The JobKeeper Rorts Scandal

JobKeeper has been in the news for many months. Introduced hastily at the end of March 2020, this Australian Government scheme to keep workers tied to their employers during the Covid downturn saved an estimated 700,000 jobs. Initially much of the discussion about JobKeeper related to the enormous $89 billion cost to the taxpayer, debate about winding the scheme back and then ending it as well as concern about how the resulting deficit was going to be reduced.

More recently the focus has been on whether all those entities which accessed the scheme were actually entitled to do so. Billion-dollar businesses were eligible if they suffered a 50% or more revenue shortfall while smaller businesses were eligible if their revenue fell by 30% or more. Entities could access the scheme by either demonstrating the revenue drop or forecasting a drop. Eligible businesses were provided with $1500 per fortnight for each of their employees.

It has become increasingly obvious over recent months that many businesses did not lose the stipulated revenue and yet still obtained JobKeeper.

The rush to set up the scheme, which quickly followed the Government’s reaction to the alarming image of thousands of workers lining up outside Centrelink offices, led to the failure to include an important safety requirement. It should have been stipulated that if the projected revenue shortfall did not eventuate, the money obtained should be reimbursed to the government – just as welfare recipients are legally required to return to the government any overpayments they receive.

The extent of overpayment has developed into a scandal that unsurprisingly is being referred to as a major rorting of the scheme.

According to the Parliamentary Budget Office, over the first six months of the scheme, $13 billion went to those entities whose earnings actually rose.

Among the list of those who were ineligible but stayed on the governmental gravy train and benefitted from this taxpayer funding were some major companies and very wealthy individuals. A few examples are Specsavers, Luxottica (owner of OPSM and Sunglasses Hut), car dealer A P Eagers, retailers Harvey Norman, Best & Less and Cotton On, private schools Wesley College, The Kings School and Brisbane Grammar, Bond University and New York University’s Sydney campus and the Australian Club in Sydney.

Many of these ineligible entities were able to post enormous profits which enabled them to increase shareholder dividends and give large executive bonuses.

While there is general appreciation of the role JobKeeper played in restricting the job loss from Covid restrictions and lockdowns last year, there has been increasing public concern about brazen rorting of the scheme and the government’s failure to urge the return of benefits from those who were not entitled to receive them.

Shadow Assistant Minister for Treasury Andrew Leigh has been raising the issue in parliament and the media for months. He said, “JobKeeper overpayment is the single biggest waste of money in Australian history, and the Morrison government won’t do a thing to make it right.”

Some entities have voluntarily returned the benefits or part of them.

The publicity that has been given to those who have shamelessly kept money to which they were not entitled has been having some effect. Harvey Norman’s Gerry Harvey, who refused for months to return any Jobkeeper money, finally announced in August that the company would return $6.02 million in JobKeeper funds to the ATO. However, this repayment is less than a third of the estimated $22 million the company and its franchisees claimed in total. According to Andrew Leigh, “Harvey Norman has given us the best advertisement for more transparency into the secretive, rorted jobkeeper scheme.”

According to Dean Paatsch, a director of corporate advisory group Ownership Matters, 88% of the $225 million that companies are returning is from publicly listed companies. Paatsch also has concerns about the lack of transparency with JobKeeper saying it was “extraordinarily generous and had zero transparency compared to the US, UK, New Zealand and other European countries. The interesting thing is that transparency does have an effect in stopping people claiming benefits that they don’t need.”

While Opposition and Crossbench MPs have been raising the issue of waste, lack of transparency and unethical behaviour by those who should not have received JobKeeper funds, the Government has been unmoved. Months ago the Prime Minister referred to questions about the rorting of JobKeeper and calls for the government to take action to have money returned as “the politics of envy” – an incredibly insensitive and arrogant remark given the size of the debt the nation now has – let alone the financial hardship that many people on low incomes have been suffering during the pandemic.

While the extent of rorting by ASX listed companies has been revealed because of their public reporting requirements, there has been no transparency in relation to private entities. Senator Rex Patrick and others have tried to obtain a list of JobKeeper beneficiaries with an annual turnover of $10 million or more. This has been blocked by the Government and the ATO Commissioner. Ownership Matters says publicly listed companies accounted for just 3% of the entire JobKeeper program, which means that private companies accounted for 97%. So the community is not being given the opportunity to see how much rorting was undertaken by these private entities. And, unlike Harvey Norman and other public companies, these unknown rorters can avoid being shamed into returning any funds to which they were not entitled.

