Sally and Bob,
I'm happy to report that something IS being done about this little scandal,
although not as much as the Attorney-General would like us to believe. Some
extracts from the Sydney Morning Herald
Anne Maureen
7 March
>Bankrupt lawyers should be barred
>
>I have practised law for 40 years, much of that as a barrister. I was
>dismayed at Paul Barry's revelations. While Ruth McColl, of the NSW Bar
>Association, has the burden of answering the criticism, some of these
>things must have happened during my presidency of the Association
>(November 1997 to November 1999).
>
>In my opinion, applying for bankruptcy merely to avoid paying income tax,
>while continuing to live the life of Riley, is unconscionable. Repeating
>the performance compounds the offence. I might have been gravely at fault,
>but I was unaware such things were happening. No complaints were made, and
>the Bar Council does not monitor its members to check their tax position.
>
>When one case of tax evasion by a barrister came to our notice in 1999,
>the Bar Association successfully moved to have the offender struck off the
>roll. Perhaps Barry did not know that; his articles have been silent about
>the case.
>
>With the illumination of hindsight, I agree that disclosure of bankruptcy
>should be a condition precedent to a barrister obtaining his or her annual
>practising certificate. And if bankruptcy is a mere tax evasion scheme,
>the barrister should earn a living elsewhere.
>
>Ian Barker QC, Berry, March 5.
>Barrister, can you spare a dime?
>
>As a poor old pensioner, I read the Herald in the local library. Today I
>read a letter from a terribly rich - and obviously important - barrister
>who owes an awful lot of tax. He said he represents an awful lot of
>people, some of whom he may not admire. He used the word "indolent" which
>I looked up in my 1935 Collins Dictionary. I wonder if his meaning of this
>is the same as my Collins?
>
>Could I please ask this financially secure gentleman to engage the
>services of another professional, ie, an accountant, to help him with his
>tax payment so that those of us who don't earn lots and lots of money can
>be sure of our pensions?
>
>If he can sue me over these words, please don't print it as the most
>sheltered parts of Circular Quay are already occupied.
>
>A.G. Brockwell, Blakehurst, March 2.
>
>A few years back my ex-wife and I were involved in the Family Court. One
>night her de facto rang to inform me that he was a barrister - as if I
>didn't know anyway. In the course of the conversation, he mentioned he was
>a barrister at least five times.
>
>Why? Was it because he knew my meagre resources would never last the
>distance? Was it to tell me that he was a superior person? Was it to let
>me know that I didn't stand a chance in court with him on my ex-wife's
>side? Was it intimidation?
>
>Despite his efforts, my ex-wife and I did work things out amicably. Would
>he have told me his profession if he was a teacher, a bus driver, a
>plumber or even a member of the Australian cricket team? A bad apple, Bar
>Association? I think rotten to the core!
>
>Name withheld, Sydney, March 7.
>
>I was greatly heartened by the forthright statement of Mr Ian Barker, QC,
>a past president of the NSW Bar Association (Letters, March 7). Will
>something just as unequivocal now be said by the present president?
>
>Albert Willis, Wollstonecraft, March 7.
>President's reply; 7 March
> Albert Willis should stay in touch (Letters, March 8).
>
> I have consistently condemned barristers who evade tax.
> I have
> made this clear before the recent controversy emerged and
> repeated that stance in public statements since February 28.
>
> I have worked with the NSW Attorney-General to ensure the
> introduction of the tough new disclosure regulation
> which will
> ensure that any barrister who has in the past or will in
> the future
> become bankrupt or entered into a voluntary arrangement with
> creditors under the Bankruptcy Act and various related
> matters,
> must show cause why he/she should not be suspended, or
> indeed
> lose the right to practise.
>
> There is no doubt that this association takes the view
> that if
> bankruptcy is a mere tax evasion scheme, the barristers
> who have
> used it in this way should earn a living elsewhere.
>
> Ruth McColl, NSW Bar Association, Sydney, March 8.
>
> It is within the capacity of the Parliament to amend
> bankruptcy
> law and, as necessary, family law, to enable creditors
> (including
> the Taxation Commissioner) to pursue a bankrupt's property
> beyond five years, whether or not it can be proved to
> have been
> sold or given away with intent to defraud.
