Wilson an unlikely Panama Papers target

Parking facility operators are rarely popular among car drivers and Wilson Parking is no exception, especially given its strong foothold in Perth, where fallen entrepreneur Laurie Wilson started the firm in the 1960s.

Wilson’s Australian operations – which go way beyond parking – have become one of the biggest local headline acts in the so-called Panama Papers scandal.

That’s seems odd, given the company appears to pay its taxes, rather than use offshore entities to avoid them, as is suggested by the exposé of global business and political clients of Panama-headquartered firm Mossack Fonseca.

I am led to believe the company, which has its Australian headquarters in Perth, was equally baffled when it started receiving questions about its tax affairs from media outlets such as the ABC in recent weeks, ahead of the revelations on Monday.

Instead, Wilson’s government business has attracted attention.

Wilson, which has a number of sensitive Australian government contracts in areas such as detention centres (through services such as security), has come under the spotlight because of its links to the Hong Kong-based Kwok family, which bought the business in the early 1990s.

Key family member Thomas Kwok was jailed as part of a Hong Kong bribery scandal a few years ago.

While the Kwok name has emerged as a user of Mossack Fonseca services, Wilson has reportedly stated that neither Mr Kwok nor his brother, Raymond, was a director of the group’s local operations.

Usually, the accusation in connection with major corporates is that offshore shelf companies are used to avoid paying full Australian taxes. With Wilson it’s hard to see that is the case.

According to the annual report, Wilson Parking Australia 1992 Pty Ltd’s parent was a Singapore company, Wilson Parking Holdings Ptd Ltd. The group holding company is a British Virgin Island’s registered company Wilson Offshore Group Holdings (BVI) Limited. Its parent, Genuine Result Limited, is also incorporated in the tax haven.

So it fits the description of complicated structure that ends up being controlled from a domicile known as a tax haven.

Last year, the Australian Taxation Office released data on 200 major foreign-owned entities, among them Wilson Parking Australia 1992 Pty Ltd, the key local subsidiary of the group.

Unlike many of the companies listed, Wilson appears to be a consistent taxpayer.

According to the tax office data, the company had income (revenue) in 2013-14 of $899 million, $41.9 million of which was taxable income, a margin of nearly 5 per cent. It paid tax of $11.3 million, or almost 27 per cent, well above the average rate of typical businesses.

While the accounts obtained by Business News from the Australian Securities and Investments Commission records don’t match those numbers for 2013-14, the 2014-15 data is similar – showing revenue of $928.3 million, taxable income of $41.2 million and tax payable at $13.6 million.

On the face of it, these operating margins, and percentage of tax payable, do not appear unusual for a mature business operating under normal Australian conditions.

Of course, it is hard to know whether an Australian subsidiary, which racked up almost $11.9 million in international travel expenses in 2014-15, is operating as efficiently as it could when it is paying bills for related party transactions.

For instance, the accounts show it paid almost $1.4 million in finance costs to related parties. It had unsecured loans, borrowings and royalties payable to related parties of $26.5 million on which its accounts state that the average interest rate was 5.6 per cent – hardly an inflated figure.

There also appear to be royalties of $1.8 million paid to commonly controlled entities, which has been capitalised as debt, but a 10 per cent withholding tax has been paid on it.

It also purchased goods and services in management and consultancy from related parties amounting to $1 million, but it actually sold more than $2.2 million in similar services to other group entities outside Australia.

Again, the message seems to be that foreign companies that provide services in politically touchy areas such as hospitals, prisons and detention centres are fair game – even if they pay their taxes.