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Aug 14, 2008

Lowy tax bloodhound shunned by audit committee

The chair of federal parliament’s powerful Public Accounts and Audit Committee Sharon Grierson has been left red-faced after telling Parliament in June that there was no compelling evidence for changing tax office settlement guidelines, writes Chris Seage.


The chair of federal parliament’s powerful Public Accounts and Audit Committee Sharon Grierson has been left red-faced after telling Parliament in June that there was no compelling evidence for changing tax office settlement guidelines.

A Crikey investigation has revealed that Grierson refused to meet or talk with former senior ATO audit manager Bob Fitton who wanted to alert Grierson to the rorts happening with dodgy tax settlements.

Fitton, also known in tax office circles as “the bloodhound”, is regarded as one of the finest investigators in the revenue authority’s history. He was known for chasing the aussie dollar to exotic tax havens. In this regard, he was involved in two of the best known tax law cases that set new precedents for tax office access powers after raiding major legal and accounting firms to gather evidence.

Last month The AFR revealed it was Fitton’s investigative work that was the catalyst to the investigation into Australia’s second richest man Frank Lowy. With that background it’s hard to fathom why Grierson gave Fitton the big flick.

Crikey has a copy of an email exchange between Grierson and Fitton back in 2006 where Grierson says she will contact him at a later date. She never did. Fitton told Crikey:

She never got back to me as she promised. I tried twice to phone her after that, as recently as this year, but she wouldn’t take my calls and never returned them. I’m terribly disappointed because I think I could have helped her and in turn the country.

Fitton, a member of the ALP and a tax office union official for many years, has since resigned his membership due to his disillusionment over the affair.

Fitton warns Grierson in his email, “I do not believe that you will receive honest and open advice from senior tax officers about this subject; they shall either hide behind the secrecy provisions of the Tax Act or try to push the responsibility off to another government department like they did in the recent matter concerning the member of the reserve bank board.”

In a blunt message that will make salary, wage and small business taxpayers cringe, Fitton’s email also says, “I believe that this issue is so important that it could ultimately undermine any faith the average taxpayer may have in the fairness of our taxation system.”

Ms Grierson refused to comment to Crikey on why she wouldn’t meet or talk with Fitton, “I won’t be commenting on personal correspondence”, she said. However, she said:

The Committee has recommended greater transparency in relation to tax settlements. We recommended that the ATO publicly explain the reasoning behind its settlement offers for large scale disputes, and also that the ATO publish additional statistics in relation to settlements in its annual report.

In my view the JCPAA recommendations don’t go far enough. The nongs at the tax office keep telling the pollies they have checks and balances in place to ensure a proper process of settling major cases. But where were the checks and balances in the Lowy and Gerard matters?


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2 thoughts on “Lowy tax bloodhound shunned by audit committee

  1. Anthony Dale

    A good piece and just the sort of thing Crikey does best. To be effective follow-up is necessary with more and more questions being put to the lazy or incompetent politicians.

  2. heloise abelard

    Nothing is surprising about tax. In 1998 while one arm of the government, the ATO, was attacking Budplan investors, we now know another arm (AWB) was placing large sums of money in a Caribbean tax haven bank to pay off Indian officials dealing with wheat imports.


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