Lendlease, PwC reject claims by whistleblower for protection and compensation

Lendlease and PwC Australia say claims by former corporate tax lawyer Anthony Watson for whistleblower protections and compensation are wrong.

Lendlease chief executive Tony Lombardo. Picture: Jane Dempster

Lendlease and PwC Australia have rejected the claims of former corporate tax lawyer Anthony Watson, calling his claim for whistleblower protections and compensation wrong.

In amended defences filed with the Federal Court, both Lendlease and PwC Australia, the now owner of Mr Watson’s former firm Greenwoods & Herbert Smith Freehills, pushed back on many of the claims made by the tax lawyer, but admitted several key conversations took place.

Mr Watson claims he was forced out of his role at GHSF after raising concerns about Lendlease’s tax treatment of several assets, despite working with the firm for decades as its tax ­adviser.

Lendlease has previously denied Mr Watson’s allegations that it engaged in an improper tax dodge. However, the firm is now facing heat from the Australian Taxation Office, which has hit the property giant with a $112m amended assessment over the sale of a tranche of its retirement assets.

The ATO’s bill, expected to be the first of possibly three totalling more than $300m, landed on May 10 after years of denial by Lendlease that it was facing ­potential tax action over its previous accounting practices.

Lendlease has said it would ­appeal against any amended tax bill, but the outcome may strengthen Mr Watson’s claims against the company and GHSF.

In its response to Mr Watson’s claims, Damian Lovell, a partner at Lendlease’s lawyers, King & Wood Mallesons, denies many of the allegations.

Lendlease claims Mr Watson, in an early 2013 meeting with the firm’s then head of taxation and senior manager Paul Hooper, did not raise “any concerns” that ­financial reports and statements prepared by the property giant were materially incorrect.

The firm claims Mr Hooper was not a senior manager of Lendlease at the time.

However, the firm confirmed Mr Watson did phone the head of tax on March 3, 2014, to discuss Lendlease’s tax arrangements, noting that Mr Hooper responded two days later via email.

Former Greenwoods & Herbert Smith Freehills partner Anthony Watson.

Lendlease also denies Mr Watson was removed as lead ­director overseeing the firm’s tax advisory services on instruction of the company, saying the GHSF partner was instead replaced “ because of his sustained failure, over a period of more than 12 months, to address issues with the quality of the services provided”.

Lawyers for Lendlease also note Mr Watson advised the firm of his resignation from GHSF in May 2016, sending notes to the then-chief executive and chief ­financial officer.

Separately, in its response to Mr Watson’s claims GHSF, now controlled by PwC, pushed back on many of the court claims.

Dentons partner Persephone Stuckey-Clarke, acting for GHSF, vigorously denied Mr Watson’s claims, saying that although the former tax lawyer worked for the firm it did not owe him several of the duties claimed.

This included a claim from Mr Watson that GHSF and he had a duty to “co-operate in the performance of the employment agreement to enable each to have the benefit of the employment agreement”.

GHSF also denies the employment agreement signed by Mr Watson required the two sides “to conduct themselves in the performance of the employment agreement in good faith and reasonably”.

The firm also denies it had an obligation to Mr Watson “to not act capriciously, arbitrarily, irrationally or unreasonably”.

However, GHSF confirms there was a meeting in 2013 between Mr Watson, Richard Hendriks and Graeme Cooper at which Lendlease’s JEM Development in Singapore was discussed.

But the firm denies any discussion around the treatment of profits from the sale of the JEM Development as revenue, rather than capital, took place.

The case returns to court next month.

Originally published as Lendlease, PwC reject claims by whistleblower for protection and compensation