November 20, 2010

http://www.smh.com.au/business/highflying-financier-found-guilty-of-money-laundering-20101119-180ya.html

THE millionaire Sydney hotelier John Hemmes last night withdrew his offer to pay $100,000 in bail surety for his friend, the convicted money launderer Michael John Milne.

Mr Hemmes, father of Justin Hemmes, was replaced by a general manager at Mr Hemmes's hotel company, Merivale, allowing Milne, also a millionaire, to be freed on bail to await a jail sentence next month.

Milne was yesterday found guilty of money laundering and tax evasion as part of the tax office's project Operation Wickenby.

Advertisement: Story continues below Milne's wife and two children, aged 18 and 20, wept and Milne shook his head as the 12-member jury yesterday found the case against him proven. The NSW Supreme Court heard that a complex web of offshore entities was ''completely contrived and an artificial arrangement'' designed to gain him a financial benefit.

Milne was a client of Philip Egglishaw, whose Swiss firm Strachans sparked the $300 million Wickenby investigation. He also had links to the inquiry's most high-profile scalp, the music entrepreneur Glenn Wheatley.

Milne used Swiss bank accounts to buy antique French furniture, a $2.7 million house in Neutral Bay, where he still lives, a Bentley car, a yacht called Black Snake worth $270,000 and a $440,000 painting by Jeffrey Smart. Most of Milne's assets have been frozen under proceeds-of-crime laws.

Milne was found to have used the sale of shares with the proceeds going into Swiss banks and then either onwards to Australian bank accounts linked to Milne, or for purchases that benefited him.

Bank records showed money from one Swiss account went to buy French antiques and $US72,000 was spent at a resort in February 2005.

In March 2005, $1 million was sent from the Swiss bank account to a Commonwealth Bank account in Sydney for a company called Barat Advisory. Milne was the sole director and shareholder of Barat.

Justice Peter Johnson extended Milne's $5 million bail, but added a $100,00 surety and a daily reporting condition at Mosman police station.

The $5 million bail was provided by Milne's wife, Liesa Marie Milne, after his 2008 arrest, and the court heard Mr Hemmes would provide a $100,000 bank cheque to secure continuing freedom for his friend.

This was later replaced, to be paid by Kerrie Boylett, who works for Mr Hemmes.

The Crown prosecutor Peter Hastings, QC, opposed Milne's bail, arguing he was a flight risk and had ''overseas interests of a type which may be utilised to assist flight''.

Justice Johnson said Milne would likely receive a custodial sentence because all of the others found guilty of offences as part of Operation Wickenby went to jail.

Milne is due to be sentenced on December 2.