While nothing was built into the scheme to actually compel rorters to return money to which they were not entitled, the ATO is taking action to recover some of the money paid to some entities. However, it is unlikely that taxpayers will ever learn the real extent of the rorting - given the lack of transparency about the majority of the scheme’s beneficiaries.

Some light could be shone on the murkier aspects of the JobKeeper scheme as the Auditor-General is investigating the ATO’s administration of the program following a request Andrew Leigh made in December last year. The A-G’s report is due to be tabled in December this year.

The national JobKeeper debt is far greater than it should have been and will create budgetary difficulties well into the future – particularly if governments try to repair the deficit quickly by cutting back on services like health, welfare and education. With inequality and poverty already major problems in Australian society, the fall-out from the JobKeeper rorts debacle has the potential to exacerbate these problems.

As the Morrison Government was responsible for the design and operation of JobKeeper, it is responsible for the massive waste of rorted taxpayer funds. No amount of spin from the Prime Minister or the Treasurer can excuse its incompetence. With the election approaching, we can look forward to plenty of distractions to encourage the community to lose interest in this and all the other rorts as well as the vaccine supply and quarantine failures.

What will be particularly interesting about the election campaign will be whether the Coalition, which has always claimed it has been a “gold standard” economic manager, will have the effrontery to push this tired line after the JobKeeper rorts debacle.

One thing we can be sure of is that the rorters, the JobKeeper Bludgers, will still be laughing all the way to the bank.

Hildegard

Northern Rivers, NSW

Guest Speak is a North Coast Voices segment allowing serious or satirical comment from NSW Northern Rivers residents. Email ncvguestpeak at gmail dot com  to submit comment for consideration.

World's richest man shares in Morrison & Frydenberg's $13 billion taxpayer-funded JobKeeper cash splash on rich businessmen

 

Forbes, 25 May 2021:

CEO of LVMH  Bernard Arnault
IMAGE: AFP via Getty Images

French fashion tycoon Bernard Arnault is the world’s richest person this Monday morning, with an estimated net worth of $186.3 billion—putting him $300 million above Jeff Bezos, who is worth $186 billion, and Elon Musk, worth $147.3 billion.

Arnault’s fortune has jumped from $76 billion in March 2020 to $186.3 billion on Monday, a massive rise of over $110 billion in the past 14 months, thanks to a pandemic-defying performance by his luxury group LVMH (Louis Vuitton Moët Hennessy).

LVMH, which also owns household names like Fendi, Christian Dior and Givenchy, rose 0.4% during the first hours of trading on Monday, putting its market cap at $320 billion and pushing Arnault’s personal stake up by more than $600 million......

Pushed by the “momentum” of shoppers in China, according to Jefferies analyst Flavio Cereda, LVMH recorded revenue of $17 billion for the first quarter of 2021, up 32% compared to the same period in 2020. 

LVMH Moët Hennessy Louis Vuitton's own subsidiary companies sell luxury goods in Australia. Its current share price is in the vicinity of €634.90 or Aust $1,013.73. The major shareholder in LVMH appears to be the Arnault Family Group, the holding company of Bernard Arnault.

Michael West Media, 6 September 2021:

Should Bernard Arnault rename his yacht Josh's Little Aussie Battler?
Image: Josip Baresic

Big business doesn’t vote, small business does. That’s the dilemma for Scott Morrison and Josh Frydenberg as they try to keep JobKeeper secret heading into the election. Michael West reports.

There is rising discontent in the Liberal Party’s small business base about the billions splashed on JobKeeper subsidies to large, profitable corporations.

No wonder. It is hardly comforting to know that the world’s richest man, French fashion magnate Bernard Arnault, is a beneficiary of Josh Frydenberg’s largesse. Perhaps Australian taxpayers may be afforded the privilege of adding to Bernard’s collection of Picassos or footing the fuel bill for his newest super-yacht (pictured in Monaco above) Symphony.

The symphony of revelations that large profitable companies, elite schools, posh clubs, and even foreign multinationals such as Bernard’s LVMH group which owns Louis Vuitton, Christian Dior and Moët & Chandon have been gorging on JobKeeper, have just tossed an ugly big spanner in the works for the Coalition election campaign.

