The Australian Federal Police said in a statement that it arrested and charged nine people yesterday who were allegedly involved in a syndicate responsible for a $165 million tax fraud against the Australian government.
Six people, including Adam Cranston, who is the son of ATO deputy commissioner Michael Cranston, were charged with conspiracy to defraud the Commonwealth, according to the AFP. Two people were charged with money laundering offences and one person was charged in relation to an alleged extortion of the syndicate.
The arrests follow an eight-month joint investigation between the AFP and the ATO, which culminated in 28 search warrants that were executed yesterday, with a further six expected to take place today, the AFP said.
Seven of the nine arrested are due to face court today, with the other two granted bail to appear in June.
It will be alleged in court that the fraud involved a company established by the syndicate to provide payroll services to legitimate clients, according to the AFP.
The money received from these companies was transferred to subcontracted companies – allegedly controlled by syndicate members – to process payroll.
While processing these payments, funds paid by legitimate clients to service tax obligations were allegedly diverted by the syndicate for their own personal gain, according to the AFP.
Tax Office investigators estimate the amount of tax obligations not paid to the ATO to be approximately $165 million.
In a press conference today, AFP Deputy Commissioner Leanne Close confirmed that three ATO officials are being investigated in relation to the case.
“A senior official from the Australian Taxation Office has been issued with a court attendance notice where we’re alleging that he has abused his position as a public officer and senior official of the Commonwealth,” Ms Close said.
“There are other people that have been suspended in the ATO. We’re alleging that they accessed information on the ATO systems ... at the request of the senior officer from the ATO.”
When asked if the senior official was related to Adam Cranston, Ms Close said, “Yes we can confirm that the ATO officer is related.”
When asked if the senior official is the father of Adam Cranston, Ms Close said, “He is.”
Ms Close said that they don’t believe Michael Cranston was aware of the syndicate his son was involved in.
“We are alleging that he accessed information from the ATO systems. We don’t believe he’s part of the criminal conspiracy to defraud the commonwealth,” Ms Close said.
“It appears that his son has asked him to access some information potentially. We don’t believe at this point that he had any knowledge of the conspiracy and the defrauding.”
Superintendent Kirsty Schofield, who is the person in charge of the investigation, confirmed that Michael Cranston will appear on 13 June at the Downing Centre Local Court.
“Michael was in shock when we spoke to him yesterday, as you can imagine, knowing what’s happened to his son,” Superintendent Schofield said.
ATO acting commissioner Andrew Mills also released a statement confirming that a senior ATO officer has been served a warrant in relation to the case.
“The warrants have been executed on a number of people alleged to hold information relevant to this investigation. One of the warrants was served on one of the ATO’s long-serving senior executive officers. That officer has been served with a court attendance notice,” Mr Mills said.
“The investigation has so far not revealed any evidence of actual intervention or influence on audit cases, or of money being refunded, or of tax liability being changed. The information I have to date shows no compromise of the operations of our administration.
“Our systems, controls and procedures worked effectively and we have been able to successfully isolate and protect the investigation, working well with the AFP over many months to build a picture of what has been happening.”