The largest tax fraud inquiry in Australia's history, that's the way the Australian Crime Commission describes the scam, or series of scams in which Crocodile Dundee star, Paul Hogan is accused of taking part. The official inquiry, called "Operation Wickenby," is in its fourth year.
When the investigation started, the ACC estimated it could clawback about $300 million (Australian) in unpaid taxes. Unfortunately, say critics, the investigation has gone on so long that the government has actually spent more than that to conduct the inquiry, and in the process, weakened civil liberties.
While Paul Hogan may be the most high-profile subject of the investigation, he is by far not the only one. The tax commissioner, Michael D'Ascenzo, has told the public there are 500 suspected "tax cheats," and over 250 tax officials working on Operation Wickenby across five agencies.
For his part, Paul Hogan, with the help of his financial advisor, Tony Stewart, is accused of weaving a complex web of crimes, with the intent to evade income tax in the U.S. and Australia. To assist the investigation, a U.S. court is demanding that three banks provide Hogan's financial records, as well as any information relating to companies affiliated with Hogan's businesses.
Specifically, one of the accusations against Hogan is that he manufactured a false deduction for a nearly $1 million paid in interest. The details were reported in Australia's Daily Telegraph based on a crime affidavit filed by Crime Commission investigator, Ian Andrew. Tax officials say he borrowed $4 million from one of his own offshore businesses, GB Film Finance (registered in the British Virgin Islands, owned half by Hogan and half by fellow Crocodile Dundee investor, John Cornell).
Later, say officials, a fictitious dispute over early repayment of the loan erupted, between Hogan's U.S. attorney, Craig Emanual, and GB Film Finance. The dispute was settled, says Hogan, when he repaid the loan including $600,000 in interest, through Quatre Saison Trust, an offshore account. Hogan then claimed a tax deduction for $910,884 on his 2004 Australian Income tax.
In addition, Hogan is accused of dodging taxes by having periods of time when he did not claim residency in the U.S. or Australia, positioning himself so that he was liable for taxes in neither country.
Hogan's finances were handled by the Sydney office of Ernst & Young. Currently E&Y's Marcus Davis is working to get Hogan's records together and signed off by the actor's U.S. attorney.
Originally the ACC hoped that some of the participants would "rat each other out," but that hasn't happened, and the investigation has been repeatedly stymied. But... things may be looking up for tax officials and down for the subjects of the investigation.
Now it seems, Operation Wickenby may have gotten a boost from Australia's federal courts. Previously the courts had petitioned to receive critical documents held by the Swiss accounting firm Strachans, but were blocked by a legal challenge from the accounting firm and a West Australian financier, Greg Dunn. The legal challenge pointed out that there were factual errors in the request for documents. Strachans, which seems to be at the hub of the controversy, is accused of creating personalized schemes that enable wealthy Australians like Hogan to evade taxes.
The involvement of Strachans became known when a hotel room of Strachans' principal Philip Egglishaw was raided and documents and a laptop were seized in 2004. Based on that evidence the ACC learned that Strachans helped Australians hide assets in a complex array of overseas entities. In June 2008, the federal courts of Australia issued a ruling that the evidence obtained in that search can be used in moving forward with Operation Wickenby.
So far, Hogan has laughed off the charges with a sort of "catch me if you can" attitude. Now as the case finally opens up... chances are, he's starting to feel a bit of heat... that is, if he has anything to hide.