The debacle over the vaccine roll-out has rendered an early federal election unlikely. Amid exploding Covid infections in NSW, Morrison’s campaign team is now desperately pushing the narrative “end lockdowns, live with Covid” while demonising Labor state premiers for closed borders but, with every death, time is running out for an early election. Besides, what premier in their right mind would open their borders to NSW right now?…..

Read the full article here.

According to The Sydney Morning Herald, in 2020 one of LVMH’s Australian subsidiaries, Louis Vuitton, claimed $6 million in JobKeeper while recording an increase in sales revenue, a boost in its profits and an increase in shareholder dividends. The exact figure was $5,965,000.

Cartoons of the Week

 

Cathy Wilcox

Matt Golding

To date only around $120 million in JobKeeper payments appears to have been clawed back from ineligible business and sole trader claimants

 

On 30 March 2020 the Morrison Government announced it would provide a wage subsidy to around 6 million workers who would receive a flat payment of $1,500 per fortnight through their employer, before tax.

The $130 billion JobKeeper payment was expected to help keep Australians in jobs as they tackled the significant economic impact from the COVID-19 pandemic. The payment was open to eligible businesses that receive a significant financial hit caused by the pandemic and provided the equivalent of around 70 per cent of the national median wage commencing in early May 2020 with payments backdated to 31 March.

The first indication that employers were not going to abide by the rules came in April:

By 21 May 2020 media reports began to reveal that a number of employers had been quick to rort the JobKeeper system.

In June 2020 mention began to be made of ‘pop up’ businesses receiving JobKeeper payments even though these businesses were not created until after the wage subsidy scheme was announced.

By 28 August 2020 more than 15,000 businesses have been removed from the scheme after the Australian Tax Office found them to be ineligible.

In that same month it was revealed that at least 25 companies in the ASX 300 had been paying bonuses worth $24 million to executives and millions more in dividends to shareholders after claiming JobKeeper payments.

Come January 2021 and the Australian Taxation Office is still playing catchup with fraud discovered in the wage subsidy scheme and continues in its attempt to retrieve the hundreds of millions in wage subsidy payments it believes have been paid out in fraudulent employer and sole trader claims.

ABC News, 29 January 2021:

Dodgy employers have signed up jailed criminals, people living outside Australia and even the dead to receive $1,500-a-fortnight JobKeeper payments.

These fictitious employees are among thousands of people being pursued by an Australian Taxation Office (ATO) investigation into rorts of the $130 billion wage subsidy program.

"Client is in jail" is one of the categories being scrutinised as a red flag in around 6,000 cases where employers may have created fictitious employees to take advantage of the JobKeeper scheme, hurriedly launched at the end of March last year to keep the economy afloat during the coronavirus pandemic.

Documents obtained using a freedom of information (FOI) application show that, by the end of September, the ATO was investigating 5,974 cases of "inflated employees" in applications for the wage subsidy.

"The reality is you cannot check every application," said lawyer and corporate investigator Niall Coburn.

"So certain things may have been overlooked, but that doesn't stop the Government from now being able to go back and look at the applications in more detail, and that's what seems to be the case here."

Paying the dead

By the end of September, the ATO had 5,974 cases under investigation, with almost a third found to be ineligible. The majority were ineligible because they "involve employers applying under the wrong ABN (business number)".

It noted there "have also been instances of putting spouses 'on the books'," as well as people overseas ("has a valid visa but … out of the country").

A further category of fictious employees were the dead. "Employee in their JobKeeper application that is deceased," the report observed…..

Fraud prevention efforts

In July, the ATO told ABC News 3,000 staff would be doing ongoing reviews of JobKeeper applications.

"At any particular time, we are reviewing between 2 and 3 per cent of JobKeeper applications," an ATO spokeswoman said.

"We will identify those who are intentionally defrauding the system and we will use the full force of the law [to punish them]."

More than 6,500 applications were rejected for a range of reasons, from people making genuine errors to fraudulent behaviour.

In December, the ABC revealed the Australian Taxation Office (ATO) was pursuing criminal investigations into fraud and had issued fines to program applicants who had made false or misleading statements.

BACKGROUND

ABC News, 9 December 2020:

The Australian Taxation Office has 19 active criminal investigations into fraud against the $101 billion JobKeeper scheme.

