Mining company says documents subject to legal professional privilege and tax office has no right to use them

This article is more than 1 year old

This article is more than 1 year old

The world’s biggest mining company has sought an injunction against Australia’s tax commissioner to force him to return documents it claims were obtained illegally in last year’s Paradise Papers leak.

The Swiss-based multinational Glencore lodged a writ with the high court last week against the ATO commissioner, Chris Jordan, and two of Jordan’s colleagues.

It is trying to prevent the ATO from using documents contained in last year’s huge “Paradise Papers” leak to pursue any tax matters against the miner.

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It asserts the documents in question – which were leaked from the Bermuda law firm Appleby – are subject to legal professional privilege so the ATO has no right to rely on them. It has asked the ATO to return the documents multiple times but the ATO has not cooperated.

It hopes the court action will set a legal precedent on the right of the ATO to rely on documents that have been obtained without a company’s consent and which are subject to legal professional privilege.

“Glencore has commenced proceedings in the high court of Australia against the commissioner of taxation seeking an injunction for the return of certain illegally obtained documents now in the possession of the ATO which Glencore considers are subject to legal professional privilege,” a Glencore spokesman told Guardian Australia. “Glencore is also seeking an injunction against the commissioner of taxation from using these documents.

“The decision to commence proceedings follows multiple occasions on which Glencore has written to the ATO asserting privilege over and seeking the return of the documents.

“Legal professional privilege is a fundamental right that protects legal advice provided between lawyer and client. We, like anybody else, have the right to seek legal advice from our lawyers and for that advice to remain between lawyer and client.”

Glencore’s court action was first reported by Fairfax Media.

The “Paradise Papers” was a leak of 13.4m files from two offshore service providers, and the company registries of 19 tax havens. They were obtained by the German newspaper Süddeutsche Zeitung and shared by the International Consortium of Investigative Journalists with partners including the Guardian, the BBC and the New York Times.

The files, released last year, revealed the offshore financial affairs of some of the world’s biggest multinational companies and richest individuals, and set out the myriad ways in which tax can be avoided using artificial structures.

They revealed how Glencore secretly loaned tens of millions of dollars to an Israeli billionaire after it enlisted him to secure a controversial mining agreement in the Democratic Republic of the Congo.

They also revealed how Glencore’s Australian subsidiary had been involved in huge cross-currency interest rate swaps – complex financial instruments previously targeted for investigation by the ATO under suspicion they had been used to avoid paying Australian tax.

On Thursday last week, Glencore lodged a writ of summons with the high court’s Sydney registry.

The ATO believes it is not only able but compelled to use information it obtains such as the Paradise Papers and Panama Papers. Australian tax office

Its statement of claim says that, since at least 1995, parts of the global Glencore group have engaged the Bermuda law firm Appleby to provide legal advice to them, through Glencore’s legal advisers, including King & Wood Mallesons.

It says that, around October 2014, King & Wood Mallesons asked Appleby to provide legal advice on a corporate restructure of the Australian entities within the Glencore group following the merger between Glencore and Xstrata. The restructure was termed “Project Everest”.

It says documents in relation to Appleby’s clients and matters, including the Project Everest matter, were stored on Appleby’s electronic document management systems.

In 2016, Appleby became aware of a “data security incident” whereby those systems were illegally accessed and documents stolen. The stolen documents have come to be referred to colloquially as the “Paradise Papers” and they include documents relating to Project Everest.

Glencore says it always expected the Project Everest documents would be kept confidential by Appleby and King & Wood Mallesons, and the ATO has no right to rely on them.

It has lodged a writ against Jordan, the deputy commissioner, Mark Konza, and the second commissioner, Neil Olesen.

“The ATO is aware Glencore has commenced proceedings in the high court of Australia against the commissioner of taxation to try to stop the ATO using Glencore related documents within the ‘Paradise Papers’,” an ATO spokesman said.

“The ATO believes it is not only able but compelled to use information it obtains such as the Paradise Papers and Panama Papers, as would naturally be the expectation of ordinary Australians. The ATO will respond accordingly to any proceedings.

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“As we do not comment on matters currently before the courts, we have no further comment to make at this stage.

“Earlier this year we put on record that it had become clear that our understanding of what advice is subject to legal professional privilege significantly differs from the position taken by some taxpayers and their advisers, and that we expected these different views would be tested shortly. Further information is included in our submission to the corporate tax avoidance inquiry (see ‘intermediary strategy’ page 10).”

Glencore’s writ has four plaintiffs: Glencore International AG (an intermediate holding company resident in Switzerland), Glencore Investment Pty Ltd (a company incorporated in Australia), Glencore Australia Holdings Pty Ltd (a company incorporated in Australia) and Glencore Investment Holdings Australia Ltd (a company incorporated in Bermuda).