Speaker 1: From Schwartz Media. I'm Ruby Jones. This is seven AM.
Speaker 1: When a West Australian mining billionaire was accused of a
Speaker 1: decade of tax evasion, his lawyers responded by trying to
Speaker 1: cut a deal with the Tax Office. The terms of
Speaker 1: that deal included an eighty percent reduction in the penalty
Speaker 1: payable and an assurance that his conduct wouldn't be referred
Speaker 1: to police or the Corporate watchdoc. The reason that billionaire
Speaker 1: Chris Ellison of the company Mineral Resources would push for
Speaker 1: those terms it's obvious. The real question is why the
Speaker 1: Tax Office would agree to it. Today National correspondent for
Speaker 1: the Saturday Paper Mike Secam on how the ATO protects
Speaker 1: the rich. It's Tuesday, October twenty nine. Mike, Let's begin
Speaker 1: with Chris Ellison, the mining billionaire at the center of
Speaker 1: this story. Tell me about him and his rise to power.
Speaker 2: Well, well, he's a typically abrasive you know, West Australian
Speaker 2: mining company head. He's also a genuinely self made man.
Speaker 2: He grew up in Dunedin in New Zealand's South Island,
Speaker 2: left school a day, turned fifteen, worked on a farm
Speaker 2: and then a cattle station, and then he came to
Speaker 2: Australia at the age of nineteen in nineteen seventy seven.
Speaker 3: We ended up getting on a plane and flew over
Speaker 3: to Sydney, bought ourselves and black holed and Monaro, which
Speaker 3: was a pretty hot car in its day. So we'd
Speaker 3: go and apply for jobs and what can you do?
Speaker 3: And we'd say anything, No, know, what do you do?
Speaker 1: Know?
Speaker 4: Literally, we can do anything? What are you qualified for? Well?
Speaker 4: I can ride pretty good, can drive anything.
Speaker 2: Then when he was twenty one, he got a crane
Speaker 2: driver's license and he moved to Port Headland in Western Australia,
Speaker 2: and he made quite a lot of money during the
Speaker 2: Northwest shelf gas boom providing cranes.
Speaker 3: I had a whole bunch of cranes that I'd hired
Speaker 3: in and I was re hiring them out to everyone
Speaker 3: that I run the whole of the supply base. I
Speaker 3: was making five hundred and fifty thousand dollars a month
Speaker 3: that I was banking profit.
Speaker 2: He set up several companies providing mining services, and then
Speaker 2: in two thousand and six he merged three of these
Speaker 2: companies into one and listed on the shell market, took
Speaker 2: a public and that company was called mineral resources, usually
Speaker 2: known as MinRes and MinRes went from just providing mining
Speaker 2: equipment to other miners to becoming a mining company in
Speaker 2: its own right, particularly in iron ore and lithium. So
Speaker 2: he got very rich in a great hurry. According to
Speaker 2: the Financial Review Rich List, he was personally worth two
Speaker 2: point twenty five billion dollars in early twenty twenty three.
Speaker 4: It's pretty cool to be able to run a business
Speaker 4: like this.
Speaker 3: My Monday's are better than the average person's Friday because
Speaker 3: I get so passionate about the things that we get
Speaker 3: to do.
Speaker 2: That has subsequently sipped somewhat due to the plunging lithium
Speaker 2: price and weakening go on all prices, and the fact
Speaker 2: that Minrez has saddled itself with big borrowings, so Ellison's
Speaker 2: fortune was estimated to be down about a billion dollars
Speaker 2: a couple of months ago. Minrez was looking a bit
Speaker 2: shaky already, but things got much worse about a week
Speaker 2: ago when the Financial Review investigative journalist Neil Chenowith began
Speaker 2: publishing a series of stories. The first one headlined Chris
Speaker 2: Ellison's offshore secret, alleging that Allison had evaded tax over many.
