The cost of blowing the whistle

Tony Watson lost his home, job, friends, and a boatload of money in his fight to show he was dumped over trying to stop Lendlease’s $300m ‘tax dodge’. He’s not alone.

Former tax lawyer Tony Watson. Picture: Britta Campion

His home, career, friends, family, as well as most of his money — for whistleblower Tony Watson the costs of raising Lendlease’s $300m alleged “tax dodge” have been immense.

He says it didn’t have to be this way, but attempts to protect whistleblowers have failed.

He says courts allow well-resourced and committed companies to exhaust opponents in years of costly litigation.

Mr Watson, a former stalwart of Lendlease’s tax advisers Greenwoods and Freehills for more than 20 years, says the fight to prove he was dumped for blowing the whistle has cost him nearly everything.

As the veteran tax lawyer and one-time trustee of Lendlease founder Dick Dusseldorp’s estate faces his fourth year in the Federal Court, Mr Watson says his fighting funds are running out.

Mr Watson said he had just received his latest legal bill in an ordeal which has already cost the 64-year-old an enormous amount of money, as well as his former home on the water and his career.

For Mr Watson, the first strike from blowing the whistle was being dumped from Greenwoods and Freehills in 2016, after agitating against Lendlease’s tax treatment of a series of deals, including its $192m takeover of the Primelife retirement group, the Jem project in Singapore and the development of the Sydney International Convention precinct.

“You’ve been there (Greenwoods and Freehills) your whole life, you thought you were good, and then all of a sudden you’re dismissed,” Mr Watson said.

“There’s the financial costs, the kids went to private schools, we had a big house, a big mortgage, and then you’re gone. Mentally and emotionally you’re not your best, and you’ve got to turn that around and pick yourself up.”

Tony Watson has lost a house, a job and a career, in an attempt to blow the whistle on Lendlease’s $300m tax “dodge”. Picture: Britta Campion

At issue are the country’s whistleblowing laws, which the High Court found do not apply to historical issues before their introduction in 2019, and the massive financial mismatch in power and wealth between litigants and huge companies.

But Mr Watson didn’t think his fight to show he was dumped for blowing the whistle would be this hard.

The Australian Taxation Office has already taken to Lendlease with a bat over the first of its three deals to sell a stake in its Primelife retirement business.

Last March the ATO slapped Lendlease with a $112m tax bill, years after beginning a review of the group’s tax plans.

Lendlease could now see a tax bill in excess of $300m over the same matters Mr Watson blew the whistle on.

Mr Watson notes he delayed his court fight to 2022, knowing the ATO was running the ruler over Lendlease.

But since then Mr Watson’s case has ground its way through the Federal Court, helped along by a detour to the High Court and moves by Lendlease and lawyers for Greenwoods and Freehills, now owned by PwC Australia, who have fought every step of the way.

Ironically, Mr Watson notes, PwC were the advisers to Lendlease that recommended the property giant cook up its tax schemes.

PwC has now faced years of turmoil after the firm’s aggressive tax culture was revealed by a marathon investigation by the ATO and the Tax Practitioners Board.

The firm’s former head of international tax, Peter Collins, was banned after breaching multiple confidentiality deeds, sharing secret government tax plans with others in the firm to produce new tax strategies for clients.

“Lendlease and PwC have taken every point and argued every proposition and failed to accept even the most basic propositions to make sure this case costs as much as it can,” Mr Watson said.

Mr Watson said that although PwC and Lendlease were entitled to fight the case, it called into question how anyone could blow the whistle and win.

“Justice is supposed to be cost-effective, speedy and efficient,” he said.

Mr Watson’s case has been overseen by Justice Elizabeth Raper since June 2022. He has been before the courts at least 20 times since, and will appear again on Monday before a trial is set for June.

To fund his fight Mr Watson borrowed cash, later selling the family home on Sydney’s Georges River.

Lendlease chief Tony Lombardo recently sold his six-bedroom Elizabeth Bay mansion on Sydney Harbour for $13m, after snapping up the 510sq m block for $8.5m.

Lendlease CEO Tony Lombardo. Picture: Jane Dempster

Mr Watson said his family had supported him through the fight.

“Family has been remarkably wonderful – I’ve never been luckier,” Mr Watson said.

But, colleagues and friends abandoned him, he said, naming a string of former work mates at Greenwoods and Freehills who haven’t spoken to him since he was frozen out.

Mr Watson is now seeking to raise funds to pay lawyers and continue the fight.

The veteran tax lawyer warns Australia’s laws are not working and governments have ignored recommendations to level the playing field. He’s not alone.

Two top lawyers at Super Retail Group, Rebecca Farrell and Amelia Berczelly, attempted to sue their former employer, claiming they were victimised after discovering an alleged affair between the company’s boss Anthony Heraghty and the then-head of human resources Jane Kelly.

Rebecca Farrell and Amelia Berczelly walking to Federal Court in Sydney. Picture: Monique Harmer

The pair alleged Super Retail Group had agreed to a payout deal before reneging.

ANZ whistleblower Etienne Alexiou’s case against the banking major over his dismissal has entered its fifth year.

Etienne Alexiou has been fighting ANZ in the courts for years over his removal. Picture: Ella Pellegrini

Mr Alexiou believes he was dumped by ANZ in a bid by the bank to placate regulators over an illegal trading scheme, claiming he had sworn on Bloomberg chats.

Instead of pinning the blame on the key figures behind the market manipulation scheme, Mr Alexiou alleges he and a string of other figures in ANZ were kicked out and their careers permanently damaged.

Mr Alexiou told The Australian fighting a whistleblower action, particularly against a bank of ANZ’s size, was “daunting and imposes a significant monetary and personal burden”.

“My former employer is a well-resourced bank which has approached my proceedings aggressively and has put every issue in dispute,” he said.

Several other ANZ traders who had brought cases against the bank have settled, including Melbourne markets figure Andrew Graham, who walked away with only a contribution to his legal costs.

Mr Alexiou said every whistleblower case suffered from “information asymmetry”, with ANZ repeatedly clashing with his lawyers over attempts to access information while also attempting to extract documents and details from his camp.

“Even though there have been recent improvements in the law, the central challenge remains proving that the reason for action against you was because you were a whistleblower,” Mr Alexiou said.

Parliament has previously contemplated the creation of a whistleblower protection authority, while a 2019 review also called for an assessment of the case for setting up a similar body.

Labor Senator Deborah O’Neill said whistleblowers paid a heavy personal cost for speaking out.

“Whistleblowers risk everything to expose the truth. Without them, corruption and wrongdoing thrives in the shadows,” she said.

“A society that values accountability must protect those who shine a light on injustice, not punish them for their courage,” she added.

Originally published as The cost of blowing the whistle