Sarawak CM’s brother avoids millions in Oz land tax, says newspaper

Sabah Chief Minister Musa Aman and Deputy Prime Minister Muhyiddin Yassin wave Barisan Nasional flags during a pre-election campaign in Keningau in Sabah, February 22, 2013. — Reuters file picKUALA LUMPUR, April 28 — The Sarawak chief minister’s brother, Onn Mahmud, has been using the Cayman Islands tax haven to avoid tax on millions of dollars in profits from property deals there over the past 20 years, Australia’s The Age reported today.

The daily reported that Onn used an elaborate global financial network to export his earnings from a portfolio of Sydney commercial and residential properties worth an estimated A$100 million (RM311.8 million). A recent report also said many Malaysian tycoons and politicians have offshore accounts in the tax havens.

In one such deal reported by The Age, Onn sold an apartment development site in Sydney’s Potts Point for A$15.5 million in 2007 — realising a profit of A$10.8 million. A former senior business associate of Onn said no capital gains tax was paid on the deal and all of the proceeds were transferred to a trust based in the Cayman Islands tax haven.

“All his operations were carefully structured to ensure that he paid no tax in Australia,” Farok Abdul Majeed told the newspaper, which said he ran Onn’s Sydney property deals for several years.

Documents obtained by The Age’s owner Fairfax Media indicate that Onn gave conflicting information to authorities to secure an Australia business visa and build the property portfolio he ran through Cayman Island trusts managed by merchant bankers Merrill Lynch in the Isle of Man.

Farok is now fighting to recover millions of dollars he claims to be owed in unpaid fees, commissions and expenses. Leading architects Crone Partners also claim to be owed more than A$500,000.

The paper said Onn is reported to be the second-richest person in Malaysia with a fortune in excess of A$2 billion — most of it drawn from deals involving timber exports that have decimated the tropical rainforests of Sarawak.

“Mr Onn’s wife and children live in a mansion in Carrara Road, Vaucluse, with sweeping views across Sydney Harbour, but he spends most of his time in Singapore and Malaysia,” the newspaper reported.

It said Onn’s 2002 business visa application was sponsored by Ryan Park Limited and three associated companies which he and his family controlled: Ferncroft Limited, Golden Arrow Limited and Cherry Blossom Limited.

In the application, Onn said Ryan Park and the other firms had invested more than A$50 million in Sydney real estate but the daily quoted Farok as saying he believed the total property investments in Australia were double that amount.

Ryan Park’s Australian Business Number registration describes it as an “Australian private company” but it has no record with the Australian Securities and Investments Commission and was in fact registered in the Cayman Islands in 1991 as a “non-resident” entity, the newspaper reported.

In March 2007, executives of Merrill Lynch swore in a statutory declaration in the Isle of Man that Ryan Park was ‘‘an unregistered foreign company’’ that ‘‘does not carry on business in Australia’’, it added.

Ryan Park and the three other companies also registered in the Cayman Islands were struck off the islands’ company register several years ago, the daily said in its report.

The paper said the property portfolio assembled by Onn between the early 1990s and 2007 included a hotel and restaurant complex in central Sydney and an office building in Elizabeth Street, Sydney, which was sold in 2005 for a profit believed to be in excess of A$5 million.

Meanwhile, The Age said Farok, who is a Malaysian-born property development and project management consultant, had resumed legal action to recover more than A$5 million he claims to be owed by Onn, who has declined to answer questions from the newspaper.

In August 2007, a NSW Supreme Court judge ordered Onn to pay A$2.2 million to Farok for outstanding fees and commissions. The order was discontinued after he failed to appear at a subsequent hearing at which the order was challenged by Onn’s lawyers.