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Media Release BHP’s Tax Evasion and its agreement with the Australian Tax Office

November 20, 2018

THE HON WAYNE SWAN MP

MEMBER FOR LILLEY

 

BHP’s Tax Evasion and its agreement with the Australian Tax Office

 

BHP’s status as one of Australia’s largest tax evaders is laid bare by the settlement with the Tax Office of disputes which go back to 2003.

This settlement confirms what BHP has repeatedly denied – Its Singapore marketing hub was used for tax evasion using transfer pricing.

I first raised these matters in the parliament in September 2015. BHP’s duplicity and hypocrisy was laid bare in a Senate tax inquiry in 2015. And since then at every turn BHP have continued to deny the true purpose of its dual structure and its use of its Singapore marketing hub.

The findings of the senate inquiry gave BHP the chance to come clean and reform their practices and re-joining the majority of Australian businesses that pay their fair share of tax.

From that time they chose to deny, obscure and mislead the public over their deliberate tax evasion.

The settlement with the tax office confirms more than $1 billion in tax and royalty revenue has been funnelled out of Australia over the past decade contrary to BHP public statements.

Stunningly in 2017 BHP’s annual report confirmed their CEO was awarded a million dollar bonus for enhancing BHP’s tax and transparency reputation.

BHP cannot claim to be transparent given their failure to outline numerous back payments to the tax office as a result of tax audits over a decade long period.

When global companies like BHP act this way they compromise the social contract and give a green light to others to go about minimising or evading tax.

When the former Chairman Jac Nasser retired and a new chairman Ken McKenzie was appointed BHP had the opportunity to restore its reputation as “The Big Australian” and shut down its Singapore marketing hub. It did not take this opportunity and launched another misleading adverting campaign. As I said at the time BHP was at risk at becoming known as the “Dishonest Australian”.

Sadly its announcement of the settlement with the tax office continues down that path.

The BHP board now has an opportunity to be honest and forthright with the Australian people and not hide behind a legal settlement. The board should provide a full and frank explanation behind its role in aggressive transfer pricing and the ethical framework it will use in the future to re-establish trust with the authorities and the Australian Public. It should now come clean about the total amount of royalties it owes State Governments as a result of deliberately understating their sales to related parties.  

Anything less than a full and frank statement about these matters leaves a cloud over the Board’s commitment to transparency.

 The settlement with the Tax Office was made possible by laws I passed as Australian Treasurer in 2013 which were opposed by the Liberal National Party on the grounds they were retrospective. Congratulations to the ATO staff who pursued this matter doggedly, our pensioners, patients and students who will benefit from your hard work salute you.

These laws were used in the 2017 Chevron judgment handed down by the federal court which added $430 million to the budget bottom line.

In the wash-up of this scandalous attempt to undermine the tax base, what has become evident is that some leaders of corporate conglomerates like BHP believe they are above the law. They believe this because they shield themselves behind an army of highly paid lawyers and accountants. In this case it has taken more than a decade to reach a point of some resolution. Appropriate corporate governance would have resulted in this matter being resolved much sooner, or even better not occurring in the first place.

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