The Australian Tax Office sought advice about what it should do if George Brandis compromised its ability to challenge Western Australia’s laws dealing with the Bell litigation case because of “bureaucratic whispers” he might block a high court challenge.

Two ATO witnesses told the Senate legal and constitutional affairs committee on Monday night that they sought legal advice due to rumours from multiple public sector sources that a direction preventing them from intervening in the high court was under consideration.

But the ATO witnesses noted the rumours were not substantiated and such a direction was never issued.

Andrew Mills, the ATO’s second commissioner, said in the days before 4 March 2016 he heard whispers “to the effect that the attorney general might consider issuing a direction in terms of what agencies could or couldn’t do in terms of proceeding with particular kinds of actions before the high court”.

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At the time the ATO was planning to intervene in a constitutional challenge to WA’s laws that gave it priority over the Bell Group’s other creditors for its $1.8bn of assets, a move that could have cost the tax office $300m.

Assistant ATO commissioner Robert Puckeridge said he was informed a direction that could prevent the ATO intervening in the case was being contemplated by the attorney general, his Department or office.

The rumours came from multiple public sector sources including in treasury; Puckeridge did not deny others were within the Australian government solicitor’s section.

Mills said the bureaucratic whispers caused concern the ATO would be prevented from running arguments that would defeat WA’s Bell laws, adding “if that were to come to pass, obviously that would put us in a rather invidious position”.

On 4 March, the ATO asked the attorney general’s department for permission to seek advice about what it should do if it was directed not to intervene before a court deadline to intervene on 8 March.

Mills said on 7 March the ATO told Brandis and the assistant treasurer, Kelly O’Dwyer, it planned to intervene in the case.



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The ATO withdrew the request to seek legal advice on 8 March when it gave notice to the high court it was intervening in the case, and no direction from the attorney general blocking its intervention had materialised.

On Tuesday the shadow attorney general, Mark Dreyfus, said in a statement the ATO evidence showed officials were “so worried that they sought legal advice about how to handle the possibility” Brandis would stop them intervening in the high court.

“Government departments should not have to fear that they will be stopped from doing what they believe is in the interests of the commonwealth and the taxpayer by a destructive minister.

“But this is what we have come to,” he said, vowing Labor would continue to pursue Brandis over the matter.

On Monday the Senate ordered Brandis to produce documents relating to the Bell matter, although the attorney general may not necessarily comply. Guardian Australia has contacted Brandis to ask if he will produce the documents.

Brandis has told the Senate the first personal involvement in the Bell case that he could recall was on 3 March 2016, although since then former WA attorney general Michael Mischin has said he spoke to Brandis about it on 1 February.

Brandis has denied misleading the Senate on the timing of his first involvement, because he had no recollection of the discussion with Mischin.

The timing of Brandis’s involvement may be relevant to when he became aware if there was a deal between the federal and Western Australian governments in 2015 that would have cost the ATO $300m.

Brandis has faced pressure on that point since a report in the West Australian in November alleged the attorney general instructed the then solicitor general, Justin Gleeson, not to run a particular argument in the high court when a creditor of the collapsed Bell Group challenged the WA law.