Mon Oct 24 14:29:15 SAST 2016

Taxing time for Krok's riches

Simpiwe Piliso | 14 February, 2010 00:000 Comments

Australian authorities probe wealthy businessman, writes Simpiwe Piliso

Pharmaceutical and casino heir Maxim Krok, who is at the centre of a family feud over the dynasty's multibillion-rand fortune, faces an official tax investigation in Australia.

The Australian Taxation Office, which is heading Operation Wickenby, the country's biggest investigation into tax fraud and evasion, has targeted sophisticated tax schemes that have short-changed government coffers of more than R2-billion.

This week Business Times established that Australia's taxman has unleashed investigators to scrutinise Krok's tax records.

Krok, the eldest son of one of South Africa's richest entrepreneurs, Abe Krok, emigrated to Australia in 2008, where he is now a director of several companies.

Although his personal fortune is unknown, Krok is reportedly worth R655-million in shares he holds in two JSE-listed companies, according to the latest annual Sunday Times Rich List.

This fortune excludes investments held in unlisted companies, property, cash, offshore investments or money possibly held with fund managers.

Officials from the Australian Taxation Office have been auditing the multimillionaire's records for the past nine years and "seeking information from offshore".

The South African Revenue Service this week declined to disclose whether it had been approached by its Australian counterpart for its investigation.

On Wednesday, the Australian tax authorities also declined to discuss their investigation, saying the law prevents Australian Tax Office employees from commenting on or providing information about taxpayers.

"Under the law we are unable to comment on taxpayer matters," said Jane Keeley, spokesman for the Australian Taxation Office.

Maxim's lawyer in Australia, Alistair McKeough, could not be reached for comment even though three e-mails were sent to his office. However on Friday, his Johannesburg-based lawyer, Eric Levenstein, declined to comment.

"We have no information about the matters in your mail. Even if we had such information we advise that these matters are subject to attorney-client privilege," said Levenstein.

Sydney Morning Herald reporter Vanda Carson, who has been covering Krok's case, said the investigation "is kept secret by our tax authorities".

The newspaper reported in December that Operation Wickenby's regional director, Gregory Trewin, had been trying to grill Krok for "some time" on income from entities he controlled between July 2000 and last June.

The Sunday Times last week reported that Krok is in the centre of a court battle with his five younger siblings over control of the family fortune. The Krok fortune includes several family trusts, each holding "many hundreds of millions of rands", set up in 1994.

The five siblings accused Krok of putting documents in front of their vulnerable 80-year-old father, Abe, who suffers from dementia and Parkinson's disease, and coercing him to sign.

While Krok and his stepmother, Rosie, wanted to be appointed curators to take over Abe's affairs, his children from his first two marriages got a court order to have an independent curator appointed.

Meanwhile in Australia, Krok's personal fortune is under the microscope.

Krok, who is believed to be in South Africa, was summoned to appear before the Australian Taxation Office's headquarters on December 16, for an "examination" of his income and tax affairs, according to The Sydney Morning Herald.

But the tycoon reportedly opted to go before the Federal Court in a bid to fight the order because he was scheduled to return to South Africa on holiday and to deal with "pressing family, compassionate, humanitarian and business" matters.

He reportedly pleaded with the Federal Court to rule that he may defer his "examination" with tax authorities until after his return from South Africa on February 22.

According to Australian law, refusing to attend and answer questions is a criminal offence.

The Tax Office argued that it would need at least seven hours to discuss his tax affairs.

According to the Companies and Intellectual Property Registration Office, Krok is a director of 113 companies and businesses, some registered as early as 1986.

Abe Krok and his brother Solly made their fortune selling skin-lightening creams in the apartheid era and added to their wealth by founding Gold Reef Resorts and casinos. His family also own golf estate developments.

Maxim, who maintains a relatively low profile, has attracted the Australian media's attention after quietly expanding his empire Down Under.

Records from the Australian Securities and Investments Commission list him as a director of Australian Medical Trading, according to The Australian.

Board appointments in recent months also include subsidiaries of Ecowize, a multinational that provides cleaning services to the food manufacturing and processing industries, and the newly registered Makonac and Setmax.

According to The Australian, Krok also sits on the board of listed hair and skincare group, Soda Brands, where he is reportedly the company's second-biggest shareholder.

Meanwhile, Business Times has established that several wealthy South Africans living in Australia are also being investigated.

Although the authorities declined to disclose the names, some controversial South Africans who have sought refuge in Australia include:

  • Barry Tannenbaum, fingered by authorities as the mastermind of a R12.5-billion Ponzi scam; and
  • John Stratton, who the National Prosecuting Authority has been fighting for three years to secure his extradition from Australia for the alleged murder of mining magnate Brett Kebble.

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