Speaker 1: Years, okay, and so how many years, Mike, and how
Speaker 1: much tax did Ellison fail to pay?
Speaker 2: He and four other executives allegedly dodged something like ten
Speaker 2: million dollars in tax from twenty and three to twenty fourteen,
Speaker 2: so over a decade, and this involved a web of
Speaker 2: offshore companies. The interesting thing here is that the ATO
Speaker 2: first raise concerns way back in two thousand and seven.
Speaker 2: They wrote to Ellison back then and said they wanted
Speaker 2: to discuss his tax affairs. But even after that, obviously
Speaker 2: it continued. The FINN reporting said the essence of what
Speaker 2: this involved was that Ellison and other senior executives used
Speaker 2: a company based in the British Virgin Islands to buy
Speaker 2: machinery cheap and then on sell it at large markups,
Speaker 2: including to Mineral Resources, which the FINN says dudded shareholders
Speaker 2: more than seven million dollars. It's also alleged that the
Speaker 2: same firm that provided Ellison's personal tax services also acted
Speaker 2: as auditor for several of his companies, including MinRes. So
Speaker 2: all of these matters are clearly of concern. But the
Speaker 2: real shock for a lot of people, including me, and
Speaker 2: perhaps the most appalling part is the way the Tax
Speaker 2: Office responded to all of these allegations when lawyers began
Speaker 2: negotiating with them in twenty nineteen.
Speaker 1: Okay, so how did the Tax Office respond well?
Speaker 2: As revealed in the Channelis reports, in late twenty nineteen
Speaker 2: and early twenty twenty, Sydney tax lawyer by the name
Speaker 2: of Christopher Batton negotiated with the ATO officials the terms
Speaker 2: under which five people including Ellison, would agree to quote
Speaker 2: voluntary disclosure unquote of the details of their tax evasion.
Speaker 2: So what that means is they would admit they're wrongdoing
Speaker 2: without the necessity of ATO having to take them to
Speaker 2: the courts or any of that sort of stuff that
Speaker 2: would get complicated and messy. So what this lawyer Baton
Speaker 2: negotiated was, in the first instance, an eighty percent reduction
Speaker 2: in penalties. He wanted that. And then the really gobsmacking
Speaker 2: bit I reckon was the other demand that he made,
Speaker 2: which is, and I'm quoting here not to refer a
Speaker 2: disclosure that my clients intend to make to law enforcement
Speaker 2: agencies as well as other federal government agencies, which basically
Speaker 2: means the ATO promising that they wouldn't tell any of
Speaker 2: the staff they'd found out to the Australian Federal Police,
Speaker 2: the Australian Securities and Investments Commission, or the Public Prosecutions.
Speaker 2: Now this did come with a slight caveat, which is
Speaker 2: that that only held as long as there was no
Speaker 2: active investigation being undertaken by any of those other agencies.
Speaker 2: But you know, as one source that I spoke to
Speaker 2: us insight into this case put it there was little
Speaker 2: chance of that because how could ASSEK, for example, launch
Speaker 2: an investigation if they didn't know about the source material
Speaker 2: which was held by the ATO, who had already investigated
Speaker 2: at length. So you know, effectively what we're seeing as
Speaker 2: the Australian Tax Office agreeing to keep quiet about the
Speaker 2: tax evasion of some of Australia's wealthiest people. And I
Speaker 2: think it shows the relative powerlessness of our government agencies
Speaker 2: against the of Australia's billionaires.
Speaker 1: Coming up after the break, why the ATO keeps rich
Speaker 1: people's secrets? So, Mike, you've been looking into the fallout
Speaker 1: from the news that Allison, who is one of Australia's
Speaker 1: richest men, had allegedly evaded tax for many years, and
Speaker 1: then did this deal to reduce the penalties and to
Speaker 1: avoid prosecution. So how often does the ATO make these
Speaker 1: kinds of deals with billionaires.
Speaker 2: Well, THETO negotiates actually quite a few of these things.
