BOQ hit with court claims in chase for Binetter family money

Bank of Queensland faces $42.5m in losses over its role in banking for four companies linked to a decades-long tax avoidance scheme by the Sydney Binetter family.

Bank of Queensland faces $42.5m in losses over its role in banking four companies linked to a decades-long tax avoidance scheme by the Sydney Binetter family, after liquidators took aim at the actions of members of the bank’s high net wealth business.

Documents filed in the ­Federal Court reveal BOQ has become embroiled in the clean-up of the Binetter family’s sprawling and convoluted ­corporate empire, which was shown to have been used to send funds to bank accounts in Switzerland, Israel, Panama and Liechtenstein.

An amended statement of claim filed by Clayton Utz lawyers on behalf of four companies claims BOQ’s private wealth business assisted Emil and Erwin Binetter, and some of their children and family, including former Nudie juice boss Andrew Binetter, to dodge millions in taxes.

Liquidators want BOQ to pay for millions in excess tax ­assessments levied against the companies, after first allowing them to engage in a fake loan scheme and later failing to stop members of the Binetter family transferring millions of dollars to overseas accounts in a bid to dodge Australian tax authorities.

The case is set to haunt BOQ after its $440m purchase of the Australian arm of South African financial services firm Investec, which was rebranded BOQ Specialist.

The Binetter family brothers Emil and Erwin, who invested in 25 companies including Nudie Juice, were found to have used back-to-back loans to lend to companies they controlled from accounts they held in Israel, in a bid to expatriate money. Andrew and Michael Binetter paid $45m settlement to the Australian Taxation Office in October 2018 to settle their part in a scheme which saw profits in Australia offset through loans from companies in Israel. Funds were placed in accounts at Israel Discount Bank before being advanced to companies controlled by the Binetters in Australia as loans.

The court documents claim BOQ’s high net wealth business allowed accounts to be opened by members of the Binetter ­family, including Andrew Binetter, with “minimal information”.

“Erwin’s family and Emil’s family were using IDB’s services to evade liability to Australian income tax,” the documents ­allege.

“BOQS wilfully and recklessly failed to make enquiries that an honest and reasonable bank would have made,” the documents claim.

The case against BOQS on behalf of the Binetter family companies comes as several companies in the family’s orbit have already launched legal action against IDB under the terms of the settlement signed with the ATO, which required them to pursue other alleged enablers of the fraud.

Lawyers for the firms allege former Investec relationship manager Ivan Katz, who worked at the firm after it became BOQS until May 2016, assisted the Binetter family.

Mr Katz, who now runs private capital at Sydney debt market firm Qualitas, was the relationship manager for the family of Erwin Binetter and entities controlled by him and members of his family.

The documents allege Mr Katz was relationship manager for the Binetter family and the entities they controlled “at relevant times”.

“Katz’s profit centre within BOQS made revenue from foreign exchange transactions from funds in accounts in relation to which Katz was the relationship manager, which included Gerobin’s, Marbin’s and Rawbin’s accounts,” the documents allege. Lawyers also claim BOQS head of investment services or head of treasury or alternatively its chief risk officer Peter Binetter knew the family had deposited money with IDB, which was held under false names.

“As a senior officer of BOQS knowing the matter … Peter was under a duty to inform Katz of the matters identified … as the fact that Ewin’s family was using IDB’s banking services for the purpose of tax evasion,” lawyers claim.

The documents claim BOQS provided the trio of Binetter family companies financial services but failed to carry out appropriate policing of anti-money laundering and counter-terrorism financing procedures.

“BOQS had to employ an enhanced customer due diligence where a risk trigger as identified in the AML/CTF Policy existed,” the documents allege.

“BOQS did not collect the necessary KYC information in respect of Gerobin prior to opening an account for Gerobin.”

Gerobin is one of the companies caught up in the legal action.

The documents claim Katz signed off on several transactions made by the Binetter family which should have triggered BOQS’s intervention as they failed to disclose the source of funds from a high-risk country.

“The true source of those funds was money under the control of one or more members of Erwin’s family that had been deposited with IDB.

“The source of funds section had been left blank because ­Andrew and Michael did not want to disclose the existence of that deposit with IDF to anyone outside of the Binetter family in ­Australia, because those funds were to be kept secret for tax ­purposes. At the times of the facts … Israel was a country with a reputation as an offshore tax haven, and was regarded by the BOQ compliance team as being a ‘high risk’ country.”

The documents note BOQS identified a proposed $22.6m funds transfer from a Binetter company in 2012 as a “high risk”, but the move was signed off by Katz.

Lawyers for the Binetter companies are asking the court to force BOQS to pay the $42.5m owed by the Binetter family companies, claiming the Queensland bank’s wealth arm “knowingly assisted” Andrew Binetter “in breach of his fiduciary duties”.

The ATO is a creditor of the Binetter companies.

BOQ has until May 5 to file its defence.