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Keating brings home the
bacon (tax-free)
Was Achilles a heel?
9 July 1998
Was the sale of former
Prime Minister Keating's share in a piggery to his
partner, Achilles Constantinidis, who then on-sold it to
Indonesian interests at the same time as Prime Minister
Keating was negotiating a treaty with Indonesian dictator
and embezzler, President Suharto, a sham to avoid
taxation?
Or was the former Federal
Treasurer financially incompetent in selling his share at
what he termed a "third rate price" to his
partner who immediately made a handsome profit by
on-selling it?
It seems as if one or the
other scenarios has to be true.
Federal coalition members tabled
a document in parliament this week alleging the former
scenario. The document referred to "H.E.",
purportedly meaning "His Excellency", the
Indonesian term for Prime Minister Keating. The document
makes incredibly damaging allegations of tax avoidance on
the part of "H.E."
On the ABC's 7.30 Report on
Thursday July 9, former Labor Press Secretary, Kerry
O'Brien, did a fairly soft interview, as he usually does
with people on the left of politics, with Keating. O'Brien
kindly didn't mention the potentially explosive report.
Instead, he allowed Keating to bluster his way through a
long, rambling interview. Even then, Keating managed to
make a couple of startling admissions that were not picked
up by O'Brien.
Keating started out by
referring to a document he brought to the interview. The
interview went like this:
Keating:
"This is a trust statement of
Gadons Wridgeway, a medium sized Sydney firm...."
O'Brien:
"They were acting for you?"
Keating:
"Oh, they.., they.. were acting at this stage for the
owner which is Mr Constantinidis. I had since sold it. But
it says here (referring to the document), the six million
was consideration for an interest in the business paid by
the Indonesians to my former partner who owned it. It
wasn't a purchase price. It was total consideration.
O'Brien:
"What do you mean total consideration?"
Keating:
"Well the company needed a cash injection. It needed
to pay down bank loans. As well as that the Indonesians
needed to actually pay for the business. - to buy the
business. It had a loan component, it had the price of the
business plus it had to pay down the loans to the
Commonwealth Bank, plus it had to pay out other debts to
food suppliers and people who built sheds and things like
that. Six million came down, one million of it was a loan
- so that's five million. Two million was a bank cheque
payable to the Commonwealth Bank in repayment of a loan. A
further $150,000 was paid to the Commonwealth Bank. There
was the Office of State Revenue. In other words, of the
five million, half of it paid out the Commonwealth bank.
How could it have been a purchase price?
On
the balance of it, the balance went to companies to pay
food bills and what have you, and I was paid a share of
that for my interest in it - way down the line. You can
obviously see that it was not six million dollars. And
some reference to only $4,900 stamp duty was paid. What
stamp would have been paid if it was on the share
transfers?"
O'Brien:
"Let me ask you a simple question. How much money did
you get for your sale of the piggery?"
Keating:
"Oh! Kerry, look, let me say, what I got..., what I
got was a minority part of that money on which I paid the
full tax as I said"
O'Brien:
"Given all that has come out, given all the
allegations, and the seriousness of them and for the
people out there watching you, why isn't it in your
interests to say exactly you made out of the
piggery?"
Keating then began
diversionary huffing and puffing so O'Brien dropped that
line of questioning. Later in the interview, this very
telling exchange occurred:
Keating:
"I sold it to my business partner".
O'Brien:
"Were you aware of the Indonesians interest when you
sold your share in the piggery to your partner,
Constantinidis?"
Keating:
"Yes I was, but there was no certainty they would
close the deal."
According to a senior Perth
accountant, the Australian Tax Office says that if a
vendor is aware of a further sale to take place after he
disposes of an asset, then for tax purposes, he is deemed
to be a party to that further sale.
The
accountant went on to say he found it extraordinary of Mr
Keating to say that the six million dollars referred to
was not the purchase price but was "total
consideration". It means the same thing. Whichever
way you look at it, the cost of the business to the
purchaser was six million dollars.
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