Solomon Lew is a man who normally gets his way: That’s often the case with billionaires. Though in his wrangle over a $600 million family trust he’s threatening not just to open what could be raw wounds within a retailing dynasty, but to highlight controversial aspects of a tax vehicle used by an estimated 800,000 Australians.
Worse still, he’s raising an ALP bugbear just weeks before a federal budget where Treasurer Wayne Swan will be combing the books looking for savings.
Lew has wealth management professionals and lawyers equally enthralled with a court case where the objective is to remove all claims on a family trust by his son’s ex-wife – Sarah Nowoweiski and his daughter’s ex-husband – Adam Priester.
It’s a remarkable move by Lew: At its simplest it reveals afresh an issue that has transfixed – and sometimes ruined – family business empires: Who deserves income from a family fortune? At its most complex it raises wider issues of financial entitlement in a period where low economic growth is going to ensure that fighting over existing fortunes may be more fruitful than striving to build wealth anew.
Lew has baffled legal experts as to why he is taking the extreme move of attempting to get his ex in-laws removed as beneficiaries. Lawyers suggest the estranged pair could remain beneficiaries but not actually receive any monies.
Further, Lew has financial planners on red alert because they recommend family trusts as discrete tax effective mechanisms for managing family business income. And though tax manoeuvres within family trusts may be perfectly legal there is little doubt they would be capable of outraging the majority of the population who don’t have enough assets to justify exploring them.
Labor Senator Doug Cameron, a Canberra figure who regularly takes up the cudgels against perceived elitism in the tax system, told Business Spectator yesterday he believes the area should be examined as a potential revenue raiser in the forthcoming budget.
Family trusts are already under pressure because of the extraordinary Gina Rinehart case (The Rinehart ring of influence, March 16) and a short-lived attempt by shadow treasurer Joe Hockey to initiate reforms a year ago.
But Lew is more than anything else a successful risk taker and never better than when he is tackling incumbent institutional power. More recently, retail analysts were not surprised that Lew’s listed Premier Investments was one of the very few retail stocks to report better than expected results. One key reason for this surprise was Lew’s typically daring appointment of Mark McInnes as chief executive when the rest of the retail industry resisted the opportunity to hire the disgraced ex-boss of David Jones.
Lew has won the early rounds of his legal battle. The estranged former in-laws first applied to have the case heard in the family court, Lew wanted the Supreme Court…it was moved to the Supreme Court. When they got to the Supreme Court Lew did not want the judge he was given…Tony Pagone.
Lew’s lawyers asked that Pagone be removed on the grounds of bias, stating that Pagone had previously provided tax advice for interests connected with Lew. Pagone openly dismissed the attempt at his removal. Ten days later Pagone was gone and a new judge put on the case.
The trial has now been postponed for another month as Lew applied for a 30-day extension following his mother’s death a few days ago.