Taxation and the latest addition to the High & Mighty … Trials and tribulations of tax minimisers … Foreigners in Paris … Mistreatment of multinationals and the “rule of law” … Janek Drevikovsky reports on what Simon says
If it’s not dinner party impressions of federal judges, then it’s family beach holidays spent working, along with lots of Edwardian trappings.
Perhaps this polymath’s crowning achievement is his defence of the meekest among us – poor old multinational corporations.
Steward, who appeared both for and against the ATO while in practice, set forth his views in a paper entitled ‘Taxation of Multinationals, the OECD Guidelines and the Rule of Law’.
The paper debuted in 2016, in the annual bumper edition published by the Samuel Griffith Society, a conservative outfit composed of states-rights lawyers and constitutional flat-earthers.
In his tract, Steward takes aim at the “legislative changes” which have “eroded” the rule of law when it comes to taxing multinational corporations.
The chief offender, he writes, is the so-called “arm’s length principle”.
The “arm’s length principle” was enacted to meet an “internationally accepted standard”, Steward tells us, first adopted by the OECD in 1979.
In 2012, the Gillard government introduced a new subdivision into the Income Tax Amendment Act 1997.
The effect, as Steward explains, was twofold. First, courts now had to consider the latest version of the OECD guidelines when deciding an “arm’s length” case.
Secondly, the tax commissioner got the power to “adjust” the prices paid by one company to another if the “arm’s length principle” had not been followed.
The amendment went in the face of a series of court decisions, dating back to the early 2000s.
“This new subdivision represents a striking example of the power of the legislative branch to overturn the work of the judiciary,” he grumbled.
Then there was the problem of the explanatory memorandum, which said parliament had made a “consistent assumption” since 1982 that the power to adjust prices existed.
“These statements in the explanatory memorandum are, I regret, false. There is not the slightest evidence of a ‘consistent assumption’.”
“To subject [multinationals] to retrospective legislation by which the criteria upon which they were to pay tax in past years changed, in circumstances where that new criteria could not then be ascertained (as it did not then exist) is, in my view, unjustified.
It is very bad tax policy.
It is equally bad for an explanatory memorandum to contain false statements, and for amendments to be passed based on falsehoods. The result is perhaps an affront to the rule of law.”
Steward was also dismayed that our tax laws now force courts to consult the OECD’s guidelines when deciding price transfer cases.
“[T]he rule of law is not promoted by granting to an unelected foreign body the capacity to influence the scope and meaning of domestic tax legislation,” Simon says.
To Steward, the guidelines are a badly drafted bit of bureaucratic compromise – the cynical spawn of a decadent, globalist elite:
“One does not know what really goes on in Paris. The meetings are not held in public. We do not know who pushed for these changes.
Presumably, the process of reform took place incrementally, perhaps over a good bottle or two of Bordeaux at some pleasant bistro on the Ille Saint-Louis – paid for by the taxpayer.”
Steward’s concern for the taxpayer is admirable, if a tiny bit selective.
The plight of the multinational was typified in the Chevron federal court tax case, where Steward appeared (unsuccessfully) for Chevron Australia.
The ATO was after nearly $340 million in tax, on the basis that Chevron had entered into a loan with its parent group the terms of which violated the “arm’s length principle”.
Both sides called countless experts, who spoke at cross-purposes about how much interest Chevron should have been paying.
Five weeks of trial and 13,500 pages of court documents later, Justice Alan Robertson handed down his judgment. As Steward explained to the Sammy Griffithites:
“He found that Chevron had also asked the wrong questions and that the resulting expert opinions it had procured did not address the statutory task.
Because under our system the onus is on the taxpayer to show that an impugned assessment is excessive, it followed that Chevron had necessarily lost.
I am sure there is a word to describe what happened in this case; for the moment I just cannot think of it.”
No prizes for guessing how Steward would’ve decided the whole shebang.
As Ms Ginger Snatch, an associate of judges, pointed out, Steward’s appointment bears all the fingerprints of a Liberal Party stitch-up.
Chevron has a history of punishing those who sue the fossil giant.
The company has refused to pay a whopping $US9.5 billion judgment ordered by a court in Ecuador in a 2009 action brought against it by farmers and indigenous land holders in the Amazon who alleged contamination from oil drilling.
The case has been referred to as the “Amazon Chernobyl”, and the lead lawyer for the applicants was New York based attorney Steven Donziger.
Chevron expressly embarked on a campaign to demonise Donziger, hiring private investigators, creating a publication to smear him and assembling hundreds of lawyers from across 60 firms.
The company claims the judgment was obtained by “egregious fraud” and brought RICO proceedings against Donziger.
Judge Lewis Kaplan, a federal judge in the Southern District of New York, ruled that Chevron need not pay the Ecuadorian judgment and instead fined Donziger $US3.4 million for contempt plus Chevron’s legal fees.
The lawyer was ordered to hand over to the court his mobile phone and computer, a decision he appealed. Pending the appeal, Kaplan ordered Donziger be confined to house arrest.
His bank accounts also have been frozen, he has been disbarred and his passport seized.
He has now been under house arrest for 15 months, yet the maximum sentence for criminal contempt in New York is six months, with the longest sentence imposed on a lawyer being 90 days.
An Amazon defence organisation reported on November 4 that 55 Nobel laureates have together called for the protection of Donziger, that the charges against him be dismissed, the harassment cease and any further actions be assigned to a “neutral and unbiased judge”.
Kaplan also appointed law firm Seward & Kissel to continue the prosecution of Donziger, after the Southern District of new York declined to do so.
This rackety turn of events resulted from a dodgy Ecuadorian judge, Alberto Guerra, who gave testimony that he had been bribed during the trial by Donziger and that the findings against Chevron had been “ghostwritten”.
In international arbitration proceedings, Guerra admitted that he lied and changed his story on multiple occasions – this after being prepped by Chevron’s people more than 50 times, being moved with his family to live in the US at the company’s expense with a monthly stipend 20 times his judicial pay in Ecuador.
The Intercept reports that Kaplan has a “soft-spot” for Chevron, describing it as:
“… a company of considerable importance to our economy that employs thousands all over the world, that supplies a group of commodities, gasoline, heating oil, other fuels, and lubricants on which every one of us depends every single day.”
In language befitting a corporate multinational that would cheer the spirit of any exquisite antique and fine art collector, Chevron said:
“… any jurisdiction that observes the rule of law should find the fraudulent Ecuadorian judgment to be illegitimate and unenforceable.”