A Little elephant in the room – Part 3

Where were we? That’s right, it had just been established that the Council of Trade Unions via then-head Helen Kelly had issued a “please explain” to Unite Union and Matt McCarten. But it is McCarten’s response to Dominion-Post journalist Rebecca Stevenson that is the most enlightening:

Unite head Matt McCarten confirmed yesterday that the union owed money to the IRD but said he had made choices to pay for union campaigns rather than clear the debt. “I don’t shy away from these decisions, I make the calls.”

So Matt McCarten, is now Chief of Staff for the Leader of the Labour Party, fellow former union boss Andrew Little. But some time around the time of the 2008 General Election, McCarten made a conscious decision not to pass on PAYE deducted from Unite Union staff to the IRD as he is legally required to do.   

You see, the IRD is very clear about an employer’s obligations. Every employer should have an IR335 Employer’s Guide, which sets out exactly what employers are legally bound to do. Firstly, employers are legally required to DEDUCT monies from employees, with strict penalties for non-compliance:

Failing to make deductions

Employers must deduct PAYE, KiwiSaver deductions, ESCT, student loan repayments or child support when required, from any payments made to employees. Failure to do this is a serious offence and can result in penalties and fines being imposed.

Anyone who knowingly fails to make deductions can be fined up to $25,000 for a first offence and $50,000 for subsequent offences. Shortfall penalties may also be charged.

Matt McCarten or someone else at Unite Union HQ did indeed make deductions, so he’s in the clear on that count. But having made the deductions, every employer is then legally required to pass them on to IRD. The penalties for failing to pass deductions on are even more sever, including imprisonment:

Failing to pay deductions

Employers must pay deductions to us by each due date.

The money deducted doesn’t, at any stage, belong to employers. Under no circumstances should the deductions be used for any other purpose than for payment to us. We’ll help employers who try to meet their responsibilities but will take action against employers who don’t comply with the tax laws.

Failing to pay deductions to us is a serious offence and can result in prosecution. An employer who is convicted may be:

  • fined up to $50,000 and/or
  • sent to prison for up to five years.

The name of anyone convicted will also appear in the New Zealand Gazette.

Let’s not beat around the bush here. Unite Union broke the law, and should have been prosecuted. Matt McCarten admitted that he “made choices to pay for union campaigns” with money the IRD makes abundantly clear did not, at any stage, belong to him or to Unite Union. He put union activities ahead of paying tax.

Interestingly enough, the next paragraph in the IR335 specifically refers to tax evasion:

Evasion

Anyone convicted of knowingly attempting to evade their responsibilities can be fined up to $50,000 and/or be imprisoned for up to five years. It’s also illegal for an employer to aid or assist another person to commit an offence.

There is no doubt whatsoever that what Matt McCarten did on behalf of the Unite Union was tax evasion. But that did not stop Andrew Little getting on his high horse in the General Debate on Wednesday of this week, when he said this:

Once upon a time, they used to say that John Key’s moral compass was broken. It now turns out that he never had one at all. Of course, it is no longer just his moral failure; it is the entire moral failure of that National Government and every backbencher who supports it. You see, it is not just the Prime Minister any more. Even their finance Minister, Bill English—this master of small government—cannot face up to the real challenges of young New Zealanders who are desperate for opportunities and to get a job. He just writes them off.

This is a dreadful, shabby little Government that has nothing to offer the future of New Zealand and New Zealanders. We now see the real world of John Key being opened up for all of us to see: a world that was never shown to New Zealand until now. Once upon a time, we all thought that John Key was this easy-going, charming, affable sort of leader—a man of the people, a man for everyone. But he is not, because we know who his friends are, we know whom he associates with; and we know whom he takes his advice from.

 It is those who live in that world of enormous, of extraordinary, of just plain mega wealth, who will do anything that they can—take all the advice that they can from the high-paid lawyers and accountants—to avoid their civic obligations and to avoid paying the taxes that they should pay.

Even as Andrew Little was yelling these words in Parliament’s Debating Chamber, Matt McCarten was back in the Leader of the Opposition’s office planning and scheming. As Little was railing against John Key, National, the mega wealthy and tax evaders, a tax evader was hard at work in Andrew Little’s own office. Don’t you think that’s just a little bit (or maybe that should be “Little bit”) hypocritical?

Andrew Little can talk all he likes about “John Key’s moral compass”. Sometimes it takes someone from your own side of the political divide to tell you things as they really are.

