The publicly listed Seven Group Holdings which is controlled by Kerry Stokes had $3,583,478,772 revenue in the 2014/2015 financial year but paid no tax. That is almost $3.6 billion but they apparently did so badly there was no tax to pay. It wasn’t much better the previous financial year of 2013/2014 when they had $3,975,156,028 in revenue and only paid tax of $16.94 million.
Seven Group Holdings is listed on the stock market and is the parent company of Seven West Media which is also listed on the stock market. Channel Seven has been getting all the media attention of late with the sex, drug and fraud scandal but that is only the tip of the iceberg of an organisation that has corruption written all over it.
Wherever Kerry Stokes goes the term “tax dodger” isn’t far behind starting at least in 1997 when the ABC’s Four Corners broadcast a story on the Victorian Premier Jeff Kennett. The broadcast also covered a shady deal done between Jeff Kennett and Kerry Stokes. “The deal involved the privatisation of the research and development arm of Victoria’s State Electricity Commission. It’s known as the Herman Research Laboratory, or HRL.“
“There was no tender for the privatisation of HRL and its research. The deal was rushed through on the last day of the financial year in 1994, the details not disclosed. It was finalised by Jeff Kennett, who signed the documentation himself.“
“As Kerry Stokes tells it, it began when the Premier rang personally inviting him to invest in Victoria. According to a glowing account by Mr Stokes in his company newsletter, the Premier said, “Just bring your money and come. If there’s any red tape, we’ll cut through it.” It was a complicated deal but, “amazingly” Mr Stokes recalled, “after what seemed like a wave from Mr Kennett’s magic wand, all the complexities disappeared”.”
Graeme Pleasance, Managing Director, Herman Research Laboratory:
Q: I take it Kerry Stokes was extremely impressed by the Premier’s role in this?
A: Yes I’ve heard Kerry say that on a couple of occasions. Not quite sure why.
Sally Neighbour: The attraction of the deal — apart from the potentially huge profits — was the fabulous tax benefits.
Under a Federal scheme to promote research and development, the money invested in the HRL research is refundable and tax deductible. Hence the rush to complete the deal by the end of the financial year. Even if the project fails, the investment syndicate led by Mr Stokes company will get back all of its money plus a guaranteed return of between 20 and 30 per cent. This scheme has since been abolished by the Federal Treasurer, who said it had more to do with tax minimisation than genuine research.
Sally Neighbour: What the investors had to pay the state for this goldmine has never been revealed. The government refused to release any details. It even changed the law to make privatisations in the power industry exempt from Freedom of Information. (Click here to read more) (Click here to watch the full Four Corners show)
In June 2015 Kerry Stokes waved his own “magic wand” and had Jeff Kennett appointed as a Director of Seven West Media.
Below is an edited version of the 1997 Four Corners show “Kennett’s Culture”. The edited version focuses on the part of the show about the tax avoidance deal that was done between Kerry Stokes and Jeff Kennett and the return favour Kerry Stokes tried to do for Jeff Kennett. (Click here for slightly longer edited version is in a previous post)
In December 2016 the Australian Taxation Office released the annual corporate tax transparency report for 2014-2015 which names 1904 large companies and details how much revenue they had and how much tax they paid. It covers:
- Australian public and foreign-owned companies with an income of $100 million or more, and
- Australian-owned resident private companies with an income of $200 million or more
Just because you do not pay tax does not mean you’re a tax cheat as there is nothing illegal about minimising your tax. But when you are paying no tax, very little tax or using a Federal scheme to promote research and development to predominantly minimise tax then questions are going to be asked.
I have had a look at the most recent annual report for Seven Group Holdings and to me it shows very little tax being paid over the last five years. Maybe someone with better skills reading balance sheets etc can shed some light on how much tax has been paid in the comment section below. (Click here to read the 2016 annual report)
It is well-known that Kerry Stokes is good friends with James Packer. Mr Packer is the major owner of Crown Resorts which is currently being sued for $362 million by the Australian Taxation Office. As I said at the start “Wherever Kerry Stokes goes the term “tax dodger” isn’t far behind“
Whether or not Seven Group Holdings are Australia biggest tax cheats is debatable but there is plenty of smoke to suggest that there is major tax dodging going on at the company. And when Jeff Kennett “changed the law to make privatisations in the power industry exempt from Freedom of Information” to conceal his dodgy deal with Kerry Stokes’ private company Australian Capital Equity it is almost an admission that bribery or fraud of some type had taken place.
Add this to the documented allegations of widespread fraud by management at Channel Seven that has been spilling into the media over the last few weeks then one has to wonder who is running Seven Group Holdings. Certainly not its CEO and the Chairman’s son Ryan Stokes.
A lot of attention is starting to focus on the Seven group of companies with allegations of corruption etc and so it should given they are listed on the stockmarket and part of many people’s superannuation funds. Over the next week or so I will start publishing some of the documents that prove the fraud and corruption.
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