Firm fails to stop Australia’s use of Paradise Papers

Cayman Compass is the Cayman Islands' most trusted news website. We provide you with the latest breaking news from the Cayman Islands, as well as other parts of the Caribbean.
Cayman Compass is the Cayman Islands' most trusted news website. We provide you with the latest breaking news from the Cayman Islands, as well as other parts of the Caribbean.

Mining firm Glencore has lost a court case trying to prevent the Australian Taxation Office from using leaked documents detailing the offshore arrangements of Australia’s largest coal producer.

Companies within the global Glencore plc group sought an injunction restraining the tax authority from making use of documents that were stolen from their Bermuda law firm Appleby on the basis that those documents are subject to legal professional privilege.

The files known as the ‘Paradise Papers’ were provided to the International Consortium of Investigative Journalists and widely reported on in the international press.

After becoming aware that the Australian Tax Office was in possession of the files, the plaintiffs requested the return of the documents and an undertaking that they would not be referred to or relied upon.

The Australian High Court dismissed the proceedings, concluding that legal professional privilege is not a legal right which may found a cause of action. Instead, legal privilege is only an immunity from the exercise of powers that would otherwise compel the disclosure of privileged communications, the court held.

As a result, the tax authority will be able to use information obtained from data leaks, even if they are leaked from a law firm.

“The critical importance of the case was confirming that the ATO can use leaked copies of documents like contracts, board minutes and banking details,” ATO second commissioner Jeremy Hirschhorn said in a press release. “An offshore law firm is not a cloak of invisibility to hide offshore arrangements.”

Given that the information was already in the public domain, he said, “Once we have information, we can’t just ignore it – we are obliged to use all relevant information we have.”

“It would be a perverse outcome if the ATO and the courts were not allowed to take into account information that the public at large can access, or had to forget information that is known,” Hirschhorn added.

The ATO said it regularly receives new intelligence and data sources from Australia and across the globe.

The tax authority also stated that it fully supports the appropriate use of privilege and understands the importance of entities being able to seek advice on issues of law, including full access to independent tax advice.

“We are working with key partners in the tax system to ensure that taxpayers can confidently continue to obtain high quality independent legal advice on their tax affairs, but also that the ATO can appropriately review transactions without having critical evidence withheld,” the deputy commissioner said.

“The broader ramifications of this decision beyond Glencore are that the days of being able to hide money overseas are rapidly coming to an end – not only are foreign banks providing the ATO with details of Australians with offshore money, but taxpayers are only one data leak away from their entire affairs being exposed,” Hirschhorn added.

If you value our service, if you have turned to us in the past few days or weeks for verified, factual updates, if you have watched our live streaming of press conferences or sent an article to a friend... please consider a donation. Quality local journalism was at risk before the coronavirus crisis. It is now deeply threatened. Even a small amount can go a long way to sustaining our mission of informing the public. We need our readers’ financial support now more than ever.