Tax office, federal police face exposure over PwC criminal probe failure

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The Senate committee report on the PwC scandal has made clear Canberra’s collective fury at the treachery of the accountancy firm that betrayed its largest single customer, the federal government, with a pointed title – PwC: A calculated breach of trust.

But the interim report, tabled on Wednesday, arising from the Senate inquiry into consultants that Greens senator Barbara Pocock instigated, offers little new information on the PwC tax scandal itself.

The Senate backed Barbara Pocock’s order for the tax office and federal police to produce all correspondence related to their failure to launch a criminal investigation into the PwC tax scandal in 2018. Credit: Alex Ellinghausen

“We now have cross-party agreement about what happened. PwC engaged in a calculated breach of trust and an intentional cover-up,” Pocock said.

With PwC’s breach now firmly established, what is of far more interest is a motion passed in the Senate this week that finally could shed light on how PwC partner Peter Collins’ potentially criminal conduct went unnoticed for so many years.

Late on Tuesday, the Senate passed an order from Pocock for the production of all communications between the Australian Tax Office and Australian Federal Police (AFP) relating to PwC, going all the way back to January 2016.

The Senate has effectively ordered Federal Treasurer Jim Chalmers to hand over this information by June 28.

Pocock’s orders include a specific reference to all documents and correspondence relating to one particular decision: the one that determined there was insufficient information to formally refer the matter to the AFP for investigation.

This highlights one of the most disturbing aspects of the scandal; how PwC and Collins’ behaviour came so close to escaping detection. And that’s despite the most powerful government agencies having damning evidence of possibly criminal behaviour in their possession for years.

If the order is successful, this sensitive information could be made public.

We know from Senate estimates’ grilling of the Tax Office that it first contacted the AFP about the PwC matter in March 2018, and it took a year for the AFP to determine it could not proceed with a criminal investigation.

What we still don’t know is, what evidence was shared before the federal police came to this decision. More importantly, we don’t know why it decided not to use its investigative powers to pursue further evidence.

If there are question marks over how Collins and PwC almost walked away from this scandal undetected, it is in this particular decision.

It took another four years, and the release of 143 pages of damning evidence of wrongdoing by Collins and PwC partners, and a referral from Treasury, for the federal police to change its stance and trigger an investigation in May this year.

ATO commissioner Chris Jordan said “some” PwC clients were marketed a scheme to get around multinational tax avoidance laws.Credit: Paul Jeffers

However, taxpayers should not get their hopes up just yet. The fresh investigations by the AFP and Tax Practitioners Board could ensure it is years before we get a clear answer as ATO commissioner Chris Jordan pointed out to the Senate committee last month.

“I think we’re really butting up against a problem around potential prejudice of the criminal investigation that is happening now,” he told the committee.

“Aren’t we butting up against a failure of the federal police to take action?” Pocock replied.

It is hard to disagree with either statement.

The decision to release the communications is in Labor’s court and they have signalled caution with so much at stake. Any release of information could potentially prejudice the current investigation and any potential legal action it may trigger.

“It is not in the public interest for this motion to succeed. I urge those opposite to carefully consider the consequences of ordering documents that relate to a police referral,” Labor’s Anthony Chisholm told the Senate before his party rejected the motion.

Whatever happens with this sensitive information, the public will get ringside seats to the next chapter of the scandal within weeks, when the federal police are called back before a special hearing of Senate estimates scheduled for July 5.

If anyone can explain the AFP’s behaviour without prejudicing the current investigation, surely it is the AFP itself.

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