Blogger Idiot/Savant from No Right Turn is as hard Left as they come. But he was dead right when he said this about Matt McCarten on 27 July 2011:

If you’re a left-wing union organiser, who opposes corporate tax cuts and favours higher taxes on the rich, you’d be consistent and pay your fair share, right? Wrong:

Inland Revenue is chasing unionist Matt McCarten’s Unite Support Services Ltd. for $150,750 in unpaid taxes after the department forced the company into liquidation last month.

McCarten’s vehicle, which supplied administrative support services to the youth-orientated union Unite Inc., was put into liquidation by a High Court order last month after the tax department pursued it for “failure to provide for taxation,” according to the first liquidator’s report.

“Failure to provide for taxation” is a polite way of saying “couldn’t be arsed paying”. Which makes McCarten a hypocrite on a grand scale. As Commissioner of Inland Revenue Robert Russell so eloquently said this morning,

[p]eople who are non-compliant are basically stealing from their neighbours.

McCarten should stop doing that, and start paying his fair share. Otherwise, he’s no different to the rich pricks he rails against.

How can Andrew Little have any credibility whatsoever on the subject of tax evasion as long as he continues to employ a self-confessed tax evader as his Chief of Staff?

 


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  • Crowgirl

    Am I imagining things or is there a suggestion here that the “union campaigns” that McCarten deemed so worthy, is really just code for “donated workers’ PAYE to the Labour 2008 General Election” campaign? Like as in the 2008 Labour Party profited directly from tax evasion. Wouldn’t that just be so ironic.

    • It was mostly spent on the Mana by-election where Matt McCarten stood.

      • Crowgirl

        How altruistic of Mr McCarten to donate the money to himself.

        • Time For Accountability

          Which is a pattern amongst Union based polititions they spend money on their personal campains rather than what members intend them to be spent on.

          This slots nicely into the fraud provisions of the Crimes Act.

          The issue is far wider that McCarten.

          It is the sole reason some unions should be deregistered.

  • duve

    We know McCarten is a ratbag. What worries me more is, why have the IRD not acted against him? It does seem that the way they act can be rather selective.

    • jv7

      More than a ratbag, the de facto labour leader and little is his puppet

    • johnandali

      I sincerely hope this will be raised at the next Question Time in parliament.

  • Cadwallader

    The final sentence is a rhetorical question, of course he can’t. The issue now is, why hasn’t the IRD prosecuted the Union? That isn’t rhetorical, it is a mystery. The sum of $150K is significant. Did the monies ever end up in a Labour Party account? Did McCarten keep them for himself? Did Goff, Shearer and/or Cunnliffe know of this failure to account for employees monies? If the monies were applied to one or more of Labour’s failed electoral campaigns oughtn’t they have been recorded in their books? This is a dirty situation for Labour to be in. How much homework did Little undertake before tossing his absurd allegations at the government? The current Labour caucus seems to be living in a glass house. So much for their claim that they are the party for the workers when they have stolen from those workers!

    • Curly1952

      And stolen from you and I, the honest tax payer

      • Cadwallader

        If it is a PAYE retention which appears to have been swiped then it is actually the property of the employees/workers. I suppose a failure to account to IRD for whatever monies is an offence against all of us.

        • H. Upmann

          Yes, this is money stolen from individuals, Joe and Mary Hard-Worker.

          Their gross salary / wages is their own personal money. A portion is legally sent to the government and the employer is obligated to do this for the individual on their behalf.

          An employer who does not do this is a thief.

  • Dumrse

    I’m rather hopefull your Elephant in the Room part 4, will tell us just what it was McCarten did with the IRD’s money. Being a friend of Mr Little’s causes me some concern.

  • Keeping Stock

    I can’t understand why the media hasn’t questioned Little on this. Then again, maybe I CAN understand; they don’t want to burn their bridges with him. But at the same time they go full retard, fed by Labour, Little and McCarten, on John Key and National.

    One of the earlier articles mentioned that the tax evasion took place between 2007 and 2009, i.e. either side of the 2008 General Election. McCarten clearly used money he was specifically prohibited from using on campaigns against the election of the current government. That makes an already-bad situation even worse.

    If he is to retain any credibility at all, Little needs to terminate McCarten’s contract immediately. To fail to do so means Little endorse McCarten’s tax evasion.

    • Woody

      As I said a couple of days ago, I am wondering who works for whom?

