Commonwealth Director of Public Prosecutions

Michael John MILNE

Year: 
2012-2013
Category: 
Project Wickenby
Location: 
New South Wales

This was a Project Wickenby matter investigated by the AFP that involved significant co-operation between CDPP, AFP and ATO.

An earlier trial involving this defendant was reported in the 2011-2012 CDPP Annual Report. (On 17 December 2010 the defendant was sentenced to head sentence of 3 and a half years’ imprisonment for an offence of general dishonesty, contrary to section 135.1(1) of the Criminal Code. That offence related to the lodgement on 13 November 2006 of a tax return for Barat Advisory Pty Ltd, the defendant’s private company, which failed to disclose a $6.5 million to $8.2 million capital gain in the 2005 financial year (‘FY’) arising from the disposal of shares in Admerex Limited (“Admerex”). On the same date the defendant was also convicted of a money laundering offence, contrary to section 400.3(1) of the Criminal Code, relating to the disposal of the same Admerex shares. However, in February 2014 that money laundering conviction was quashed by the High Court. This is discussed further below.)

On 13 November 2012 Milne pleaded guilty to a second offence of general dishonesty contrary to s 135.1(1) of the Criminal Code. That offence related to the lodgement on 7 December 2006 of Milne’s 2000, 2001 and 2005FY personal tax returns which failed to disclose income received from consultancy services paid to international bank accounts, totalling $923,574, as described below.

The defendant was a Director of Talisman Technologies Inc. (Talisman) and Chairman of its board of directors since January 2000. Talisman, a company incorporated in the British Virgin Islands, was in the business of acquiring and commercialising intellectual property.

The majority of shares in Talisman were owned by Xhosa Limited, a company incorporated in Ireland. The defendant was an officer or member of Xhosa Limited and associated with the ultimate beneficiaries of Xhosa Limited. Xhosa Enterprises SA (Xhosa Enterprises) was a company incorporated in Switzerland. Various company documents refer to the defendant as a director and a shareholder of Xhosa Enterprises.

Talisman’s board of directors resolved to ratify a consultancy agreement entered into on 1 March 2000 between Talisman and Xhosa Enterprises SA (the Xhosa Consulting Agreement).

Pursuant to the Xhosa Consulting Agreement, Xhosa Enterprises agreed to provide consulting services, through the defendant, to Talisman during the 12 month period commencing on 1 March 2000 until 28 February 2001 and Talisman agreed to pay to Xhosa Enterprises fees at the rate of US$200,000 per annum, payable in equal monthly instalments.
From January 2000 to June 2001 the fees payable under the Xhosa Consulting Agreement were paid by Talisman to the defendant and totalled about AU$528,574.66. The fees were paid to accounts in the United States in the defendant’s name.

On 8 July 2003 the defendant was appointed as director and the acting chief executive officer of Global Technology Australasia Limited (Global Technology) and its subsidiaries. Global Technology, which later changed its name to Admerex Limited (Admerex), was a publicly listed company providing management software, management services and specialty applications to companies to better manage their receivables, loans, credit cards and other forms of credit.

On 28 August 2003 Admerex’s board of directors resolved to pay consulting fees to the defendant of $40,000 per month plus GST, effective from 1 May 2003, to be paid monthly until further determined. It was further resolved that the defendant was to nominate a consulting company through which the consultancy fees were to be paid. No consulting fees were paid to the defendant in accordance with that resolution. However, on 21 December 2004 the board of directors of Admerex resolved that the defendant be paid a fee of AU$400,000 for consultancy services provided to Admerex and that the fee be paid in January 2005.

On 5 January 2005 an amount of AU$400,000 was transferred from a Swiss bank account in the name of Admerex (Ireland) Limited (being a subsidiary of Admerex) to an account in the name of Sinitus Nominees Ltd with the notation “Payable MJM” (the defendant’s initials).

On 6 January 2005 an amount of AU$400,000 was transferred from Sinitus Nominees Ltd’s bank account to a Swiss bank account in the name of Clairmont Holdings and Development Limited, in accordance with the resolution made on 21 December 2004. The notation accompanying the transaction was “Payable MJM” (the defendant’s initials). This transfer was the only transaction ever conducted in the Clairmont Holdings and Development Limited account. The defendant was the beneficial owner of the funds held in that account.

On 7 January 2005, immediately following the deposit of AU$400,000, the amount of AU$395,000 was withdrawn from Clairmont Holdings and Development Limited’s account, leaving a balance in that account of AU$5,000. That same day, 7 January 2005, the defendant tendered his resignation from the board of directors of Admerex and its subsidiary companies, effective immediately.

In May 2005 the defendant retained Grant Thornton to advise and assist him in lodging his personal income tax returns. Over the ensuing months employees of Grant Thornton made numerous requests of the defendant to provide documents and instructions to enable them to prepare his returns.

By email and at meetings in 2005 and 2006 employees of Grant Thornton, including a senior manager and a director, requested instructions on the amount of income earned by the defendant. The defendant instructed Grant Thornton that he had no taxable income throughout the relevant period. He did not inform Grant Thornton about Talisman or the consultancy services he had provided to that company or the money which had been paid to him by Talisman.

The defendant did not declare any income in his income tax return for the year ended 30 June 2000. The amount of $171,273.58 should have been declared as income in that return. Tax which ought to have been paid by the defendant on the omitted income of $171,273.58 was $73,669.89.

The defendant did not declare any income in his income tax return for the year ended 30 June 2001. The amounts of $165,822.56 and $191,478.52 should have been declared as income in that return. Tax which ought to have been paid by the defendant on the omitted income of $165,822.56 and $191,478.52 was $74,567.01 and $86,103.97 respectively.

The defendant did not declare any income, other than a relatively minor amount of interest income, in his income tax return for the year ended 30 June 2005. The amount of $400,000 should have been declared as income in that return. Tax which ought to have been paid by the defendant on the omitted income of $400,000 was $181,134.02.

The total amount the defendant failed to declare amounted to $923,574.66. The total tax payable on this omitted income was $415,474.89.

The defendant intentionally failed to declare the income he received from the businesses with which he was associated in an attempt to avoid paying tax on his earnings.

After initially pleading not guilty to a 6 count indictment, following charge negotiation the defendant pleaded guilty to 1 count of dishonestly obtaining a gain from a Commonwealth entity pursuant to section 135.1(1) of the Criminal Code on the basis that income tax returns lodged for the 2000, 2001 and 2005 financial years omitted income of about $928,574.

In September 2012 a forfeiture order pursuant to section 47 of the Proceeds of Crime Act was made with the defendant’s consent.

On 30 November 2012 the Supreme Court of NSW sentenced the defendant to a head sentence of 2 years’ imprisonment. This resulted in a further year of imprisonment being added to the defendant’s total effective head sentence for the 2010 offences (referred to above) and an increase to his non-parole period of 3 months.

In 2014 the Supreme Court of NSW was required to adjust the defendant’s total sentence after the High Court quashed his conviction for money laundering. The adjusted sentence resulted in an effective head sentence of 4 and a half years’ imprisonment for the two offences of general dishonesty which the defendant did not seek to challenge in the High Court. The defendant was released after serving 3 years, 2 months and 4 days of that sentence.