>
> Surely the intent should be a matter of presumption with
> the onus
> of rebuttal on the bankrupt. Assets received by wives,
> whether
> former or not, or by close relatives, should be
> accessible to
> creditors except, of course, where a sale can be shown
> to have
> been made for a proper value.
>
> It is monstrous that the barristers recently highlighted
> in the
> Herald, while still earning high fees, should be able to
> avoid their
> financial obligations.
>
> Clyde Philip Long, Castle Cove, March 7.
>Editorial: Checks on barristers
>
>Date: 09/03/2001
>
>The NSW Attorney-General, Mr Debus, has acted with commendable promptness
>in response to the Herald investigation exposing barristers' abuse of the
>tax system. The question is whether the new regulations gazetted today and
>the changes promised for the Legal Profession Act will go far enough to
>meet the concerns raised by the Herald investigation. There is no doubting
>Mr Debus's determination to give the State what he described in Parliament
>on Wednesday as "the most stringent legal professional conduct regime in
>Australia". But the changes as he foreshadowed them this week will surely
>have to be taken further to be effective.
>
>The regulations in force from today will require barristers and solicitors
>to notify the Bar Association or the Law Society if they become bankrupt
>or if they apply "to take the benefit of any law for the relief of
>bankrupt or insolvent debtors". Further changes to the Legal Profession
>Act will specify that bankruptcy falls within the definition of
>professional misconduct and so, possibly, lead to a practitioner being
>disciplined or struck off. A practitioner who is declared bankrupt will be
>suspended and will subsequently lose the right to practise unless she or
>he is able to show cause why she or he is still fit to practise.
>
>That is all very well. But there was no mention in Parliament of a most
>vital sanction, which Mr Debus had earlier foreshadowed, to encourage
>practitioners to disclose their bankruptcy. This is a change in the law to
>make the failure to notify itself professional misconduct. It is a pity Mr
>Debus he did not make it clear, in announcing his reform package, that
>this is still part of it. For it is surely not an incidental or minor part
>of it, but must be a central pillar of any legislative regime to compel
>disclosure. Given the arrogant disregard many lawyers have for their tax
>obligations, such a provision is essential in any effective professional
>conduct regime.
>
>Another problem with Mr Debus's package is that it will still leave
>bankrupt barristers and solicitors plenty of room - and in this case
>plenty is too much - to argue extenuating circumstances. No matter how
>much the Bar Association may insist that the system of regulation and
>discipline is not one of self-regulation, but co-regulation, it is
>essentially still one aptly characterised by the expression "Caesar
>judging Caesar".
>
>The cure for that is a change far more radical than Mr Debus is proposing.
>The present regulation and discipline of barristers - as demonstrated by
>its manifest failure to prevent, or punish with appropriate professional
>sanctions, the most blatant abuses of the tax system - is plainly
>deficient. A large part of the reason for its deficiency is its closed
>nature. That compounds the problem of the system's dominance by the
>profession itself, its essential self-regulatory nature. As the Herald
>investigation has
>shown, the present regulation processes can produce extraordinarily
>lenient results - such as those which found a barrister's "involuntary
>inertia" an excuse for his repeated failure to file tax returns, and so
>pay tax.
>
>In Parliament on Wednesday, Mr Debus said the Herald investigation had
>shown that "senior barristers - apparent pillars of society - have in fact
>been systematically exploiting bankruptcy provisions to avoid paying
>millions of dollars worth of tax". He spoke with suitable scorn of
>barristers who had "come to regard the payment of tax as an optional
>extra". He added: "They have used their knowledge of the law not to pursue
>justice on behalf of their clients but to arrange their own affairs in
>such a way as to avoid the payment of income tax - in some cases
>apparently altogether and for many years."
>
>As Mr Debus says, those who practise law have an obligation to uphold the
>highest standards of lawful conduct: "It is a travesty and a disgrace if
>senior barristers appear not as upholders of the law but as a rogues'
>gallery intent on dragging the practice of law in this State into the
>mire." Mr Debus's task remains formidable. He has to produce legislation
>tough enough not only to
>close every loophole against every clever tax-shy lawyer, but also tough
>enough to overcome the bias inherent in an essentially self-regulatory
>system of professional standards.
Anne Maureen Scarff
School of Economics and Finance
Werrington South Campus,
University of Western Sydney,
LOCKED BAG 1797
PENRITH SOUTH DC NSW 1797
"I have never killed a man but I have read many obituaries with a lot of
pleasure."
Clarence Darrow
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