Wednesday, February 19, 2014

Outback Outrage: How Rupert Murdoch's News Corp Helped Destroy Australian Budget

by Nomad

Through a special tax arrangement with the Australian government,  Rupert Murdoch's New Corporation- parent company of Fox News- became  the largest single factor in the shortfalls in the Australian budget.

The Australian Financial Review is reporting a story which will probably never appear on Fox News.
The single largest factor in the underlying deterioration of the federal budget announced by Treasurer Joe Hockey in December was a cash payout of almost $900 million to Rupert Murdoch’s News Corporation.
Despite Fox News and News Corp newspaper's near-constant drumbeat against government spending, it came right down to it, News Corp was just another corporation expecting special treatment. Documents last week revealed the company claimed a massive tax deduction- one of the largest cash payments- from the Australian Tax Office

When the Australian budget went south, it was not due to wild spending on foolish projects or due to the military appropriations but, if these reports are true, one main factor was a record-breaking tax deduction that the Tax Office allowed the media giant. 

The Guardian fills us in with other particulars:
The payment by a “foreign tax authority” was revealed in accounts published by News Corporation in the US earlier this month and related to a $2bn claim by News Corp for historic losses on currency transactions by its Australian subsidiaries.
The payment was estimated to be worth $600m to News Corp but the final figure grew to $882m after interest charges.

Australian Tax Office against the Murdoch Muscle
Furthermore, the AFR makes another interesting claim. That Murdoch-owned media, through its network newspapers outlets, exerted pressure on the government at a time when the officials in the Tax Office were trying to decide what to do. 
On July 25 the Federal Court of Appeal ruled against the Tax Office to allow News Corp to claim a $2 billion deduction from a series of paper shuffles between subsidiaries..
The Tax Office was given a deadline for August to decide whether to pursue a legal appeal on the decision.  That was when the media empire flexed its muscle.
The Tax Office was deciding whether to appeal against the judgment as News Corp newspapers launched a ferocious attack on the government, kicking off with the Daily Telegraph’s headline on August 5, 11 days after the court judgment: “Kick this mob out.” In the following days, Labor leader Kevin Rudd would claim that News Corp was running a virulent anti-government campaign in exchange for concessions from the Coalition.
The Tax Office announced it would not appeal and News Corp wound up with the tax deduction.

News Corp  has always had very cozy relations in both UK and Australian government circles,  and this has allowed them certain advantages.  But, say some analysts, many officials and much of the Australian public have simply had enough of this kind of special deals, especially when it comes at the expenses of the public at large
At the same time as all of the tax office events were happening, the head of the Australian Treasury, Joe Hockey, was telling the Australian people that the "entire community" would have to accept spending cuts to prevent deficits continuing for a decade.  
With a climbing national debt and unemployment, the Australian budget has never really recovered since the global downturn. The Abbot government has had to make cuts  to education and to health services. Yet, when it came to asking News Corp to pay their fair share, few in government had the courage to stand up to the powerful Murdoch empire.
And this isn't really anything new, according to the Australian Financial Review:
In a 1989 meeting, four News Corp Australia executives exchanged cheques and share transfers between local and overseas subsidiaries that moved through several currencies.
They were paper transactions; no funds actually moved. In 2000 and 2001 the loans were unwound. With the Australian dollar riding high, News Corp’s Australian subsidiaries recorded a $2 billion loss, while other subsidiaries in tax havens recorded a $2 billion gain.
So the pattern was established long before now. The outrage in the outback is the only thing actually new.

Other Allegations Against the Empire
Additionally, in the UK, News Corp has been under the spotlight in an ongoing scandal involving involving illegal phone hacking of private individuals.
Employees of the newspaper were accused of engaging in phone hacking, police bribery, and exercising improper influence in the pursuit of publishing stories. Investigations conducted from 2005 to 2007 concluded that the paper's phone hacking activities were limited to celebrities, politicians and members of the British Royal Family.
The investigations concluded and then in 2011, the whole thing blew up again with new charges with, reportedly 11,000 pages of the evidence. In American media, there is barely a whisper of this scandal. If this practice is widespread in the US for all corporate-owned news organizations, it would go a long way in explaining why there has been so little coverage.

The charges, if proved to be true, could spell trouble for News Corp- (at least in a better world where justice prevailed). Provisions in The Foreign Corrupt Practices Act of 1977 specifically make it "unlawful for a U.S. person, and certain foreign issuers of securities, to make a payment to a foreign official for the purpose of obtaining or retaining business for or with, or directing business to, any person." Evidence shows that police officials were paid as sources of private information which News Corp reporters later used. In at least one case, the transactions were carried out through a private investigator who after paying the police, received payment from the newspapers. Basically contracted work. 
News of the World alone paid one investigator more than £150,000 a year.
(Whether that constitutes "business" is a matter of the courts.)

In the Australian case the implications are clear. If true, News Corp attempted to use the Australian government for a substantial handout, and when the government Tax Office balked, the media empire used its influence over public opinion to pressurize the officials. In the end, the government retreated and now the public is expected to pay for the losses and to endure budget cuts. 

So, the next time you hear Sean Hannity or Bill O'Reilly or Megyn Kelly discussing with so-called experts about how dangerous it is to raise taxes on the corporations and the 1%, it's good to recall it's not about the public interest but about the interest of tax-dodging corporations, like Fox News-owned New Corp.