Pages

Wednesday, August 17, 2022

‘The future for me is about how we can dare to share data and information’

  IRS seeks armed accountants ready for ‘deadly force.’


King 🤴- Coalition MPs finally discover a political norm they don’t like being trashed via Little Italy 🇮🇹 


 Chief Constable Lucy D’Orsi: ‘The future for me is about how we can dare to share data and information’ - Policing TV





Russia Buys 1,000 Drones From Iran and Expands the Level of Strategic CooperationElijah J. Magnier. Moon of Alabama has a good discussion (EM). Shorter: It’s not because Russia is “running out”; it’s because Iran has good tech



In Wealthy City, a Marxist Mayor Wins Over Voters New York Times

Unexplained Wealth of Top Georgian Judge Highlights Obstacles Along Country’s Path to Europe

The influential judge, who failed to declare apartments and luxury purchases made by his long-term partner, is said to be the member of a ‘clan’ of judges who stand in the way of reforms demanded by the European Union.


Tax and Historical Archives: 

Petroulias, appearing under the alias Michael Nicholas Felson, pleaded not guilty to knowingly possessing seven counterfeit Australian $50 bank notes.

Court documents state he also pleaded not guilty to two counts of possessing bank cards with the intention of committing fraud, The Daily Telegraph reported.

Petroulias allegedly showed police a New Zealand driver’s licence in the name of Nicholas James Piers when he was pulled over.

Australia’s youngest ever tax chief ‘caught with counterfeit cash, bank cards and driver’s licences’



Nick Petroulias played 'central' role in three deals to sell $30m of Aboriginal land, ICAC told


Bakis denied that she was responsible for a series of statutory declarations that identified Daphne Diomedes as a driver when fines were issued to a car registered in her name. 

Ms Bakis and Petroulias were allegedly involved in the sale of up to $ 30 million of land belonging to the local Aboriginal Land Council in Awabakal. 



MR CHEN: Now, Ms Bakis, you and Mr Petroulias have two children, I think you’ve agreed?---Yes.

Other Ernst & Young employees who provided tax advice to Hogan include former partner John Hart, partner Paul Mclean, senior managers Seth Hertz and Despina Bakis, of Sydney, and Washington DC senior manager Paula Charpentier.



John Braithwaite  2005Competition
Allegedly , Nick Petroulias , during his period as head of Strategic Intelligence and Analysis of the ATO in the late 1990s , organised rulings for pro ters ...


28 Feb 2017 — ... for litigation funding provided to Nick Petroulias' criminal defence [49] ... of Taxation Nick Petroulias (now known as Michael Felson).


Former assistant tax commissioner Nick Petroulias was convicted in December 2007 of corrupt conduct and unauthorised publication of documents
7 Nov 2001 — The investigation of former Australian Taxation Office senior official Nick Petroulias for allegedly defrauding the Commonwealth cost more



By Lincoln Wright, the foreign affairs correspondent for the Canberra Times.

T he biggest tax scandal in Australia in decades has many Australians worried that their tax system has fallen prey to a peculiar type of "down under" crony capitalism. Their wake-up call came earlier this year with the arrest of Nick Petroulias, the Australian Taxation Office's former intelligence chief, on charges of fraud.

At the center of the Petroulias case is the way the ATO regulates the tax affairs of companies and individuals with its system of "private binding rulings." Private binding rulings, or PBRs, were established in 1992 as a new bureaucratic tool to give businesses more certainty in their tax decisions.


The original motive behind the PBR system was well intentioned. If a businessman was concerned about the tax implications of a new investment decision, he could approach the ATO and ask for an advance ruling, which, once granted, had the status of law.

But things have soured since then. Over the last three years, the PBR system has helped the promoters of aggressive tax minimization schemes to siphon off as much as $1.1 billion in tax revenue. The result is that various voices in Australia are calling for changes that make ATO tax rulings more transparent, removing the temptation for deals to be struck on the sly between favored businesses or individuals and the ATO. Others are calling into the question the ATO's authority to make private rulings at all.

Unlike public tax rulings, which are recorded on a database, private binding rulings represent a hidden realm of Australia's private tax law. They are offered to individuals or companies who apply for the tax ruling or who can afford to push for one.

In fact, businesses regularly "forum shop" at different ATO offices around Australia in search of the most favorable PBR. And with nearly 1,800 ATO officials authorized to issue them, it's not that hard to get a good ruling.