      I am interested in whether this debt has ever been cleared. I also wonder why McCarten hasn’t felt the full force of IRD’s wrath, I know it can’t possibly be because most if not all IRD staff would be union members.

      • Kiwiracer

        I think you are exactly right, and this is also why the media is “hands off” on it. . . . . . .

    • Curly1952

      Two reasons they haven’t questions Little 1). They are in Littles pocket, and 2). They don’t do any back ground work on people or issues unless they try a “hit” on the right,

  • Sally

    I read rumours are swirling that McCarten is in for the chop. His tax dodging will be a convenient excuse. The question is how many skeletons does he know about? Labour will have to be prepared for a big payout to keep him quiet.

    • Woody

      Big payout Sally? From Labour’s overflowing war chest? You are so funny.

      • kayaker

        They’ll have to employ a ‘highly paid lawyer’ to sort this out.

      • OneTrack

        They just have to double the union fees to fund it.

      • Sally

        Being facetious. I believe his salary is covered by parliamentary salaries ie taxpayers.

      • Michael

        Nope, from Labour’s Parliamentary budget. That is provided by paying taxpayers (as opposed to non-paying ones.)

    • Sagacious Blonde

      The tax dodging was in the public arena long before McCarten was appointed Chief of Staff, so was complicitly condoned by Labour’s hierarchy.
      The polling trajectory for Labour since McCarten was employed has done nothing but track steadily downwards.
      We all predicted he would bring nothing of value to Labour – we were right.

  • Keeping Stock

    A question for Cameron and/or Pete; was the appointment of McCarten as Cunliffe’s Chief of Staff in any way connected with the hack of Cam’s computer, Cunliffe’s highly principled 2014 election campaign and the whole Dirty Politics scam?

    • I believe so. What many don’t realise is that I was talking to Matt McCarten about the appalling way KDC treated his staff but he point blank refused to get involved. Hindsight is a wonderful thing but I believe now he was deeply involved in the conspiracy.

      • Cadwallader

        Therefore: Is it drawing too long a bow to construe that McCarten is Andy’s boss? (Or at least his de-facto boss/instructor?)

        • OneTrack

          I think the term is “Handler”

          • Orca

            “Puppetmaster” perhaps?

          • Cadwallader

            “Executioner?”

  • grannymorris

    To quote Benjamin Franklin: “In this world nothing can be said to be certain, except death and taxes.”

    Well in 2011, the 99.2% chance of death must have looked pretty certain to Matt, so why worry about taxes any more? See “Dying union boss seeks buyer for life policy” at http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10787162

    But assuming he found a buyer, did he pay the tax man? If so, that might just explain why he hasn’t been prosecuted.

    • Justme

      We can only assume that he didn’t on the basis that if he had, they would have trumpeted it to the world.

      • grannymorris

        To be fair, no one has trumpeted his miraculous survival against overwhelming odds either. Some things are better left unsaid.

  • Wasapilot

    Great series of articles. More sunlight needs to be shone on these hypocrites.

    Anyone know what has happened to General Debate this morning?

  • MaryLou

    Aside from the shonkiness of McCarten and Labour for hiring him under these circumstances, my gravest concern is the conduct of IRD in this case. Really, it is. Anyone else wuld have been pinged a long time ago. How is it that he has escaped with nothing done? That really, really should be answered.

    • Superman

      I had a small business and used to send the employee’s PAYE payments to IRD every month. Then they went online. You could fill in the forms online and transfer the money directly. This seemed like a great system. The first month I sent the money and filled in the form online. The next month I got a fine to the value of 50% of the total PAYE payments because IRD never received the form although they had received the money. I phoned them and asked why when they knew my name, address, land line and cell phone numbers, my wife’s name and my dog’s name, in fact everything about me they couldn’t have phoned and asked what had happened to the form. The reply was “tough you didn’t send the form”. Since then I have viewed the IRD as the enemy. It seems there are rules for some but not for others. This is corruption.

      • KatB

        I had problems when we went electronic at work, I missed a payment. It was scheduled but through my fault it don’t go through. When I realised this I rang the IRD to rectify the problem. Well you would’ve thought the sky was falling in. We’d never missed a payment before but boy they made it clear we may still be liable for a late payment fee. Thankfully they let us off with a warning but made it very clear we wouldn’t get a warning next time. Then you hear of people owing thousands, repeat defaulters and nothing seems to happen. Somethings not right.

