Neil Chenoweth - Claims of secret payments, gifts, bullying: Former KPMG partner named
Former KPMG boss turned ATO chief Chris Jordan used tax haven, whistleblower alleges
Unsubstantiated whistleblower documents allege former ATO commissioner Chris Jordan received secret offshore payments during his time at KPMG.
Historic allegations about wrongdoing at KPMG can be traced back to the era when Chris Jordan was one of its senior partners before going on to become the Australian Tax commissioner, according to a document released by parliament on Thursday.
The heavily redacted document alleges “secret commissions” of $2.4m were paid to two people. This publication has seen the unredacted document and can reveal Mr Jordan and fellow former KPMG partner Wayne Jones as the individuals it refers to.
A second 2021 document yet to be substantiated provides greater detail of allegations Mr Jordan received million-dollar payments off the books during his time at KPMG in the late 1990s and hiding the money in a secret bank account in the Isle of Man to avoid paying tax in Australia.
Mr Jordan did not respond to requests for comment and the ATO would not comment. Mr Jordan has previously denied the allegations.
While the public document redacted Mr Jordan and Mr Jones’ names, it revealed two other former partners Philip Henry and John O’Donnell were alleged to be “selling tax losses for which Philip Henry knew to be non-existent or materially deficient”.
The Australian does not allege the claims are true, just that they have been made. If true, they destroy any argument that KPMG has floated about its successive scandals being the actions of a few rogue partners.
KPMG is teetering under the weight of significant governance failures. These include misusing confidential client information to secure work, maintaining cozy ties with former partners on corporate boards, and audit partners compromising independence by accepting perks such as Taylor Swift concert tickets from clients.
Mr Jordan’s name has come up over these 1990s claims because of the republication last week by The Australian Financial Review of whistleblower allegations about Mr Jordan’s involvement in the same alleged tax avoidance.
The newspaper claimed KPMG had paid the whistleblower $500,000 to stay quiet.
The Financial Review reported that Mr Jones and Mr Jordan, who had been friends as well as colleagues, were involved in arrangements surrounding Dinnans Ltd, an Isle of Man shell company used to execute their offshore money transfers.
KPMG has now begun the brutal task of firing staff and reducing partner pay as it seeks to manage a dramatic slump in revenue from the public airing of its unethical behaviour.
On Thursday, many partners were delivered news about “moving down” the bands that dictate their portion of the firm’s profit share – a pay cut – as part of desperate cost saving measures, The Australian can reveal.
New chief executive John Sams started “conversations” just a day earlier with 50 partners that will be exited. Next week, 450 client-facing staff will also lose their jobs.
In a cruel twist, it’s believed that none of those expected to lose their jobs will be from the audit or tax teams, where the whistleblower scandals have stemmed from, because it needs all hands on deck to complete existing contracts.
Former CEO Andrew Yates, former chairman Martin Sheppard, and former chief operating officer Eileen Hoggett have all left the firm as a result of the current audit scandal, along with the former head of audit Julian McPherson and audit partners Paul Rogers and Kim Lawry.
KPMG said it has been difficult to investigate the claims about Mr Jordan because they allegedly occurred so long ago.
Now the task may fall to Mr Sams, or the ATO and the Tax Practitioners Board that it controls. Complicating matters is the fact that both authorities are heavy with former KPMG partners themselves.
Those include Jeremy Hirschhorn, who is the ATO’s second commissioner, leading its Compliance and Engagement Group. Peter de Cure is the chair of the Tax Practitioners Board and Simone Carton is a board member.
Mr Jordan was the commissioner and Dana Fleming served for many years as assistant commissioner.
Mr Jordan was the first person to ever be appointed directly from the private sector to head the ATO and is understood to have had deep personal and professional connections. He was appointed by the Gillard Labor government in 2013 and reappointed by the Turnbull Coalition government in 2017.
In the unsubstantiated 2021 document, the author provides greater detail of the alleged “secret commissions” worth $1.2m referred to in the other, now public, document released by parliament.
“In 1998, Jordan and Jones brokered a deal with TSB Lloyds and Rothschild Australia and negotiated a structuring fee of $1.2m each which they decided to treat as personal income rather than properly returning it to KPMG,” said the author in the 2021 document.
“The payments to Jordan were made by Dinnans, an Irish subsidiary of an Isle of Man entity. Jordan did not return the fee as assessable income for income tax purposes. It is inconceivable that a person such as Jordan could have been appointed to the position of Federal Commissioner of Taxation,” they continued to allege.
That 2021 letter also alleges Mr Jordan and Mr Jones participated in tax schemes that trafficked tax losses of mining companies. The schemes included “Copper Doctor” and “Gold Doctor.”