14 October 2015
Transcript - #2015053, 2015

In the role of: Minister for Small Business and Assistant Treasurer [21 September 2015 - 18 July 2016]

Serious Financial Crime Taskforce launch, Parliament House, Canberra

Joint Press Conference with
The Hon Michael Keenan MP
Minister for Justice
Minister Assisting the Prime Minister on Counter Terrorism

SUBJECTS: Launch of Serious Financial Crimes Taskforce, Parramatta shooting, control orders, Industry Super Funds model

MINISTER O’DWYER

Thank you, everyone for joining us here today. I am here today with the honourable Michael Keenan, the Minister for Justice, to launch the Serious Financial Crime Taskforce. We are joined by each representative agency and there are eight. In particular I would like to introduce Michael Cranston the Deputy Commissioner of Private Groups and High Wealth Individuals from the Australian Taxation Office and Leanne Close, the Deputy Commissioner of Operations from the Australian Federal Police. We are also joined by the Australian Crime Commission, Australian Border Force, Australian Securities and Investment Commission, the Australian Transaction Reports and Analysis Centre (AUSTRAC), the Commonwealth Department of Public Prosecutions, and the Attorneys-General’s Department as well.

The Serious Financial Crime Taskforce represents the most recent addition to the Government's suite of measures designed to disrupt and to deter serious financial crimes. It's to ensure that taxpayers pay their fair share of tax in Australia.

Serious financial crime is complex, and it often manipulates the systems both here and overseas, across jurisdiction and across legal frameworks. No one agency can tackle this issue alone.

The Government is absolutely committed to ensuring that tax avoidance, whether international or domestic does not corrupt our tax system in Australia.

In line with this, we have strengthened tax loopholes and we have introduced legislation to ensure that we have the strongest possible laws in relation to tax avoidance for multinationals and large corporations who choose to avoid to pay tax in Australia. Through this taskforce we are giving the agencies the necessary powers to investigate and to prosecute financial crimes.

Opportunities for financial crimes have increased. The market has diversified. We are seeing with technology and globalisation that there are different ways to conduct financial transactions and to conduct business. So we need to demonstrate an agility. We need to keep up with these changes which is why the Government has provided to the Australian Taxation Office more than $127 million over four years for the taskforce.

It will remove the wealth derived from criminal activity and prosecute those facilitators and promoters of serious financial crime.

We have already seen great successes with previous taskforces like project Wickenby. As of 30 June 2015 there have been 46 individuals convicted and sentenced for serious offences, more than $2.29 billion in liabilities raised as at 30 June 2015, with almost a billion dollars recovered in outstanding revenue.

So this new taskforce continues on that great action and there has already been action to date from the first of July. There are eight new active investigations that are on foot. These are matters where we suspect crimes may have been committed involving abuse of use of trusts, fraudulent phoenixing and international tax evasion from across around 10 international jurisdictions.

The Australian Taxation Office has already conducted and instigated over 580 audits and they have raised $85 million dollars in liabilities since the first of July this year.

Now there are very serious penalties for those who choose to try and evade paying tax and who conduct themselves in a way which means they are conducting serious financial offences. They can face up to 25 years imprisonment, if they are involved in money laundering offences and if they’re involved in fraud offence, imprisonment of up to 10 years in jail.

There are also very serious penalties that apply as well and the full force of the law will be brought to bear for those people who people who commit serious financial crime. I would like to hand over now to my colleague Minister Keenan.

MINISTER KEENAN

Thank you Kelly. It is good to be joined by you, Leanne Close from the Australian Federal Police and Michael Cranston from the Australian Taxation Office. We know that organised criminal gangs represent a continuing threat to the community of Australia. Serious and organised criminals will always look for vulnerabilities in our system to exploit, and the serious and financial crime space as the Assistant Treasurer has said is inherently complex. The harm caused by serious and financial crime does have a significant impact on the Australian community and it can undermine Australia’s economic security.

We are committed to detecting and disrupting serious financial crime, and we are focused on increasing and strengthening the cooperation between our agencies to respond to this threat.

Experience has shown us that the most effective way to deal with these sorts of crime types is to join our law enforcement and our regulatory agencies to undermine the business model of the serious criminals that peddle it. The Taskforce has been established to disrupt serious and organised and Commonwealth financial crimes, including offshore tax evasion and criminality relating to phoenix activity and trusts and there are currently eight active investigations being undertaken by the Taskforce.

It is important to remember, as the Assistant Treasurer has said, that these crime types are very complex and it does take a long time to collect the evidence that is required to prosecute them. A large part of this process is making sure that they have got the material to be presented before a court which can often be held by private corporations in multiple state and international jurisdictions.

The Taskforce will remove willful criminal activity and they will prosecute the criminals responsible for it. The Australian Federal Police host the Taskforce within its Fraud and Anti-Corruption Centre and they are joined by officers from across the Commonwealth to do that, including from the Australian Taxation Office, the Australian Crime Commission, the Attorney-General’s Department, AUSTRAC, ASIC and the Commonwealth Director of Public Prosecutions and the Australian Border Force.

