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