John Cornell and Paul Hogan.
Marika Dobbin
January 1, 2009
IT BEGAN on a sweltering Valentine's Day in Melbourne almost five years ago.
A Swiss accountant, Philip Egglishaw, was staying a few nights in the presidential suite of Sheraton Towers, long enough to meet the corporate lawyer Michael Brereton, who made his name advising celebrity clients such as Kylie Minogue and Michael Gudinski.
But Mr Egglishaw's business trip was spoilt when two officers of the Australian Crime Commission raided his room and seized a laptop containing details of his financial dealings.
The commission was looking for dirt on Mr Brereton, but the computer revealed the names of hundreds of Australians allegedly linked to Mr Egglishaw's accountancy firm, Strachans, in the tax haven of Jersey, in the British Channel Islands.
Those under scrutiny included rock tycoon Glenn Wheatley, actor Paul Hogan, and his artistic collaborator John Cornell, cricketers Shane Warne and Allan Border, and a host of other lawyers, entertainers and business people.
The discovery sparked the biggest tax investigation in Australian history, known as Operation Wickenby.
It is budgeted to cost at least $305 million and has brought together taskforces from five federal agencies - the ACC, the Tax Office, federal police, the Australian Securities and Investments Commission and the Commonwealth Director of Public Prosecutions.
It has encompassed international authorities, with inquiries into financial services firms in Vanuatu and the Strachans offices in Switzerland.
Yesterday Jersey police arrested a fellow principal at Strachans, Philip de Figueiredo, at his island home.
He faces extradition to answer charges of defrauding the Commonwealth and other tax offences through alleged offshore tax avoidance schemes.
The arrest of Mr Egglishaw on similar allegations may follow.
But despite Wickenby's resources and scope, the operation has achieved only three convictions in five years.
In October, two former Brisbane directors were sentenced to three years' jail after pleading guilty to obtaining a financial advantage by deception in relation to $300,000 of false deductions.
It came a year and a half after Wickenby's highest-profile scalp - the conviction of Melbourne music entrepreneur Wheatley, who also pleaded guilty.
Wheatley admitted not paying tax on $318,092 of income and served a 15-month sentence. He spent a year at Beechworth Correctional Centre and the last five months in home detention at his South Yarra mansion.
On the day of his release in October, Mr Wheatley claimed he was the "poster boy for Operation Wickenby". But it has been Hogan who, after losing a court battle to keep his identity secret, has been the most public critic of the investigation.
Hogan, Cornell and their financial adviser, Tony Stewart, are accused in the Federal Court of secreting tens of millions of dollars in film royalties to offshore tax havens.
Hogan is also accused of lying about his travel to misrepresent his tax residency status between 2002 and 2005.
The three deny any wrongdoing and have not been charged.
Hogan has waged a protracted legal battle to stop the investigation, most recently losing a case to remove the team investigating his tax affairs.
Wickenby suffered a setback of its own in December when the Tax Office reached an agreement to repay one of its main targets - Mr Brereton - about $1 million. The ACC has pursued him for more than six years.
It was during a raid of his law firm in 2002 that the name Strachans first caught the commission's attention, turning up repeatedly in Mr Brereton's files, disks and emails - and the seed for Wickenby was sown.
The $1 million settlement with Mr Brereton relates to arrangements the Tax Office once suspected were fraudulent. Mr Brereton has claimed vindication, although he remains under investigation by the ACC.
With criticism growing that Wickenby is taking too long for little result, there is no doubt the commission is hoping yesterday's arrest will blow the lid off tax fraud schemes and reveal new evidence against its Australian targets.
It all hangs on whether Mr Egglishaw or Mr de Figueiredo co-operate with the authorities. If convicted in Australia they face five to 10 years' jail, a far cry from the Sheraton Towers presidential suite.
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