The Australian Taxation Office prepared for the possibility that Attorney-General George Brandis could prevent them from intervening in the long-running Bell Group court case.

It has been alleged that Brandis reached an agreement with the then-WA attorney-general Michael Mischin in late 2015 over the government’s involvement in the dispute over the wind-up of the Bell Group companies. According to the allegations, Brandis instructed then-solicitor-general Justin Gleeson not to pursue a particular legal argument for the case with the ATO, which is seeking to reclaim $300 million owed to the government by Bell Group.

The ATO ultimately intervened in the case, arguing that the wind-up legislation passed in Western Australia “has either forgotten the existence of the Tax Legislation, or decided to proceed blithely in disregard of its existence”. The High Court found the Bell Act legislation to be invalid.

Labor is pursuing Brandis over his involvement in the case, and in a Senate committee hearing on the matter on Monday night, the ATO revealed that Brandis did not issue a direction preventing the ATO from intervening in the case, in the weeks before the ATO sought leave to intervene in the Bell case. Despite this, the rumour mill was in full operation through the Australian Public Service, insinuating that the Attorney-General may have been contemplating issuing such a direction. 

“We had no knowledge of any proposed Attorney-General direction but we did hear … bureaucratic whispers that led to speculation on our part that maybe such a direction was being considered,” ATO Second Commissioner Andrew Mills told the committee. 

“We were concerned whether or not that would, whether or not were such a direction being considered, of which as I say we had no direct knowledge — it was merely rumours flying around. We should really be in a position to know how to respond in that situation and so we began to see whether it was possible to obtain advice.”

These “bureaucratic whispers” originated from Treasury and the Australian Government Solicitor’s office, officials confirmed in early March — just days before the ATO filed its leave to appeal in the Bell case. Not wanting to pre-empt the Attorney-General’s decision, but wanting to make sure the ATO was “armed” if that was the case, the ATO sought permission to get advice from the Solicitor-General on what they could do if Brandis issued a direction preventing the ATO’s intervention in the case. The request was passed onto the office of the Solicitor-General by the Attorney-General’s Department, but the ATO withdrew the request on the day it filed leave to appeal.

The day before leave was filed, Mills said he had a conversation with Brandis and Financial Services Minister Kelly O’Dwyer where Brandis, unprompted, voluntarily told Mills he had no plans to issue a direction.

“I can only assume from that … he may have heard that we sought permission from the Attorney-General’s Department and allayed concerns on that,” Mills said.

In a statement on Tuesday, Shadow Attorney-General Mark Dreyfus said the ATO’s decision to seek legal advice was serious.

“A government department that has been forced to seek independent legal advice on the potential actions of a rogue Attorney-General. It is deeply concerning that the ATO, upon hearing the so-called ‘bureaucratic whispers’ about a potential direction, took them seriously enough to go straight to the Attorney-General’s Department for advice without even seeking to confirm them first.”

Peter Fray

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