The Australian Taxation Office has awarded a multi-million dollar contract to global management consulting and technology services company Accenture which is based in the well known tax haven of Bermuda.

The contract, estimated to be worth half a billion dollars over four years, calls into question the ATO’s procurement process as the move has offended hundreds of ATO officers that are engaged in the fight to stop the use of tax havens for tax avoidance purposes. This fiasco is certain to leave Tax Commissioner Michael D’Ascenzo red faced as well as his right-hand man Greg Farr the Second Commissioner in charge of IT. Crikey revealed last week that Farr is keen to escape the ATO by moving to a position at the Department of Defence. There is speculation that the sheer volume of the change program is causing tensions among D’Ascenzo’s leadership team.

Accenture’s tax status has been a controversial issue over the years in the US. In 2004 the US Department of Homeland Security awarded Accenture the lead role in a $10 billion contract. The House Appropriations Committee voted to block the contract on the grounds that Accenture’s Bermuda base is a means to dodge US taxes.

That followed moves in 2001 by 61 Congressmen to introduce the Patriotic Purchasing Act that would bar companies incorporated in tax havens from winning new government contracts. Congressman Waxman said at the time, “Corporate expatriates should not continue to benefit from government contracts. It is wrong to make U.S. taxpayers pay billions for contracts with companies that renounced their citizenship in order to evade taxes.” The Bill never got up.

I contacted a number of audit sources in the ATO who confirmed they are unhappy with the ATO decision to give Accenture such a huge contract. They of course cannot go on the record. However Bob “the bloodhound” Fitton, one of the ATO’s most successful and notorious auditors, said that Bermuda is good for three things: beach, girls and tax avoidance.

Fitton, who resigned two years ago, was famous for conducting raids on major legal and accounting firms chasing international tax avoidance in tax havens. Those raids led to major tax cases known as the Sharp case and the Allen, Allen & Hemsley case which clarified the ATO’s access powers.

Fitton said:

What does this say about the tax office procurement process? It is highly offensive to the auditors who are battling day in day out chasing the avoidance paper trail to tax havens and at the same time their leader gives away hundreds of millions of taxpayer dollars to be sent to Bermuda. Michael D’Ascenzo should have known better.

It seems bizarre that the Government only last month announced a Tax Information Exchange Agreement (TIEA) between Australia and Bermuda.

The Minister for Revenue and Assistant Treasurer, Peter Dutton said, “This is the first of our TIEAs to come into force, and represents a significant step in Australia’s efforts to prevent offshore tax evasion and avoidance.”