06 April 2016
by Neil Chenoweth
Paul Hogan's revenge on Swiss adviser Strachans
Paul Hogan achieved last October what a decade of Australian government investigations, dozens of criminal convictions and a global manhunt had failed – he managed to get his former Swiss financial adviser, Strachans, kicked off the island.
That's the metaphorical island of Panama law firm Mossack Fonseca, which finally decided to drop Strachans as a client.
While the long-running Project Wickenby investigation into tax dodgers made Strachans infamous in Australia, it was only in 2013 when Hogan claimed in a US court that Strachans had misappropriated $33.5 million of his money that Mossack Fonseca began a major review of the Swiss firm.
Mossack Fonseca runs registry services in tax havens around the world. Strachans has been a client since 1991.
The media reports of Hogan's court claims triggered a long-running internal debate at Mossack Fonseca offices, which led to new due diligence checks in 2014. These came to a head late last year.
On October 9, in a last ditch attempt to avoid being fired by Mossack Fonseca, Strachans partner Terry Jehan emailed Mossack Fonseca a letter titled Hogan Apology to show that the Swiss firm had mended its fences with Mr Hogan.
The letter, written by Mr Hogan's US lawyer Craig Emanuel on September 16, 2014, and co-signed by Andrew Robinson of Robinson Legal in Sydney, showed that Hogan had settled his differences with Strachans over the $33.5 million. The message to Mossack Fonseca was there was no need to drop Strachans as a client.
That's not an apology, Mr Robinson told The Australian Financial Review last week.
"We are not aware of any correspondence in recent years that could be described in any sense as 'an apology letter' between any of our clients and Strachans and are unaware of any circumstances that would warrant any form of apology," Mr Robinson said in an email.
Inside the fight
Ouch. The letter, revealed in a giant leak of Mossack Fonseca documents obtained by German newspaper Süddeutsche in a project led by the International Consortium of Investigative Journalists, provides an inside view of the poisonous dispute between Mr Hogan and Crocodile Dundee co-producer John Cornell and Strachans partner Philip Egglishaw.
That dispute came to light in April 2013, when The Sydney Morning Herald revealed, on the back of another project by the ICIJ, that Mr Hogan was accusing Strachans in a California court of stealing $US34 million, which he needed to pay a settlement with the Australian Tax Office. Mr Egglishaw vigorously denied this.
The US court documents showed that Strachans set up account 379865 at Corner Banca SA in Lausanne, in 2005 to hold $US34 million for Mr Hogan's companies. Strachans' US lawyer claimed they would not release the funds until Mr Hogan signed an indemnity agreement, which would cover them if the Tax Office pursued Strachans for the rest of the tax.
Mr Emanuel's "apology letter", addressed to Strachans' Swiss lawyer, Paul Gully-Hart, confirmed that Mr Hogan and Strachans settled the dispute on August 30, 2013, when bank statements were provided to show Corner Banco "was holding approximately AUD$33.5 million in a number of accounts, which Mr Egglishaw advised were held on behalf of Mr Hogan".
"I am told that Mr Egglishaw is distressed about articles that appeared in the international press in April 2013, which alleged or implied that your client had misappropriated approximately $34 million held in Switzerland on behalf of Mr Hogan," Mr Emanuel wrote.
"I am instructed through their Australian lawyer, Mr Andrew Robinson, that neither Mr Hogan nor Mr [John] Cornell made any allegation to the press that your clients had misappropriated these funds, and by virtue of the settlement, they both agree that there has been no misappropriation of these funds as suggested by some of the press articles."
The fight might have been over, but the media reports had done what a decade of headlines about Strachans as the target of the Operation Wickenby tax avoidance investigation had not.
It triggered a long-running internal debate at Mossack Fonseca officers, which led to new due diligence checks in 2014, which came to a head last year.
Strachans was founded in Jersey in the 1980s, but moved to Geneva in the late 1990s. Philip Egglishaw lives in a five-storey apartment building known best for the police station on the ground floor and its luxury penthouse, where one of France's richest men, Edouard Stern, was in 2005 shot dead by his mistress while bound and wearing only a latex stocking. The mistress, Cecile Brossard, then fled to Sydney.
It's the sort of controversy that Egglishaw, described as an urbane, bowler-hatted Englishman, would abhor.
It was the seizure of Mr Egglishaw's laptop in a Melbourne hotel room in 2004 by Australian Federal Police that kicked off the Project Wickenby investigation of international tax avoidance, which has seen 46 people convicted, including Strachans partner Philip de Figuereido, and $2.29 billion in tax bills.
None of this was enough to persuade Mossack Fonseca to dump Client 841, Strachans.
It was not until Australia began extradition procedures in Jersey, in January 2009 against another Strachans partner, de Figuereido, for money laundering, that Mossack Fonseca took action.
Within days Mossack had resigned as registered agent for 11 British Virgin Islands companies where de Figuereido was a director.
In March, Strachans quietly renamed its chief British Virgin Islands company, Strachans International, as SI Admin Limited, and Mr Egglishaw was replaced as a director by another Swiss company he controlled.
Thus when the British Virgin Islands Financial Investigation Agency approached Mossack in May 2009, there was no link to de Figuereido. There was no ID or related documents about Egglishaw either.
A whole new range of Strachans companies were quietly formed. But the new due diligence inquiries in 2014 prompted by the Hogan media reports changed the picture.
It was these inquiries that last year uncovered an international arrest warrant that Interpol had issued for Mr Egglishaw a decade before, which Mossack Fonseca found was still outstanding.
The internal debate at Mossack Fonseca raged through June to October whether to resign from Strachans companies linked to Egglishaw. Terry Jehan at Strachans protested and offered to remove Egglishaw from the boards of two British Virgin Islands companies and sent the "Hogan apology".
"I am not sure why you have resigned for United Finance Services Ltd as Mr Philip Egglishaw resigned in 2013, and is no longer connected with this company," Mr Jehan wrote on October 9.
"Please confirm. As regards SI Admin Ltd if Mr Philip Egglishaw resigns as a director and the shares are transferred and beneficial ownership changed would you reconsider your position?"
Mossack Fonseca compliance executive Sandra de Cornejo wrote to colleagues on October 19: "This man is listed by Interpol, I do not see why we should stay with this company.
"I also see the ruse by the customer to ask if we stay with the company if you remove the individual. I insist that we must resign."
The head of Mossack Fonseca's British Virgin Islands' office, Eyra Perdomo, agreed on October 20: "I do not want a scandal with someone in INTERPOL. I agree with the resignation."
Mossack Fonseca told Strachans on October 24 that it was cutting links. But goodbyes are rarely forever in the British Virgin Islands.
Mossack's decision only applies to companies linked to Egglishaw.
It appears there will be no problem with Strachans companies linked to Jehan.