It has also issued fines to another 19 applicants to the wage subsidy program who have made false or misleading statements, and is considering penalties for another 24.

Since JobKeeper was launched in March, the ATO has clawed back $120 million in payments to applicants who made it into the system but were later found to be ineligible.

"While most businesses and employees are doing the right thing, we have identified concerning and fraudulent behaviour and claims by a small number of organisations and employees," the ATO said in a statement.

The agency declined to comment on whether the criminal investigations relate to employers or employees and would not provide details about any of the businesses involved or when the investigations began.

However, ABC Investigations understands employers and individual workers are being investigated over fraud and abuse of the scheme.

Applicants could face a prison sentence or fines if found guilty of defrauding the scheme……

The fraud investigation revelations come as the Australian National Audit Office (ANAO) considers its own probe into the scheme.

According to its website, the ANAO has flagged JobKeeper for a potential audit next year that would include an "examination of the implementation of integrity measures designed to protect the scheme against fraud and other abuse."

The ATO fraud hotline has received more than 10,000 tip-offs about fraud against JobKeeper, including claims that some employers have not been passing on the full subsidy to their employees.

ABC Investigations has also spoken to workers concerned that their employers may have artificially suppressed their revenue in order to qualify for the scheme, for example by delaying invoicing customers or removing popular items from sale in retail stores.

The ATO says it has initiated 14 of the fraud investigations using its powers under the Taxation Administration Act and has referred a further five cases to the Australian Federal Police's Serious Financial Crimes Taskforce.

Smart Company, 10 December 2021:

A marketing company has been made to repay $22,500 in JobKepeer funding, after the Australian Taxation Office received a tip-off the business was misusing the stimulus payments.

The ATO said the tip-off alleged the marketing company had incorrectly claimed JobKeeper for its employees, which came to a total of $12,000 per month.

The ATO’s investigation found two of the company’s four employees were ineligible for JobKeeper, because one was on work experience and not receiving any wages, and the other was hired after March 1, 2020.

The two remaining employees were eligible for JobKeeper, however, the ATO said their employer did not pay them the full $1,500 per fortnight in some periods.

“We determined that it was not an honest mistake and required the employer to repay $22,500,” the ATO said.

The ATO says it is closely tracking the misuse of pandemic support.

Tweet of the Week

THE RORTERS OF SPORTZANCEpic.twitter.com/7HAduemHx7

— Huw Parkinson (@rabbitandcoffee) May 16, 2020

Clarence Valley, Lismore & Richmond Valley get $1 million each from Drought Communities Programme after discovery of yet another alleged Morrison Government 2019 election campaign funding rort caused grant criteria to be revised & broadened

The Daily Examiner, 29 January 2020:

Yes, the Clarence Valley has been 100% drought affected with most of the land officially in either the Drought or Severe Drought categories.

This along with the bushfires has makes 2019-20 a horror year for farmers and graziers.

So this federal government grant is most welcome.

However, Clarence Valley local government area - like Lismore and Richmond Valley - only became eligible when criteria for assistance was changed after it was discovered that, just an in the 'sports rorts affair', there had been an apparent manipulation of a grant programme's funding allocations just prior to the May 2019 federal election - when of the 14 councils announced eligible as a Coalition election commitment 13 were in Coalition-held electorates and just one was not as it was held by an Independent.

The plus for Nationals MP for Page, Kevin Hogan, is that now instead of one council in his electorate being given a Drought Communities Programme grant, there are now three four.

Richmond Valley, another Northern Rivers local government area, also receives a grant of $1 million. However it is in a federal electorate which has been held by the Australian Labor Party since 2004. 

Somewhat ironic that a move by Morrison & Co to assist Coalition electorates has ended up giving this particular Labor electorate a windfall.

The Trouble With Water: 'ghost' water begins to haunt the Liberal-Nationals election campaign

“It is well understood and agreed that water in the Murray-Darling Basin has been overallocated and extracted at rates that are unsustainable.” [The Australia Institute, February 2018]

Eastern Australia Agriculture Pty Ltd (EAA) owns water entitlements at two properties in the lower Balonne area of the Condamine-Balonne region The Kia-Ora property is situated approximately 7km south of St. George, Queensland, along the Balonne River. The Clyde property is located 10km south-west of Dirranbandi, Queensland.

