Tycoon Drops Bid For Bermuda Documents

November 2, 2011

Australian-born businessman Peter Lowy has called an end to a long-running US legal challenge in which he sought thousands of pages of documents –including financial dossiers from Bermuda  — related to an international investigation into his tax affairs.

US media outlets report Justice Susan Illston, of the US District Court for the northern district of California, has formally dismissed the case at the request of Los Angeles-based Mr. Lowy, whose family is under investigation for suspected cross-border tax evasion.

Now an American citizen, Mr. Lowy’s Australian-Israeli family’s Westfield Group operates more than 100 shopping centres in Australia, New Zealand, the United States and Great Britain.

Peter Lowy [pictured] is head of the US division of the Westfield Group.

The US Internal Revenue Service consented to the dismissal, saying it was ”in the interest of the court and the parties”. Judge Illston ordered the parties to pay their own costs of the case.

It is not clear why Mr. Lowy decided to halt the case at this point, although in March the court effectively snuffed out their chances of obtaining any more documents.

The Lowys’ US lawyers nevertheless pressed on, arguing material the US tax authorities obtained from Bermuda in 2009 — after they had lodged their initial freedom-of-information request —  should have been disclosed to them.

The case was initiated in February last year when the Lowys claimed they were wrongly denied access to thousands of pages of documents accumulated by the IRS as it probed transactions dating back to the 1990s.

One aspect of the investigations conducted by Australian and US tax authorities focuses on the Lowy family’s use of the LGT Bank in Liechtenstein in handling about $US67 million of funds in the late 1990s, and the subsequent dispersal of those funds.

The court heard the IRS had requested help from Bermuda authorities, who in turn served notices of demand on the Bermuda branch of the accounting firm Ernst&Young.

It also heard that Australian tax authorities feared that, if the IRS released documents to the Lowys, the Australian investigation could be jeopardised.

The IRS repeatedly resisted the Lowys’ requests, saying the terms of the US-Australia tax treaty required the documents be kept secret.

In March, Judge Illston ordered the IRS to give the Lowys more detail about the nature of the documents that had been withheld – but the IRS and the Lowys could not even agree on what that court order meant.

Now the IRS has asked the court to modify or clarify the March order to ensure that, when it is asked to describe documents it holds, the US tax agency can say internal records relate to or reflect information the IRS received from a tax-treaty partner.

The agency does not want the court order to imply, as the Lowys argue, that it must state what documents it sent to other countries.


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