickenby has so far resulted in the collection of $186 million in tax, 57 people charged with serious offences, nine people convicted and 26 criminal investigations. But despite the prolonged investigation into Hogan, and continuous press speculation about Wickenby's "net closing on Hogan", no tax-related charges have been laid against Hogan and his advisers.

Dr David Chaikin, senior lecturer and international litigation expert at Sydney University's business faculty, says: "They obviously haven't got enough evidence to launch a criminal indictment yet, and it may be difficult. The fact the ACC have abandoned the allegation that the advice given by Hogan's accountants was part of a scheme of fraud or crime - without knowing anything more - well, that must provide some comfort for Hogan in the criminal case."

Chaikin believes the marathon investigation raises questions about how long is too long for a criminal investigation to go on. "It's pretty slow," he says. "It does have a smearing effect on Hogan. He's in the news all the time, in the context of a bad story. If I allege something about someone every day for a period of time, people begin to think it's true."

One thing is clear: every day the ACC investigation of Hogan continues, the stakes get higher. As Chaikin notes: "What happens if they don't criminally charge him? The way the case has been pushed and presented by the ACC, it would be a huge loss."