"Kia Ora" reportedly totals 18,841 hectares and has water entitlements of 36,705 megalitres, while "Clyde" is said to total 18,743 hectares with water entitlements of 30,289 megalitres.

EAA also appears to hold Queensland water licences which allows it to harvest overland flows/flood waters from both properties.

Questions have arisen with regard to the sale of some of this water.......

The Government’s been buying up water at record prices, leading to millions of dollars flowing to offshore tax havens. But now, two of our top pollies are facing questions over just who is making a fortune off our water.@HamishNews and @MichaelWestBiz bring you this report pic.twitter.com/5UTH1NHJzR

— The Project (@theprojecttv) April 18, 2019

Ever wondered how that $79M 'gift' of taxpayers money to a SE Qld irrigator was spent? Wonder no more - this is what 'ghost water' can buy the seller #AusVotes2019 pic.twitter.com/cYOE8CvqJ9

— no_filter_Yamba (@no_filter_Yamba) April 16, 2019

At various times prior to entering federal parliament in September 2013 Liberal MP for Hume and Australian Minister for Energy Angus Taylor was reportedly a co-founder and director of Eastern Australia Irrigation, a director of and company secretary for Eastern Australia Agriculture and was also a paid consultant for EAA.

💧Angus Taylor YESTERDAY: “has never had a direct or indirect financial interest in EAA or any assoc’d company.”

TODAY: He was also a consultant for EAA 09/10 “on normal commercial terms”.

TONIGHT: there’s a difference between ‘an interest’ & being paid as consultant. #auspol pic.twitter.com/AwwWGznyNz

— Hamish Macdonald (@hamishNews) April 19, 2019

The Minister for Energy Angus Taylor, former deputy-prime minister and federal agriculture and water resources minister, the current National Party MP for New England Barnaby Joyce, and the federal Dept. of Agriculture and Water Resources have all issued statements taking issue with concerns being expressed over this particular water sale and denying any wrong doing. Both ministers have threatened legal action for defamation.

The Queensland Government denies being party to this water sale.

The Morrison Government is now facing calls for an inquiry into the Murray-Darling plan water contracts signed off by former minister Joyce.

BACKGROUND

Ghost Water – licences for unreliable/unverifiable amounts of temporary water sold to government for use as environmental flow water.

Overland flow is “water that runs across the land after rainfall, either before it enters a watercourse, after it leaves a watercourse as floodwater, or after it rises to the surface naturally from underground…..You can take overland flow for any purpose unless there is a moratorium notice or a water plan that limits what can be taken.”  [Qld Government, Business Queensland. January 2019]

Applications can be made for a water licence for the capture of overland flow water.

“A water licence is an entitlement to take water which is attached to land therefore, unlike a water allocation, it is not an asset in its own right. Water licences cannot normally be sold independent of land unless there are management rules in place which allow permanent transfers (relocations) to occur…..The relocation of a water licence enables a licensee to transfer ownership of the entitlement, permanently moving the licence from the land to which it is attached, to another parcel of land within the confines of the rules. This process differs from permanent water allocation trading whereby water allocations are traded independently of land titles and have their own registrable title (i.e. water can be held by someone who does not own land).” [Qld Government, Business Queensland. February 2019]

At the time of the water sales EAA has 7 harvesting licences, of which 4 were for water extraction from the Balonne and Narran rivers, 2 were for collection of overland flow waters and 1 was for irrigation water draw on the Beardmore Dam.

Unsolicited offer by EAA to sell overflow water at 

https://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22publications%2Ftabledpapers%2F59682649-2fa2-43b1-955f-ae16caecef45%22.

Austender records of three EAA water sales to the Dept. of Agriculture and Water Resources - the first by transparent open tender and the remaining to by non-transparent limited tender:

At the time of the first water sale (1,980ML at est. $2,175 per megalitre) Barnaby Joyce was an elected senator on the Opposition benchs and Labor's Tony Burke was federal water minister, at the time of the second and third sales (totalling 27,960ML at $2,745 per megalitre) Joyce was the Australian Deputy Prime Minister as well as Minister for Agriculture and Water Resources. 

The first sale under the Labour Government was a result of an open competitive tender, the second and third sales were by unadvertised limited tender which excluded a competitive tender process.

NOTE: In 2008 it appears that EAA sold 10,433ML from its water storage to the Murray-Darling Basin Commission for an unknown amount.

