CUBIC Corporation in action Down Under

The AIM Network

2 years ago

By Denis Bright

The existence of Cubic Transport Systems should arouse the curiosity of investigative journalists. Regular users of the fare gates at many major cities in Australia and the USA might be excused for thinking that such operations are fully controlled exclusively by local transport authorities. Cubic’s technological skills also extend to traffic management of major motorways.

The technological excellence of the Cubic Corporation co-exists with strategies to overlook taxation payments to the Australian government. The Cubic Corporation is on The Guardian’s list of major companies which have paid no company tax since 2013.

Failure to pay taxes on Australian operations interacts with boasts about the vitality and diversity of Cubic’s investment links which have recently been acquired by Veritas Capital and its associates.

SAN DIEGO, May 25, 2021 – Cubic Corporation (NYSE: CUB) (“Cubic” or the “Company”) today announced the completion of its sale to Veritas Capital (“Veritas”) and Evergreen Coast Capital Corporation (“Evergreen”), an affiliate of Elliott Investment Management L.P. (“Elliott”), in a transaction valued at approximately $3.0 billion, including the assumption of debt.

The go-private transaction, which was announced on February 8, 2021 and the terms of which were amended on March 31, 2021, received approval from Cubic shareholders on April 27, 2021. As a result of the completion of the transaction, Cubic shareholders will receive $75.00 per share in cash, and Cubic’s common stock will be suspended from trading on the New York Stock Exchange (“NYSE”) prior to the opening of business on May 25, 2021 and will be removed from listing on the NYSE.

Cubic will remain based in San Diego, California, and the transition is expected to be seamless for customers and employees across Cubic’s businesses.

More recently, Veritas Capital has secured financing for a take-over of the NCR Corporation which manufactures those surveillance devices on trial in Australian retail outlets (Seeking Alpha, 25 August 2022):

NRC Corp (NYSE:NCR) rose 5.6% on a report that private equity firm Veritas Capital is said to have secured financing for a takeover of the company.

Several large banks are said to have committed financing for an acquisition, according to a StreetInsider report. While financing appears to be mainly locked down, a deal is still not certain and the parties NCR could decide to walk away.

The latest update in the NCR saga comes after WSJ last month said Veritas was in exclusive talks to purchase the company. At the time, the paper said a transaction may still be weeks away, and it’s not guaranteed at all. NCR has a market cap of almost $4 billion.

The WSJ report followed after Dealreporter said in late June that NCR, which is in the process of exploring alternative, may be acquired by Veritas.

NCR, a technology provider for retail stores, restaurants and banks, initiated a strategic review in February and now the board has narrowed down the potential paths the company may take, Michael Nelson, treasurer and investor relations at NCR, said at an RBC investor conference in June.

Companies like Cubic with multi-billion turnovers are of course advised by the shrewdest accountants and legal advisers. The processes used in tax minimization in partnerships with all levels of government in Australia invite speculation about the processes being applied. The media releases from Cubic are centralized out of San Diego. The use of cloud-based storage and distribution systems may enable these transport management systems to be steered from outside Australia in the interests of tax minimization. In the absence of details from the media departments at Cubic, such conclusions are merely speculative guesses.

This speculation would easily be silenced if Cubic could be more open about its former tax minimization strategies. Cubic’s media department in Sydney claims that tax minimization is old news, which his company does not wish to rehash. The media office of Cubic in Sydney claims that documentation exists to explain Cubic’s strategies for tax minimization. Despite applications to Cubic offices in Brisbane, Sydney and San Diego this documentation is being kept under wraps with a claim that this explanation is no longer relevant to Australian readers.

Adding to this intrigue is Cubic’s involvement in military training systems across the US Global Alliance. Some details of Cubic’s outreaches in defence and strategic technologies are available here. This public relations hype goes not extend to the publication of details of taxation commitments.

Cubic is involved in sales of high technology defence programmes to countries like Saudi Arabia, Egypt and Israel which would be expected to fall into line with the US Global Alliance in the event of future international conflicts. The human rights record of these participating countries seems to be no barrier to Cubic’s support for the global arms race in these outposts of global militarism.

Cubic Defence Australia is crucial to the integration of operational defence systems throughout the US Global Alliance. This was covered by a media release on 15 December 2021:

Townsville, Australia – December 15, 2021 – Cubic Defence Australia announced today that it has been awarded up to 14-year contract to support the Australian Army’s Combat Training Centre Live Instrumentation Simulation, Range Instrumentation, and Information System (CTC-LIS).

The Combat Training Centre enables the Australian military’s largest, most advanced, and potent teams to enhance their competitive advantage by empowering them to reach their potential; and the CTC-LIS provides the technology basis to achieve this mission.

The system is based at Lavarack Barracks in Townsville and deploys regularly around the country to training events, including in some of the most remote training areas in Australia.

Cubic is less forthcoming about its taxation payments to support the Australian government in these difficult times. Cubic also operates a vast network of subsidiary companies for both transport, strategic communications and defence industries which seem to be beyond the reach of the Australian Tax Office.

Australians should ask why this profitable company has paid no company tax here since at least 2013.

In the first months of the new government in Canberra, the age of legalized tax avoidance must cease. New ground rules are absolutely necessary to ensure that old practices are not continued in the 2022-23 financial year at a time when welfare agencies are issuing tents and temporary shelters to keep families off the streets and out of parked cars on these late winter nights.

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Denis Bright is a financial member of the Media, Entertainment and Arts Alliance (MEAA). Denis is committed to consensus-building in these difficult times. Your feedback by using the Reply button on The AIMN site is always most appreciated. It can liven up discussion. I appreciate your little intrusions with comments and from other insiders at The AIMN. Full names are not required when making comments. However, a valid email must be submitted if you decide to hit the Reply button.