I broke the story of Frank Lowy’s first costly punch-up with the Australian Taxation Office in an article in Sydney’s Sun Herald in March 20, 1994 published under the headline “Shopping king faces $20 million tax bill”. It appeared in a longer version in The Sunday Age with the headline “Tax Office hits Lowy family with bill for $20 million”.

At the time I was The Sun Herald‘s London correspondent and sources had advised me that the Westfield shopping centre supremo had fallen foul of the tax laws and been forced to enter into an expensive settlement.

On the eve of publication, a senior Fairfax executive telephoned me in the UK office to ask whether I was absolutely confident of my sources. I was.

He then asked whether the article was really worth publishing since the ATO and Westfield had reached a mutually agreed deal and he wondered aloud whether it was worth making a fuss about it. I disagreed.

Finally he explained that the story could have a devastating impact on Westfield’s share price when the market opened on Monday morning and hinted that it could lead to a damages claim against Fairfax. I wasn’t impressed.

There is no way of knowing whether Westfield put any behind-the-scenes pressure on Fairfax then controlled by Canadian publisher Conrad Black, but in her authorised biography of Lowy titled Frank Lowy: Pushing the Limits, journalist Jill Margo gave some details of the Lowy camp’s response:

In March that year (1994) Westfield’s media strategist Geoffrey Hole received a call from an old colleague (me) who worked for a Sydney newspaper. “Your mob is in serious trouble,” the colleague said. “I hear there is a huge tax assessment against the Lowy family.”

Hole immediately set to work. The figure of $300 million that was being bandied about was wildly wrong, but if word got out that the family had such a major tax liability. No matter how inaccurate the claim, it would have created difficulties. Lawyers were called in, the press was warned against publishing that figure and given clear explanations of the real situation.

Margo explained how the $300 million figure came to be “bandied out”:

In simple terms, the dispute related to amounts totaling about $50 million. Roughly half consisted of tax allegedly due, half was interest and penalties. The ATO issued the same assessment notice to the family six times, although it had no chance of collecting the amount six times, and the figure of $300 million had come from the sum of the amount.

The Sun Herald was hardly on the streets when Hole was dispatched to London on a plane to interview me. We met at a Covent Garden restaurant for lunch during which he put me through an oldfashioned third degree trying to identify my sources. He learnt nothing.

In her biography Margo gave a felicitous account of the impact on the former member of the Zionist underground army, the Haganah:

Frank was distressed — he has always loathed litigation and unnecessary exposure. When a settlement was finally negotiated, Lowy was flooded with relief at being saved from having to defend himself in a public court.

Fourteen years on, the Lowy family is again in the frame: a US Senate subcommittee into foreign-based banks is looking into allegations that a Liechtenstein entity helped Australia’s second richest man hide $69.5 million from the ATO.

Lowy’s son Peter, who has US citizenship, is due to testify in Washington on Friday.

The ATO will be watching with unusual interest.