  • Reid

    PAYE is viewed in law as monies held in trust by the employer on behalf of the employee. In other words, it’s not Matt’s money, it’s not the company’s money, it’s the employee’s money. And Matt stands guilty of having violated that trust, which says a great deal about how much he regards those principles of being a good employer which he’s espoused all his life, and it says a great deal about the fellow unions who have said nothing about his crime, committed against the very group people standing staunch and firm in support of whom is their very raison d’etre, a crime committed not by a third party, but by one of their own. It’s not only a disgrace to Matt, it’s a disgrace to the entire movement.

    • Keeping Stock

      To be fair, I seem to remember that one of the earlier posts mentioned Helen Kelly of the CTU asking for an explanation.

      But imagine if an employer with staff who were members of Unite did this. The union would be going ballistic, and rightly so. It’s weapons grade hypocrisy from McCarten, and from Cunliffe and Little for associating themselves with him while banging on about tax evasion.

      • Reid

        Yes, she asked but she didn’t demand. And when none was forthcoming she took it no further. She was probably behind Matt settling the repayment regime but what I would have done were I her was to explain to Matt that if he didn’t pay up even out of his own funds, then the CTU would, and that it would be publicly announced they’d done so and why – because of the trust issue. That would have for Matt been reputationally ruinous but who cares, he did the crime.

  • Orca

    Awww now be fair, poor Matt just misunderstood the term “PAYE deductions”, he deducted them from what was supposed to go to the IRD. An easy mistake.

  • IKIDUNOT

    So, when is IRD going to take action…….waiting, waiting………

    • Mine it,Drill it,Sell it.

      Will if you read the FINAL report on the companies office web-site I would think the answer is never.www.business.govt.nz/companies/app/service/services/documents/424A2139C091556AFB779B40F5BC3BDF

      • one for the road

        No available or identifiable assets left = assets stripped out – wonder by who?

      • MaryLou

        Then if there is no available or identifiable assets, jail time should apply? Or home detention? Or community service? Or a public slap on the wrist? Surely not nothing….

    • Disinfectant

      For nearly all criminal prosecutions, someone needs to lay a complaint.
      I’m sure that armed with the facts, someone will do it.

  • Cadwallader

    We’ve all missed an obvious equation here:
    “E=MC2” Evasion=McCarten & others.
    That’s my eureka moment for today. I need a lie down now.

  • localnews

    I find it amazing that he came out and publicly stated he chose to spend the money on something else. Any business person having trouble meeting their Ird obligations would be making sure they had an excuse and hard luck story up their sleeve in case they ended up in the dock. He is either crazy or incredibly naive to make such a statement, it is pleading guilty.

    • Disinfectant

      Crazy, stupid, naïve, ideologically blind and arrogant.

  • KGB

    When an ex-employer of mine did not pay my PAYE the IRD informed me I still owed it.
    I had to take my employer to court, and from the money awarded to me, I then paid IRD.
    The unions were uninterested, and the employer claimed I never worked for him. My saving grace was my collection of little brown envelopes he wrote my wages & PAYE calculations on.
    Does anyone know if this is still the case? It was about 1985, and IRD considered me in default, though they later fined him. But I had to do the hard yards.
    If nothing has changed, those union employees must have IRD dept in their names?

    • dumbshit

      My nephew related a similar story to me, about 18 mths ago. He had to pay what the employer had short paid!

      • Mags

        i knew that was the law but never thought IRD would implement it. I wonder if the IRD employee felt bad about that? And once the money is obtained by IRD they may not be worried about prosecution of the employer. No further monetary benefit for them. I wonder if the employee can take a claim against the employer? Probably not worth it as they will have no money to pay so a costly excercise with the only benefit satisfaction.

  • Wheninrome

    It just proves A Little has absolutely no understanding on the subject at all, otherwise he and the labour party could not in all moral honesty continue to support Mr McCarten with employment, it boils down to “theft” from the public of NZ no matter how you look at it. NZ Tax is paid in theory for the benefit of Joe Public in NZ. You would think this was right up labour’s alley, take and give to everyone else. Obviously they just pay lip service to their ideals.

  • kayaker

    Can you imagine the furore if this was happening on the right side?

    • Keeping Stock

      Scary, isn’t it. There would be marches, political campaigns, and calls for heads to roll.

      Obviously though, it’s OK when Labour sanctions tax evasion…

  • XCIA

    Collectively, they have no conscience. That is why they can steam ahead as if there is nothing untoward with the lies and deceit that they spread on a daily basis. These people are not socialists, they are sociopaths.

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