Billionaire Australian businessman Frank Lowy has rejected accusations he set up a secret account to hide at least $US68 million ($A70 million) from the taxman.
A US Senate inquiry into the use of offshore tax havens is examining the banking strategies used by Australia's second-richest person, his sons and other wealthy investors.
The US Senate subcommittee has accused two prominent banks, LGT Bank in Liechtenstein and UBS AG in Switzerland, of helping rich investors hide billions of dollars and evade taxes.
In a report on the abuse of overseas bank secrecy laws, the Senate panel said Mr Lowy, the founder of the Westfield global shopping mall chain, had set up a secret Liechtenstein account to conceal funds from tax collectors, Bloomberg reported.
Mr Lowy, who according to BRW magazine's list of Australia's richest residents is worth more than $6 billion, wanted to hide money after paying $US25 million ($A25.7 million) in a tax dispute with Australian authorities, the panel's report said.
Mr Lowy met in 1996 and 1997 with LGT officials who helped him transfer funds to a foundation set up to disguise the Lowy family's ownership, the report alleged.
When the account was closed in 2001, it held more than $US68 million, Bloomberg reported.
But Mr Lowy's office said today he totally rejected assertions in the report that he or his family had used a US corporation, or taken other steps, to hide assets from Australian authorities so as to avoid paying tax.
“The report from the US subcommittee relies on certain documents originally stolen from a Liechtenstein bank,” his office said in a statement.
“It draws inferences from the documents and states them as facts – without verifying their contents or inquiring into the real facts.”
Under the Australian tax system, the use of Liechtenstein structures to hold assets is not illegal or improper, the statement said.
“Mr Lowy insists that neither he nor any member of his family has done anything improper.
“No attempt was made to save any Australian tax.
“Nor is it considered that any Australian tax was in fact saved.
“Frank Lowy has relied on professional advice that he and his family group have met all tax obligations in this matter both in Australia and the US.”
The report does not suggest the Lowys have evaded any US tax but it details the activities of the Lowy family's use of LGT Bank.
The details appear to have emerged after a former employee of a Liechtenstein trust company provided tax authorities around the world with data on about 1,400 people with accounts at LGT.
Mr Lowy's office said it understood the Australian Taxation Office obtained possession of the stolen documents over 12 months ago and has been carrying out a detailed and thorough audit.
“Frank Lowy and his family have and will continue to fully cooperate in this process.”
US law requires American residents to disclose any interest in a foreign trust.
The US Senate panel said its probe had found that LGT and UBS in Switzerland had maintained thousands of US client accounts with billions of dollars in assets that have not been disclosed to the Internal Revenue Service (IRS).
The six-month-long investigation also discovered that the two institutions employed banking practices “that could facilitate, and have resulted in, tax evasion by their US clients”, it said.
The banks help clients evade taxes by urging their American clients to open accounts in their offshore jurisdictions, helping them to structure them to avoid disclosure to US authorities and providing financial services in ways that do not alert the IRS to the accounts' existence, it said.