Mogul won’t testify
Beverly Hills shopping center magnate Peter Lowy refused to testify to Congress on Friday about his family’s use of overseas tax havens.
But senators tried to make up for his silence, offering accounts of shadowy shell corporations, secret transactions, mysterious acquisitions, exotic locations, all topped off by allegations of a late-night flight by Lowy this month to avoid a government subpoena.
A U.S. citizen who was born in Australia, Lowy invoked his 5th Amendment right against self-incrimination after listening to Sen. Carl Levin (D-Mich.) detail his family’s use of LGT, a private bank in Liechtenstein, to shelter $68 million from 1997 to 2001.
Lowy’s lawyer, Robert S. Bennett, denied that his client tried to avoid the subpoena, and the Lowy family issued a statement denying any tax evasion in the United States or Australia.
In his brief appearance, Lowy said, “Senator, I’m sorry, I mean no disrespect. But on the advice of my counsel I assert my rights under the 5th Amendment of the United States Constitution not to answer any questions.”
Lowy is head of the U.S. division of Australian-based Westfield Group, which operates 24 regional malls in California. His father, Frank Lowy, is worth $6 billion and is the third-wealthiest person in Australia, according to Forbes magazine.
Steven Greenfield, a New York toy importer, also declined to testify Friday before the Senate’s Permanent Subcommittee on Investigations, which has been probing the use of overseas banks to shelter money from U.S. taxes.
The subcommittee, chaired by Levin, released the results of a six-month investigation last week detailing the practice, estimating that it cost the Treasury $100 billion a year. Many of the allegations come from documents provided by a former LGT employee to authorities in the U.S. and other countries.
“The Greenfield and Lowy case histories unfold like spy novels, with secret meetings, hidden funds, shell corporations, captive foundations and complex offshore transactions spanning the globe from the United States to Liechtenstein, Switzerland, the British Virgin Islands, Australia and Hong Kong,” Levin said.
Levin said the Internal Revenue Service was investigating both cases. An LGT spokeswoman referred to a statement last week in which the bank asserted that it had complied with “pertinent laws and regulations.”
The Lowy family released a statement saying that it had met its tax obligations in the United States and Australia, that the money in question was legally held in Liechtenstein, and that it was “distributed for charitable purposes in Israel some years ago without claiming a tax deduction.”
But Levin said the Lowy family had refused to give the subcommittee information about the donations.
“The Lowy family engaged in layer upon layer upon layer . . . of activity to hide assets in a Liechtenstein bank,” Levin said after the hearing. “We’ve got to end it.”
Levin, along with Sens. Norm Coleman (R-Minn.) and Barack Obama (D-Ill.), has introduced legislation to stop U.S. companies from misusing offshore tax havens.
Lowy was out of the country during last week’s hearing. Coleman said Lowy took “a red-eye flight to Australia” to avoid a subpoena. Bennett angrily denied the charge, saying he told the subcommittee Lowy would be traveling.