A review has called for tougher fraud controls at the ATO in the wake of $144 million Plutus tax fraud, including regular rotation of staff and tougher background checks for job applicants.
At the centre of Australia’s largest tax fraud case, the Australian Federal Police closed down Plutus Payroll and nine other companies in May 2017, charging 10 people including then deputy ATO commissioner Michael Cranston after the eight-month Operation Elbrus investigation.
The charges, including conspiracy to defraud the Commonwealth, blackmail and abuse of power, related to a scheme where Plutus signed contracts with government departments and other employers to process up to $1 billion of gross wages and entitlements for their contractors.
Operation Elbrus used wire taps and seized bank accounts, luxury property and prestige vehicles and saw Mr Cranston, though unaware of the conspiracy, charged with inappropriately accessing ATO files to help his son Adam.
A report by outgoing Inspector-General of Taxation Ali Noroozi found a range of ATO fraud controls needed strengthening after the landmark case, including measures to better capture conflicts of interest among senior appointments and for criminal intelligence databases to be used to find candidates who are known to law enforcement or linked to people who are.
The report recommended all employees be required to make an annual disclosure about matters that are assessed in their pre-employment checks and for disclosures to be probed at a frequency reflective of the risk associated with their job.
Set to leave the role next month, Mr Noroozi recommended the ATO improve policies for intervention by senior officers, including by specifying the circumstances in which officers are authorised to intervene in individual matters and where senior officers receive requests to intervene in matters outside their area of responsibility, requiring them to be transferred to their counterpart in the relevant area.
Senior officers should be required to document their actions in cases of intervention and face regular review.
Roles with medium-to-high risk of fraud should see periodic rotation of staff, with strengthened induction for new senior public servants recruited from outside the ATO in order to “focus on the ethical standards and highest levels of integrity that an organisation such as the ATO must exemplify,” the report said.
Mr Noroozi said the ATO’s audit and risk committee should be made more independent through the majority of its members and chair being external to and independent of the ATO, and for all ATO staff to make contemporaneous notes of any requests to access taxpayer information made by one officer to another.
“One of my recommendations is aimed at the systematic capture of conflicts, including those that are not declared, appropriate action being taken in respect of identified conflicts and ensuring that former colleagues of current ATO officers do not obtain information or exert influence by reason of their previous association,” Mr Noroozi said.
“I have recommended that the government review current inter-agency collaboration including optimising models for sharing specialist capabilities and information as well as the management, structure and funding of inter-agency taskforces.”
‘No systemic problem’
Chief operating officer Jacqui Curtis said the report showed there was no evidence of internal fraud or corruption of a systemic nature within the ATO.
“While the report gives us confidence that we were already on the right track, we must always be looking for opportunities to refine and improve our processes.
“It is vital that the community has confidence in our administration of Australia’s tax and super systems,” she said.
The ATO has appointed Simon Longstaff as an independent integrity adviser to provide education, support and advice.