Speaker 2: They reduce penalties anyway, quite often with well resourced people
Speaker 2: and companies that they believe have evaded tax. As to why,
Speaker 2: one tax specialist that I spoke to put it to
Speaker 2: me like this, What it boils down to is nervousness
Speaker 2: about taking on well resourced defenders who are able to
Speaker 2: match or surpass the budget of the ATO that the
Speaker 2: ATO might have to prosecute. So, in other words, they're
Speaker 2: prepared to copy an outcome where the miscreant plays less
Speaker 2: than the tax office thinks they owe, so as to
Speaker 2: avoid the cost and uncertainty of litigation. According to data
Speaker 2: from twenty twenty two to twenty three, they entered into
Speaker 2: settlements with two hundred and fifty one entities I think
Speaker 2: most of them were foreign multinationals, and as a result
Speaker 2: secured an extra three point one six billion dollars in
Speaker 2: tax revenue. But the ATO also reveals that there was
Speaker 2: a quote variance unquote of forty four percent, meaning they
Speaker 2: secured just fifty six percent of the amount that they
Speaker 2: initially assessed they were owed for the sake of legal convenience.
Speaker 2: What wasn't revealed and isn't revealed in these in this
Speaker 2: ATO data is individual details, so we don't know the
Speaker 2: identities of the people who have struck such deals. I
Speaker 2: think there is a really strong argument for policy referm here.
Speaker 2: Other countries don't keep such tax settlements secret, They should
Speaker 2: be published. I spoke to the Green Senator Barbara Pocock
Speaker 2: about this. She, you might recall, was the prime inquisitor
Speaker 2: in the Senate inquiry into the PwC tax scandal, and
Speaker 2: she says she can see no reason for this secrecy,
Speaker 2: and she questions the deterror effect of finds that are
Speaker 2: seriously reduced and agreed in secret, And she says the
Speaker 2: PwC case was one example of why that was necessary.
Speaker 4: It's just extraordinary and more than that, to then.
Speaker 2: Ask the OVO to lean on other enforcement mechanisms and
Speaker 2: the Cubertal secret is astounding. Pocock is far from alone
Speaker 2: in that view. I spoke to a number of other
Speaker 2: people who also were of the view that the ATO
Speaker 2: is unnecessarily generous and secretive in its dealings with tax sheets.
Speaker 2: One of them was Jeffrey Watson, SC former council assisting
Speaker 2: ayakak in New South Wales and elsewhere, director of the
Speaker 2: Center of Public Integrity, and he's strongly critical of the
Speaker 2: deal that was done in the case of min Rest
Speaker 2: and he told me found it extraordinary that the tax
Speaker 2: Office would enter into such arrangements that he said didn't
Speaker 2: appear to be in the public interest. You know, as
Speaker 2: he put it, this seems to have been a very very
Speaker 2: contrived tax arrangement, very carefully organized, persistently pursued over many years.
Speaker 2: Why in any sane world were the words he used,
Speaker 2: would this attract any reduction in penalty?
Speaker 1: And so how have Chris Ellison and his company MinRes
Speaker 1: responded to everything that has come out so far?
Speaker 2: Well, that's been pretty interesting. In response to the Finn's revelations,
Speaker 2: Ellison released a statement explaining in inverted commas some of
Speaker 2: the dealings. He said that MinRes was established in two
Speaker 2: thousand and six with the merger and public listing of
Speaker 2: several private companies operated by him and his business partners.
