By Kate McClymont, Ruth Williams, Sarah Danckert and Georgina Mitchell
Controversial Sydney businessman and philanthropist John Kinghorn is facing a maximum 10-year jail term after he was charged with defrauding the tax office of $30 million.
The fraud offences follow a "complex" eight-year investigation by the Serious Financial Crime Taskforce aided by international agencies, said Australian Federal Police Assistant Commissioner Neil Gaughan.
RAMS Home Loans founder John Kinghorn is facing a maximum 10-year jail term after he was charged with defrauding the tax office of $30 million.Credit: Jim Rice
The AFP alleges that the founder of RAMS Home Loans and Allco Finance Group avoided paying more than $30 million in tax obligations by concealing he beneficially owned and controlled two companies registered in Jersey, a tax haven in the Channel Islands.
The 76-year-old appeared in the Downing Centre Local Court on Thursday charged with one count of dishonesty in relation to information he supplied to the Commissioner of Taxation.
Mr Kinghorn faced the Downing Centre Local Court on Thursday charged with one count of dishonesty in relation to information he supplied to the Commissioner of Taxation.Credit: Nic Walker
That charge dates back to 1997, court documents show. It is alleged Mr Kinghorn falsely claimed he did not control an unlisted offshore company.
The other charge, of dishonestly influencing the Commissioner of Taxation, relates to a period between March 6, 2004 and March 10, 2007, where Mr Kinghorn allegedly concealed his control of two companies - Kalomo Corporation and Kalomo Pacific Leasing.
The two companies were established in Jersey in 1994 and deregistered in 2008.
In the late 1990s Kalomo Pacific Leasing loaned $4 million to Rentworks, a leasing company at the time majority owned by Mr Kinghorn, it was revealed in a 2003 court case before the Industrial Relations Commission.
According to his corporate profile, Mr Kinghorn remains chairman of Rentworks India. He is also a director of Krispy Kreme and LJ Hooker Home Loans.
This is the second time Mr Kinghorn has been a target of the AFP and the ATO.
In 2009 Mr Kinghorn and his close associate Greg Jones were the subject a joint AFP/ATO investigation over millions of dollars in tax the pair allegedly owed following the 2007 float on the Australian Stock Exchange of RAMS Home Loans.
Mr Jones, who is now facing bankruptcy over a $90,000 debt to American Express, pocketed an estimated $45 million while Mr Kinghorn walked away with $650 million. Within weeks the sharemarket had collapsed and with it went RAMS. The market later learned RAMS had failed to roll over more than $6 billion in debt funding.
That's why you and I could never afford to get divorced, mate, all this shit will come out if we do.
John Kinghorn
There was more bad blood in the market when it also emerged the tottering company had repaid Mr Kinghorn a $28 million personal loan.
It is understood that Mr Kinghorn and Mr Jones later reached confidential settlements with the ATO.
But that was not the end of the matter. In 2012, explosive phone intercepts, previously obtained by the AFP during their investigation into possible tax offences against the two men, were aired during an explosive investigation by the NSW Independent Commission Against Corruption.
The corruption inquiry examined how Cascade Coal, a private company in which Mr Jones and Mr Kinghorn and others had shares, came to be awarded a lucrative coal exploration licence by Mr Jones' close friend, mining minister Ian Macdonald.
Also examined was the $30 million paid to the family of the now-jailed minister Eddie Obeid for their secret 25 per cent ownership of Cascade Coal.
The AFP's telephone taps revealed the machinations behind Cascade Coal's attempt to sell its million-dollar exploration licence to a related public company for a massive $500 million. If the sale had gone ahead both Mr Kinghorn and Mr Jones would have each received $60 million.
In one call recorded in 2011 Mr Kinghorn is heard telling fellow Cascade shareholder and mining magnate Travers Duncan: "That's why you and I could never afford to get divorced, mate, all this shit will come out if we do."
Obeid and Macdonald will face a six-month criminal trial in 2019 over the grant of the Mt Penny coal licence.
ICAC's finding that Mr Kinghorn was corrupt was later overturned on appeal.
In 2006 Mr Kinghorn donated $25 million to found the Kinghorn Cancer Centre, attached to St Vincent's Hospital in Sydney. The hospital has the right to remove a donor's name if that donor brings the organisation into disrepute.
Mr Kinghorn, who has pleaded not guilty to the ATO fraud charges, will return to court on February 6, 2018.