Additional Comments: To publish or not to
publish–there is no question
I thank the Committee and Secretariat for the work that has been put
into this inquiry. In general, I welcome the introduction of deferred
prosecution agreement (DPA) scheme.
However, I have some concerns over the discretion granted in the
provisions for the Commonwealth Director of Public Prosecutions (the Director)
not to publish details of a DPA.
I draw attention to controversies created by the Australian Tax Office
(ATO) engaging in secret tax liability deals with companies in preference to
engaging in litigation to recovery monies due. These secret deals have been
attacked in the media and elsewhere, but a good example of the concerns over
secret deals in preference to litigation is provided by the testimony of Mr
Lock, an ex-ATO official, to the Senate Economics Reference Committee Inquiry
into corporate tax evasion at a hearing in Melbourne on 10 April 2015:
Mr Lock: Under public service rules, when somebody comes into
the ATO they obviously have to sign certain documents as far as
confidentiality. There are also public service rules about breaching
confidentiality when one leaves. But there are problems where I see it—and I
did have an example. I was working on an audit of one of the big four banks in
Australia. The audit ended up going through the full litigation process. It
concerned part 4A assessments around $100 million. It ended up being negotiated
for about $30 million, from what I understand. My immediate SES at that time
was involved in those negotiations. Those negotiations were conducted with PwC,
who were the representatives for the taxpayer bank at the time. Shortly after
the negotiation settlement took place, that particular officer left the ATO and
took up a position with PwC.
Senator MILNE: That is pretty extraordinary evidence. You are
saying that it got to the point where $100 million was owed and a decision was
made not to prosecute but to negotiate.
Mr Lock : Yes.
Senator MILNE: Who makes a decision not to prosecute?
Mr Lock : It was not so much a prosecution; it was a matter
of not proceeding with the case to litigation, to have the issue tried. They
determined a settlement instead.
Senator MILNE: Nevertheless, it was determined that the bank
owed $100 million.
Mr Lock : That was our view.
Senator CANAVAN: And they were contesting that view?
Mr Lock : They were contesting our view.
Senator MILNE: Yes. So, rather than have it proceed to court,
it was negotiated by your senior with PricewaterhouseCoopers, and then the
person went to work with PricewaterhouseCoopers.
Mr Lock : Some months later, I recall; that is right.
Senator MILNE: How often does it happen that negotiations
occur rather than going to court? The tax commissioner himself talked about how
expensive it is to go to court and how long it takes, and I appreciate that in
this context as well, but nevertheless it is pretty amazing. How often does it
happen that people negotiate with the big four on behalf of their client and
then end up working for the big four?
Mr Lock : I can only give that particular instance. I do not
have that knowledge as to what happened with other officers.
Joseph Pulitzer once said:
There is not a crime, there is not a dodge, there is not a
trick, there is not a swindle, there is not a vice which does not live by
While I direct no accusation at the ATO in the secret tax liability
deals it has negotiated, the mere fact that the deals are secrets opens an
authority to criticism which can erode the public’s confidence in it. This is
ATO settlements are now subject to an independent assurance of
settlements program being established. The intent of this program is to provide
the community with assurance that settlements were undertaken fairly and
reasonably. It largely addresses the issue of public confidence.
Noting the importance of the office The Commonwealth Director of Public
Prosecutions (CDPP) and the Director, it is an office and position that needs
to be viewed with the utmost public confidence and, to the extent possible, not
be open to claims of impropriety nor to controversy that may flow from secrecy
attached to any DPA.
We need to avoid the possibility of a controversy within the CDPP
because of ‘secret’ DPAs. We do not want to be establishing an independent
assurance of DPAs program in the years to come.
Publication of Deferred Prosecution Agreements
The bill provides for a number of mandatory terms for all DPAs:
a statement of facts relating to each offence specified in the
last day for which the DPA will be in force;
the requirements to be fulfilled by the person under the DPA;
the amount of financial penalty to be paid by the person to the
the circumstances which constitute a material contravention of
the DPA; and
consents to the Director instituting a prosecution of the person
on indictment for an offence specified in the DPA without the person having
been examined or committed for trial in circumstances where the party to the
DPA provided inaccurate, misleading or incomplete information to a Commonwealth
entity in connection with the agreement; and the party knew, or ought to have
known that the information was inaccurate, misleading or incomplete.
The bill also provides for a broad discretion in which the Director may,
if they consider it to be in the interests of justice, publish a version of a
DPA that does not disclose the name of the person or any other material the
Director considers should not be disclosed.
However, the interests of justice must be properly balanced against the
public interest and the need for transparency. In all circumstances, a minimum
level of information should be published.
That the bill be amended to remove the discretion to not publish a DPA.
A minimum disclosure standard
A minimum disclosure should occur with that minimum being as follows:
detail the provisions of which an offence has been made against;
last day for which the DPA will be in force; and
the amount of financial penalty to be paid by the person to the
That the bill be amended to include a minimum disclosure standard for
In circumstances where a DPA has not been published in full because of a
concerns that it is not in the interests of justice to do so, full publication
of the DPA must occur once this concern is no longer present.
I support Recommendations 1, 2 and 3 of the Committee’s
recommendations. With regard to Recommendation 2, I make a further
recommendation that the Government adopt the recommendations contained in my
Dissenting Report to the inquiry into the Treasury Laws Amendment (Enhancing
Whistleblower Protections) Bill 2017.
Senator for South Australia
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