Not only has the Commonwealth lost billions in revenue as a result of PBRs, it is fairly apparent that senior ATO officials knew the PBR system was helping the "boutique" end of town at the expense of the average business.


The biggest argument in favor of reforming the PBR system is the scandal surrounding Mr. Petroulias, the former assistant commissioner of taxation, who was arrested earlier this year for allegedly defrauding the Commonwealth and for using the PBR system for his own financial gain.

Barely 30 years old, Mr. Petroulias was the head of the ATO's Strategic Intelligence Unit for seven months before quitting in April 1999 to pursue a private career in taxation law. He allegedly planned to set up an offshore merchant bank to peddle tax-deductible schemes he had ruled on in his former job.

Mr. Petroulias was no mere cog in the wheel of Australian tax revenue collection. Inspired by the methods of the Central Intelligence Agency and the Federal Bureau of Investigation, the self-confident, entrepreneurial tax lawyer eagerly established an informer's network among the nation's growing class of "aggressive" tax-minimization advisers.

Thus, sitting atop an extensive intelligence network, Mr. Petroulias became Australia's top tax spy, someone who, according to the authorities, broke the rules when it came to dealing with the enemy -- accountants offering mass-market tax-minimization schemes to executives -- and anyone else hoping to reduce their tax bill.

These were schemes that allowed individual contributors to claim tax deductions by contributing to employee benefit trusts or special superannuation schemes, such as the one offering tax-free gains located offshore in New Zealand. But their use exploded when aggressive tax planners used PBRs to market them around the nation. An estimated $1.1 billion was funneled through the New Zealand scheme before the ATO effectively ended the show for Australian contributors 

Mr. Petroulias's network of informers was based on a very old principle. He put the message out to Australia's tax planners: Come forward and inform on your competition and you will receive favorable treatment from the ATO; stay away and the ATO will punish you. His intention was to get "real time" intelligence by trading favorable PBRs for information. It was a way of reducing revenue loss through compromise and keeping up with new tax schemes instead of waiting for their effects to unfold.

With the PBR system backing him, Mr. Petroulias clearly enjoyed his work and what he has described as the "intoxicating" power he had over tax planners. "Someone from the profession commented that there was a conga line to Petroulias's door -- and that's exactly the point, that's what I wanted. It was a rush. It was a thrill," Mr. Petroulias said after his arrest.

But Mr. Petroulias's "street methods" were more suited to anti-terrorist or espionage cases; they angered many in the game of devising new ways to minimize tax, and they worried ATO officials watching the new spying game from afar.

Ultimately, Mr. Petroulias appears to have gone into business for himself while working for the ATO. Or at least that's what the Australian Federal Police originally believed to be the case when they launched a massive nationwide operation against him that culminated in March.

Although the original fraud charge has been dropped, Mr. Petroulias is still waiting trial on other charges, including allegedly using his position to benefit from his own minimization schemes at a cost of about $11 million in tax revenue.


But it is doubtful Mr. Petroulias is the real problem so much as it is the potential for favoritism within the PBR system. This is something that even Mr. Petroulias, who denies any wrongdoing, has recognized.

"If you start thinking about [PBRs] as a concept, then basically it's the power to a certain bunch of tax officials -- and we're talking about thousands of tax officials -- able to rewrite tax laws for specific people that ask for it," Mr. Petroulias said. "Now, what goes on behind closed doors we can never quite know. But do you understand the potential that's created by the system?"

Moreover, tax minimization schemes are just one of the problems with PBRs. A good PBR can also make or break a bottom line for a struggling business. What some businesses are naturally concerned about is just what advantages their competitors are getting from their secret deals with the ATO.

Apart from the issue of transparency, PBRs are supposed to be for individual cases but increasingly they are being used for mass-marketed schemes that apply to hundreds of people but which are of a dubious legal basis. That puts at risk the retirement savings of many investors who might get caught in retrospective rulings against the original PBR.

These problems were supposed to be addressed in an investigative report on the PBR system commissioned by Tax Commissioner Michael Carmody. But no one really knows what the so-called Sherman Report says because it too remains under lock and key, out of public view


In fact, the lack of transparency is the real problem at the ATO. Mr. Carmody should reveal the contents of the Sherman Report as soon as possible or risk facing the allegation that the ATO is indulging in crony capitalism, Canberra-style.

-- From The Asian Wall Street Journal