The Australia Institute, March 2018, "That's not how you haggle....Commonwealth water purchasing in the Condamine Balonne", excerpt:

EAAs original asking price was $2,200 per megalitre. DAWR displayed Pythonesque haggling skills and paid a final price of $2,745 per megalitre. DAWR paid 25% more per megalitre than originally requested by EAA, 139% higher than the Commonwealth had previously paid for the same type of licence and 85% higher than the average price for a more reliable type of water licence. The megalitre price was inflated because it included the cost of a storage that the vendor originally offered to transfer to the Commonwealth, but that offer was later withdrawn, without adjusting the price. The storage was used as a justification of the sale, but not as a condition of the sale.

The water purchased was for Over Land Flow (OLF) licences, which cannot be traded between irrigators, because they are attached to land. They have no legal status or any recognition at a location other than where they were originally purchased. That is, there appears to be no legal basis for the Commonwealth to ensure it gets to the places it is intended to be used.

 Austaxpolicy, 28 September 2018, excerpt:

First, tax havens siphon taxable profits away from jurisdictions like Australia. This means either increasing the tax burden on individuals and businesses, taking on more debt, or cutting social services.

These shenanigans are not always illegal. But what is legal is not always moral or economically sound. Australia’s fiscal foundations are threatened by the erosion of the tax base by tricky tax tactics.

Aggressive tax planning can erode public confidence in the tax system itself. After all, one reason most of us pay the taxes we owe is that we believe we live in a society where our fellow citizens do the same.

A fascinating new dataset released by the Australian Bureau of Statistics helps shed light on this problem. Across multinational firms operating in Australia, the bureau reports their operating profit and their taxable profit. What is unique about these data is that they are reported for firms with majority owners in different countries. So it is possible to compare across countries, and ask the question: which nation’s firms have the biggest gap between operating profits and taxable profits?

For the typical Australian firm, the gap between operating profits and taxable profits is 30 percent. The figure is pretty similar for multinationals whose owners reside in the United States (28.4 percent), United Kingdom (26.6 percent) and Japan (28.5 percent).

But for some nations, it’s a different story. If you’re a Bermuda-owned multinational operating in Australia, then on average the gap between operating profit and taxable profit is 88 percent. If you’re a British Virgin Islands owned multinational, the reduction is 92 percent.[3]

So if you start with ten dollars of operating profit, then Australian firms report about seven dollars of taxable profits. The same is true for American, British and Japanese-based multinationals – ten dollars of operating profit produces seven dollars of taxable profit.

But for firms based in Bermuda or the Virgin Islands, and operating in Australia, ten dollars of operating profit produces just one dollar of taxable profit. That’s a startling difference……..

Second, tax havens are the hiding ground..... 

Gabriel Zucman, an economist at University of California, Berkley, estimates that around four-fifths of money in offshore bank accounts is there in breach of other countries’ tax laws.[4] .......

A recent study in the journal Nature Ecology and Evolution found there are even egregious environmental vandals there too. Following the Panama Papers, the study found seventy percent of fishing vessels implicated in illegal, unreported and unregulated catches had been registered in Belize, Panama, or other tax havens at some point. [5]

Third, tax havens increase inequality. Offshore wealth held by Australians in tax havens was approximately 6 per cent of GDP, according to Zucman’s work in 2013. In today’s prices, that would mean over $100 billion in assets held offshore by wealthy Australians. [6]..........

Cayman Islands corporate tax rates appears to be zero.

Michaelwest.com.au, 21 April 2019:

During December 2016, the Tax Office required Eastern Australia Agriculture to enter into a Settlement Deed to reduce the interest charged by EAI on convertible notes issued by EAA.

The interest charges were required to be reduced from June 2011 when Taylor was still a director of EAI. The total amount of excessive interest charges was $14 million.

This from EAA’s 2016 annual report:

“Forgiveness of interest expense – parent entity

“Following a review by the Australian Taxation Office (ATO), the company entered into a Settlement Deed with the ATO on 9 December 2016 and the parent entity agreed to reduce the interest rate on the convertible note from 12 per cent to an average interest rate of 7.97 per cent effective from 29 June 2011, resulting in a forgiveness of interest expense accrued in 2016 and prior years."