Speaker 2: And I'll quote from his statement, more than twenty years ago,
Speaker 2: and prior to MinRes listing, we also operated entities overseas
Speaker 2: for acquiring mining equipment and parts to import into Australia
Speaker 2: and on sell. Some equipment prior to min Res listing
Speaker 2: was sold to our then privately owned Australian businesses. Regrettably,
Speaker 2: revenue generated by the overseas entities that we were beneficiaries
Speaker 2: of was not disclosed to the Australian Tax Office at
Speaker 2: the time. This was a poor decision and a serious
Speaker 2: lapse of judgment. Now, my first observation would be, you know,
Speaker 2: when talks of a lapse of judgment, one usually thinks
Speaker 2: of something quick. This was a lapse of judgment that
Speaker 2: lasted for a decade. But his argument essentially is he
Speaker 2: wasn't cheating the MinRes shareholders because at the time there
Speaker 2: were no Minre's shareholders. It was his private company. When
Speaker 2: Channels first reappeared Saturday a week ago, he called Minreres
Speaker 2: quote a nine billion dollar company. Well that was right
Speaker 2: when he wrote it. It's not now though. As of
Speaker 2: Monday this week, when I last checked it, it was
Speaker 2: a six point seven billion dollar company. So perhaps the
Speaker 2: best indicator of how serious this scandal is. It's two
Speaker 2: point three billion dollars worth.
Speaker 1: Of serious, right, Okay, but I think it's fair to
Speaker 1: say that that wouldn't have happened. None of this would
Speaker 1: have happened if these reports hadn't come out in the press.
Speaker 1: So what does that tell, as Mike, about the role
Speaker 1: of the Australian Tax Office and how it seems to
Speaker 1: be operating differently for different people.
Speaker 2: Well, the first thing I would say is, you know,
Speaker 2: you can't expect billionaires and corporates not to do everything
Speaker 2: in there power to minimize their tax debt. And you
Speaker 2: know they can do this legally. Of course, there's a
Speaker 2: million loopholes that they can exploit, but you know there's
Speaker 2: also ways that are not legal. And it appears that
Speaker 2: that was you know, the allegation here. But as Barbara
Speaker 2: Pocock says, the ato's actions suggests that there is one
Speaker 2: law for the rich and the well connected and another
Speaker 2: law for the battling in the intimidated. She drew the
Speaker 2: comparison with robodebt, you know, which destroyed a lot of
Speaker 2: lives when a bunch of battlers were hit with debts
Speaker 2: and fines that they didn't know, but which in most
Speaker 2: cases they felt they had no power to contest. Meanwhile,
Speaker 2: she says, you know, the big end of town court
Speaker 2: cheating on their taxes, sending their lawyers to the ATO
Speaker 2: and demand a you know, an eighty percent discount on
Speaker 2: their penalties, and then demand protection from other law enforcement
Speaker 2: agencies you know, and demand secrecy. This is not just
Speaker 2: serious for the shareholders of MinRes, It's also serious for
Speaker 2: Australian taxpayers you know, who missed out on billions of
Speaker 2: dollars when the ATO cuts secret deals with corporate tax
Speaker 2: ovators you know. And this enrages Barbara Pocock and in
Speaker 2: her view, it should outrage every Australian. How do you
Speaker 2: argue with that, isn't it?
Speaker 1: Mike? Thank you so much for your time.
Speaker 4: Thank you, cheers.
Speaker 1: Also in the news today, the Treasurer Jim Chalmers has
Speaker 1: raised the prospect of stripping gambling companies of their access
Speaker 1: to government research tax concessions, following figures from the Australian
Speaker 1: Tax Office showing they'd claimed almost ninety million dollars in
Speaker 1: a single year. When asked about the figures at a
Speaker 1: news conference, the Treasurer indicated that the government may be
Speaker 1: prepared to change the laws. And a woman has faced
Speaker 1: court of the alleged assault of independent Senator Lydia Thorpe
Speaker 1: at a public event in Melbourne. Earlier this year, Ebony
Speaker 1: Bell appeared via video link in the Melbourne Magistrates Court,
Speaker 1: charged with two counts of recklessly causing injury and three
Speaker 1: counts of unlawful assault, and will remain on bail before
Speaker 1: the case returns to court on November twenty two. I'm
Speaker 1: Ruby Jones. This is seven am. Thanks for listening.