Revealed: the former EY partner being sued by the ATO
Max
MasonSenior reporter
Sep 16, 2024
A former EY partner who allegedly took $700,000 in secret commissions while
setting up illegal tax schemes for wealthy clients can be named as Peter White,
after he lost a long court battle to keep his identity a secret.
The Commissioner of Taxation is suing Mr White in the Federal Court,
alleging he promoted
three illegal tax schemes to seven clients in the five years to April 2021,
according to a claim lodged in August last year.
Former EY partner Peter White has been fighting to keep his name secret for
more than a year. Dion
Georgopoulos
Mr White fought for more than a year to stop The Australian Financial Review naming him.
He lost two attempts to keep his name suppressed but appealed both times. Last
week, he gave up his right to a third bid and suppression was lifted on Monday
morning.
The former big four firm partner identified companies that had significant
tax losses, then ran his client’s profits through those companies to wipe out
large chunks of tax payable, the Tax Office alleges. The structure is called a
tax access loss scheme. Mr White is fighting the case.
EY sacked Mr White in August 2022 after its own review. Mr White and his
lawyers have been contacted for comment.
EY Oceania chief executive David Larocca emailed partners on Monday morning
letting them know the suppression order had been lifted and the firm can use Mr
White’s name in relation to the allegations.
Property developer Novce Grujoski launched a separate legal action in the
NSW Supreme Court against the former EY partner in 2022.
Mr Grujoski alleges Mr White told him to transfer $400,000 in February 2017
and $300,000 in August 2019 to a trust as part of a tax structure. The claim
alleges these were “secret commissions”, that Mr White was a beneficiary of the
trust, and that the former EY partner had a pre-existing relationship with the
company he used to minimise tax losses.
The ATO alleges Mr Grujoski was expecting to reap $10 million in profits
from the development and sale of 56 units, and approached Mr White in late 2016
to minimise the tax payable on the profits from the sale of the units.
Mr White used a whiteboard to illustrate how the tax scheme would work,
according to the ATO’s claim. He allegedly used WhatsApp to communicate with a
friend who had control over companies that had tax losses.
“Have a client in need of $14m in tax losses … Can I tell him 5 cents,” Mr
White is alleged to have said in a message on March 6, 2018.
The 5 cents appears to represent a cost of 5 per cent for using tax losses.
The ATO began reviewing Mr Grujoski’s tax affairs in mid-2018. Four years
later, it told the property developer the earnings on which he needed to pay
tax had increased from $1.7 million to $28.8 million. This included tax returns
for Mr Grujoski, his wife and two associated companies.
Mr White told clients the ATO had scrutinised similar arrangements and found
no problems, the ATO alleges. He also allegedly said the schemes were based on
a 1989 High Court decision, and had been run by a number of partners who
advised it was a common arrangement.
Mr White could be fined as much as $1.5 million, or twice the benefit he
obtained, if the Federal Court rules against him. This case is one of only a
handful of tax promoter cases brought to court under laws passed in 2006.
In his defence, filed in October last year, Mr White claimed other staff at
EY were involved in reviewing and drafting documents. He denies the ATO’s
allegations.
Rejecting Mr White’s initial bid to have his name suppressed, Justice
Geoffrey Kennett wrote in October 2023: “Mr White relies [his suppression bid]
on the damage to his reputation among clients and prospective clients (and
consequent commercial damage) which he is concerned may arise from disclosure
of the nature of the allegations against him.
“The prospect of such damage is obvious. He is accused of significant
misconduct as a tax practitioner.”
But inconvenience and embarrassment to Mr White did not justify suppressing
his identity, Justice Kennett said.
Mr White had been due to appeal part of the March decision, but his attempt
to introduce new evidence was rejected as “an
abuse of process” by Justice Stewart Anderson.
EY partner sued byATO was Bill Papas’ former adviser
Myriam
RobinRear Window editor
Sep 16, 2024
In August 2023, the Commissioner of Taxation alleged former EY partner Peter White had taken
$700,000 in secret commissions while promoting three illegal tax schemes to
seven wealthy clients.
Briefly, the former big four operative stands accused of letting these
clients take advantage of other people’s tax losses to avoid corporate tax (for
a hefty fee). And while White has fought ever since to maintain his innocence,
he’s also been focused on another battle of at least equal (if not greater)
sensitivity.
Bill Papas turned to EY’s Peter White for advice on where to base his sustainability businesses.
This second, secret skirmish came to nought on Monday, when the Federal
Court formally lifted a suppression order he’d fought for over a year to
sustain. Open justice has prevailed, and despite White’s many vigorous efforts,
he can now be named. And we can tell you about his cameo in another recent
white-collar saga.
We speak of Forum Finance, run by alleged fraudster Bill Papas.
In 2021, Papas
fled to the idyll of Greece’s Thessaloniki, where he sponsors the local
football team. This was around the time several dozen lenders, including
Westpac, began to suspect Forum had falsified invoices worth some $400 million.
A lengthy (and unconcluded) legal case has followed. And it’s in the
affidavit of Forum CFO Tony
Bouchahine that White makes an appearance.
Before he was an international fugitive, Papas had grand plans to set up a
global food waste and sustainability portfolio. Naturally, he wanted effective
tax treatment. So, Bouchahine’s affidavit states, he turned to White, then
still an EY tax partner. Specifically for advice on which nation he should set
up his head office in.
To be clear: there’s nothing even allegedly illegal in this portion of
Papas’ scheme. While a McGrathNicol report later found the sustainability
businesses were, possibly,
insolvent from inception and heavily reliant on loans from the broader
Forum group, there’s no suggestion White had any role in any of them beyond
some initial advice on corporate structure.
Still, isn’t it a small world. And now both White and Papas have their own lengthy legal spin-offs. Maybe one day they’ll compare notes.
Commissioner of Taxation v [Respondent] [2023] FCA 1176
|
COMMISSIONER
OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA v PETER WHITE |
|
|
PETER
WHITE v COMMISSIONER OF TAXATION & ORS |
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