The higher the interest rate charged by the parent, the more money flows from Australia to the Caribbean. In the parlance of the tax fraternity, this practice of charging excessive interest rates, in order to maximise the interest payments out of Australia to a tax haven, is called “debt-loading”.

By 2016, Angus Taylor was no longer a director of EAI. He had stepped down from the board of the Cayman Islands company in 2013, the year he entered Parliament. He was a director however when the financing arrangement was established.

London Stock Exchange, EF Realisation Company Limited (EFR) Annual Financial Report, released 22 January 2018, excerpt:

Compulsory Redemption Mechanism

EF Realisation monetised various portfolio assets between February and August 2017 which, in aggregate,  comprised approximately 24% of the NAV as at 30 September 2017. The total net proceeds raised were approximately £4.36 million, made up of £4.26 million in realised proceeds (including £0.1 million from a corporate action involving the Company's holding in Energy Future Holdings) and £0.1 million of investment income (net of expenses). The Company realised its investment in Menhaden Capital plc in February 2017 which raised £1.2 million, equal to 2.3p per Ordinary Share. EF Realisation sold a bond holding in Integradoro de Servicios Petroleros Oro Negro SAPI de CV ("Oro Negro") which raised approximately £0.5m, and it received approximately £2.5 million from Eastern Australia Irrigation Limited which had sold certain of its water entitlements to the Australian Government and distributed a majority of the proceeds to its shareholders, including EF Realisation. On 4 September 2017, the Company announced its intention to implement the Company's first capital distribution, returning £3.0 million to Shareholders of the approximately £4.36 million in total net proceeds; the balance of the net proceeds from asset realisations was retained for working capital purposes…..

All the other investments in EF Realisation are unlisted and valued by the Directors at their estimated realisation values and, with one exception, changes in these valuations have been small. The exception is an upgrade to the valuation of the Company's minority shareholding in Eastern Australia Irrigation Limited following that company's sale of water rights to the Australian Government authorities in August 2017 and the expectations for the amount of proceeds that can now be realised from the sale of its farms…..

Eastern Australia Irrigation Limited ("EAI") is an Australian based company which owns and operates two farms in Queensland, whose main crop is cotton, along with various water extraction rights from the Murray Darling River Basin. During the summer of 2017, Australian Government authorities approached EAI with an offer to acquire some of its water entitlements. EAI was able to negotiate the price for the water entitlements to the highest level ever paid, and in August 2017 it completed the largest ever sale of water entitlements in the Murray Darling River Basin. EF Realisation owns 9.6% of EAI's shares and, along with other holders, supported the sale of the water rights. EAI used the majority of the sale proceeds to return capital to its shareholders, and passed £2.5 million to EF Realisation. This represented a gain on that part of the EAI holding of £0.34 million or 16.0%. We comment below on the plans to dispose of EAI's farms……

EAI was in the process of selling its farms prior to the sale of water rights. Proceeds received for the sale of water rights were attractive compared to the offers received in the farm sale process so the farm sale process was suspended in order to complete negotiations with the Australian Government authorities over the sale of water rights.  EAI has now resumed the farm sale process with the intention of using sale proceeds to repay debt and redeem its shares. Having sold some of the water rights, the effective size of the irrigable land that can be used for cotton farming has been reduced by approximately one-third and it is expected that this, and the decision to sell the farms separately rather than as a package as last summer, will make the farms attractive to a broader range of potential buyers. Cotton prices are supported by low crop harvests in cotton growing regions outside Australia and, at the time of writing, local rainfall on EAI's farms has prevented a return of drought conditions. However, until binding bids are received for the farms, the timing for EF Realisation to redeem or sell its shareholding in EAI and the proceeds from such a redemption or sale are uncertain.

EF Realisation carries its remaining investment in EAI at a conservative estimate of the proceeds that would be received assuming EAI's farms are sold and its shares are redeemed. In particular, the implied valuation of the farms is less than the value of the farms used to secure EAI's loan from the Commonwealth Bank of Australia, a valuation point that has been a floor for proceeds in farm sales. [my yellow highlighting]

In the 2012-13 financial year Eastern Australia Agriculture Pty Limited made a political donation of $20,000 to the Liberal Party of Australia (NSW) and on 29 August 2013 the company made a second political donation of $35,000.

After the September 2013 federal election Barnaby Joyce became the Minister for Agriculture and in September 2015 Water Resources was added to his ministerial portfolio.