The Government is expected to announce a crackdown on the Australian mining giant, Hancock Prospecting, as it tries to end the tax avoidance that has cost the Australian economy billions of dollars.
News24.com.au has obtained an exclusive first-hand account of how the Australian Securities and Investments Commission (ASIC) and the Australian Financial Review have both investigated the mining giant.
In August, ASIC’s Office of the Inspector General (OIG) was appointed to investigate the company’s tax affairs.
The OIG found that the company had failed to declare a significant proportion of its Australian profits and that it failed to provide relevant tax information to ASIC, the Australian Taxation Office (ATO) and Parliament.
ASIC’s Commissioner David Chisholm has said he expects the investigation will uncover a number of “serious breaches” of Australian tax laws.
ASIC and the ATO have also investigated how the company has used shell companies to disguise the real owners of the company and its directors, including two of its most senior executives.
The ASIC has also issued two public notices of concern to Hancock Prospective over its tax affairs and has warned of a “firm and serious” risk of tax avoidance in the company.
ASIC has also sent ASIC investigators to investigate whether the company could be breaching securities laws by concealing the identities of directors.
In a letter sent to the Australian National Audit Office (ANAO), ASIC Commissioner David Caulfield said the “unprecedented level of scrutiny” into the Australian subsidiary’s tax arrangements was “incredible”.
“I am extremely concerned about the scope of this investigation and the extent to which this investigation may breach the laws relating to securities and tax law,” he said.
“I expect the OIG to undertake a thorough and comprehensive investigation into the circumstances surrounding this transaction, including whether the transaction was appropriate and if the transaction could be justified under relevant legislation.”
The OAG has also requested documents relating to the ASIC investigation.
Advertisement The ASIC investigation has been conducted by an independent auditor, which will be given access to the ASIC investigation documents and audited by ASIC.
ASIC is currently investigating how the companies financial statements were made and who was responsible for the company accounting for the profits.
Hancock Prospectives Australian arm has been fined for not paying taxes on more than $7 million in profits The Australian Securities Exchange (ASX) has issued two “warnings” to the company this week over its “serious and widespread” tax evasion.
“You may have failed to pay GST and other relevant tax in the past, or have not paid your share of any income tax payable to the relevant authorities,” the ASIC notice states.
“This may include: “The use of a shell company or company formation to avoid reporting requirements and/or to conceal the ownership of shares or other assets; The failure to declare the beneficial ownership of a company; The use of false and misleading representations or undertakings; The concealment of a corporation’s income, profits or losses; The avoidance of a requirement for a company to be registered with the relevant authority; The withholding of tax from income or profits; or the non-payment of tax by a company.
“In the second notice, ASIC has said that “significant amounts” of the Australian company’s profits had been paid out in “illegal dividends”.
The notice also says that “there is evidence that the Company is operating in a manner that would give rise to significant breaches of the tax laws”.
The notices come after the company was fined $7.2 million by the ASX last year.
In February, the company issued a statement saying it would “fully cooperate” with the ASO and ASIC in the investigation.
Hancock has denied it is using shell companies or hiding the true owners of its shares.
In the ASIC and ATO’s latest notices, the ASIO alleges that the Australian-based company has “systematically failed to comply with its obligations under the Australian Corporations Act”.
The Australian government has been “further advised that the ASI and ATL will not be able to obtain relevant information from the Australian companies under their existing powers of discovery.” “
The Australian government does not have authority to tax the Australian shareholders of the Canadian and Australian subsidiaries, as the companies are not wholly owned by the respective governments,” the notices states.
The Australian government has been “further advised that the ASI and ATL will not be able to obtain relevant information from the Australian companies under their existing powers of discovery.”
A statement from Hancock Prospectively on Tuesday said it “respects the authority of the ASIs tax enforcement authorities to pursue all possible remedies to the investigation”.
The company has also called for the removal of “unnecessary regulatory uncertainty” and said it would take all necessary steps to “resume the business as usual and not breach its obligations in relation to its Australian subsidiary”.
The ASIC and Australian government have previously said that the companies profits were not being used to fund tax avoidance schemes and have asked the Australian authorities to investigate further.