AMERICAN private equity company TPG triggered nationalistic hand-wringing when it bought the famed Myer department store chain on June 2, 2006.
But The Weekend Australian can reveal that by the end of that day, the department stores were not in US hands at all. In fact, they were effectively owned by a shelf company, set up just months earlier, in the grand duchy of Luxembourg. And that company was itself wholly owned by another outfit in the Cayman Islands.
The Australian company set up to buy Myer, NB Flinders, would file its annual report two months after the Myer takeover, saying its parent company was NB Swantson, based in The Netherlands.
But at that time the Dutch company held no shares in Myer. It had not even been created at the time of the Myer deal, according to an investigation by The Weekend Australian into the web of companies set up by TPG in the Cayman Islands, Luxembourg, The Netherlands and Australia to house its interests in Myer.
The way these companies were structured is at the heart of the pursuit by the Australian Taxation Office of the $1.5 billion profit that TPG made on its three-year investment in Myer, which ended with last month’s sour stockmarket float.
No specific allegations have been made. But the tax office’s lawyer said in a dramatic late night court hearing last month that it had issued tax assessments of $452m, and $226m in penalties under the anti-avoidance provisions of the Tax Act.
TPG’s offices in Australia were not notified by the tax office when the matter was taken to court last month. But the ATO was clearly worried no income tax would be paid on the profits. Authorities tried to urgently freeze the bank accounts that held the $1.5bn but the following day it was discovered that TPG’s accounts in Australia held just $45. The money had been sent overseas.
The story starts on April 3, 2006, when NB Flinders, the Australian company, was set up with Ben Gray (son of former Tasmanian Premier and current Gunns Ltd Director Robin) as its director. Gray is the head of TPG’s operations in Australasia. He has so far refused to be drawn into the tax saga. He would not comment yesterday and a spokeswoman for TPG said the company would not respond to detailed questions about what it believed were “standard or publicly available documents”.
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Gray was a director of NB Flinders for only a short time, resigning on April 21, 2006. By that stage veteran retailers Bernie Brookes and Bill Wavish had been brought in to help turn Myer around. Wavish was appointed a director of NB Flinders in April and was chairman of the company. Brookes was appointed as director and chief executive in July 2006.
Ben, 2007, Among: Melbourne’s most influential citizens, HERE
Picture: The Age
