Lowys accused of stonewalling

THE chairman of the US Senate committee investigating tax haven banks took a direct swipe at Westfield Group's executive chairman, Frank Lowy, before his son Peter Lowy appeared at a committee hearing in Washington on Friday night.

THE chairman of the US Senate committee investigating tax haven banks took a direct swipe at Westfield Group's executive chairman, Frank Lowy, before his son Peter Lowy appeared at a committee hearing in Washington on Friday night.

Opening the hearing, the Democrat senator Carl Levin said an "ingenious set-up" allowed Mr Lowy senior to "deny with a straight face" that he and his family were beneficiaries of a tax-haven arrangement that hid assets from Australian tax authorities.

Senator Levin referred to Mr Lowy's statement on July 17 rejecting a committee report that said Mr Lowy and his sons David, Peter and Steven had used the services of LGT Bank in the tax haven of Liechtenstein to hide $US68 million.

Mr Lowy's statement said a committee report was incorrect in alleging the family were beneficiaries of "a Liechtenstein structure".

The report described the Lowy family's use of a Delaware company, Beverly Park Corporation, to name the beneficiaries of a Liechtenstein foundation, Luperla, via a British Virgin Islands company, Lonas.

"That meant Luperla had no official beneficiaries at the time it was formed or in the following years," Senator Levin said.

"This ingenious set-up allowed the Lowys to deny with a straight face that they were foundation beneficiaries, while controlling the Delaware corporation that would eventually be used to name those beneficiaries."

Senator Levin also referred to Mr Lowy senior's comment that "the report fails to mention the fact that all of the funds held in the structure in the Liechtenstein bank were distributed for charitable purposes in Israel some years ago".

The senator said: "He has refused the subcommittee's request to name the charities involved or identify the dates and amounts of the donations.

"He has also declined the subcommittee's invitation to supply additional information about Luperla Foundation or LGT Bank."

There was more tension between the committee and the family after Peter Lowy, a Los Angeles resident, declined to answer questions on Friday night, asserting his right under the fifth amendment of the US Constitution against self-incrimination. He told the committee that "respectfully" he had been advised not to answer questions, and in less than three minutes he had been excused.

Mr Lowy, 49, who runs Westfield's American operations and is a US citizen, had been called to appear on July 17 but asked for eight days' delay due to business commitments.

A Republican member, Norm Coleman, scolded Peter Lowy, saying, "Mr Lowy had left the United States on a red-eye flight to Australia, just before the US Marshals Service could track him down and serve him with a subcommittee subpoena".

"All we seek here today is what we ask of any person or entity that we engage with: a measure of candour and respect for the law," he said. When Mr Lowy was excused his lawyer, Robert Bennett, who sat with his client during the brief hearing, asked to make "one correction that I feel is very important".

Senator Levin refused, saying "We are not going to have you testify in lieu of your client."

Mr Bennett repeated: "The committee has made a mistake."

When this failed, he threatened to address the media instead.

"I'm sure you will, anyway," Senator Levin replied .

Outside the inquiry Mr Bennett said it was absolutely false that Mr Lowy had tried to duck the subpoena.

He said the marshals knew he was overseas because Mr Lowy's lawyers had told them so, and that he had not travelled to Australia to avoid being served with a subpoena.

Mr Bennett refused to comment on the substance of the allegations of tax evasion made by the committee.

Senator Levin said governments around the world were fed up with tax evasion and said it was time to pass his Stop Tax Haven Abuse Act.

A second witness, Steven Greenfield, a toy importer - who is also under investigation for his use of LGT Bank - had initially refused to appear before the Senate committee.

After being threatened with contempt proceedings, he agreed to appear in person.

Mr Greenfield also asserted his right against self-incrimination and was excused.

On Thursday the chairman of the Senate finance committee looking into tax evasion in the Cayman Islands, Max Baucus, a Democrat from Montana, said tax reform would be an important focus in 2009.

The inquiry, which focused on Ugland House in the Cayman Islands - the offices of Maples and Calder and about 18,500 companies - heard evidence that the use of shell companies in tax havens was growing rapidly and was a major contributor to the $US345 billion ($360 billion) in unreported income in the US.


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