The Australian Crime Commission specifically will collect the intelligence and build leads for detection and disruption activities and they will also develop a Financial Crime Risk Assessment which will help to direct Taskforce activity. AUSTRAC will provide the financial intelligence and data sharing as well as analytical and intelligence support.

The overall objective of this Taskforce is to maintain integrity and community confidence in the Australian economy, in our financial markets, in our regulatory framework and in the collection of the revenue, and this is going to be best achieved by pooling the resources and the capabilities of all of these agencies in one spot.

I now think we are happy to take some questions.

JOURNALIST

Ministers, does this Taskforce take into account, or does it have scope to look at the funnelling of charitable funds that go towards terrorist organisations or is that outside its remit?

MINISTER KEENAN

If one of those was a particularly complex matter, but we do have a unit within AUSTRAC which we’ve already funded and is dedicated to making sure that we’re tracking down terrorist financing. So AUSTRAC is the primary agency with responsibility for that and it’s part of our counter terrorism package we’ve beefed up recently and have a specific team looking at that.

JOURNALIST

Can you tell us a little bit about the eight investigations that are underway and what sort of people you’re looking at there?

MINISTER KEENAN

The nature of ongoing investigations is that you can’t provide running commentaries so I’m afraid not.

JOURNALIST

In what area, in what kind of crime? Can you say anything about the kinds of crime that are being targeted?

MICHAEL CRANSTON

Some of the investigations are still focused on the international tax evasion and some of these sophisticated schemes. So that’s probably the predominant and there is a couple of matters sort of involving some phoenix activity as well.

JOURNALIST

So is it not, is it white collar tax evasion sorts of crime that are being looked at here or is it drug crime? What kinds of crime?

MICHAEL CRANSTON

I think it’s under serious financial crime aspect generally if it’s an impact on revenue to the Government and also financial impacts on the community as well. Generally it’s hard to describe what you mean by white collar crime but if it’s your traditional sort of definition then yes along the white collar crime line.

JOURNALIST

This taskforce was announced back in May so what is new about today’s announcement?

MINISTER O’DWYER

What’s new about today’s announcement is that there have already been significant activities undertaken since the first of July. As I mentioned before, more than $85 million in liabilities have already been raised as a result of the Taskforce being put together. There are eight investigations already on foot as a result of the cooperation between the eight various departments and agencies.

This is a very powerful Taskforce which has the ability to look across jurisdictions to work with international partners, to share information in a way that previously has not been done before and it means that we are serious about cracking down on financial crime, we are serious about bringing those people to justice and we’re serious about recovering the revenue that should be paid to the Australian people and restoring integrity to our Australian taxation system.

JOURNALIST

So can we just confirm that those eight have been since July, those eight investigations?

MINISTER O’DWYER

That’s correct.

JOURNALIST

Just on another matter Assistant Treasurer, Westpac has indicated that it will raise its variable mortgage rates saying it’s to cover the cost of increased capital requirements is that feasible and are you concerned that the other big three might follow suit?

MINISTER O’DWYER

Can we first take questions on the announcement we’ve made today before we go to other questions.

JOURNALIST

Can you tell us about the $85 million in liabilities that you’ve raised? Who’s responsible for not paying tax in those cases?

MINISTER O’DWYER

I might defer to the Australian Taxation Office to give you a more colourful picture.

MICHAEL CRANSTON

I think a lot of those liabilities are probably across three areas again. On the international front where we have identified some schemes – people are hiding assets and some offshore. There’s also again on some phoenix matters where there’s more aggressive phoenix arrangements where we have raised liabilities to look at the past. Also there has been some aggressive abuse of trusts, so not used in the appropriate matter and there have been some liabilities made on relation to those and they generally flow through to individuals, some wealthy type Australians.

JOURNALIST

Will you name them? I mean who is not paying tax in Australia?

MICHAEL CRANSTON

You know we can’t name individuals so no we can’t name them.

JOURNALIST

If you’re being aggressive about this why aren’t you naming and shaming people?

MINISTER O’DWYER

What we will be doing is once those investigations have reached their conclusion, obviously we will take further action once that has been concluded and the appropriate justice system will take its course where people will be prosecuted in the ordinary course of events. As we said, this taskforce has been set up from the first of July this year, already we’ve got eight investigations on foot. As has been mentioned by the Minister for Justice, it takes some time to compile the evidence, we don’t believe in trial by media, we believe in doing the ground work which is exactly why we’ve set up this taskforce to do the important work that it is doing.

JOURNALIST

Just to clarify on the $85 million. If you have raised the liabilities, has any actual money been recovered or paid to the Commonwealth from any of the individuals or companies where you have raised the liabilities? Has anything gone to court yet or has any work begun on taking anything to court yet – on any of those $85 million in liabilities?

MICHAEL CRANSTON

Since the first of July, that is not a long time ago, and generally liabilities they get some time to pay. There is probably some small collections but if you want to look back in the history of similar sort of behaviour like under Project Wickenby we raised over $2 billion in liabilities and collected roughly about a billion dollars which was sort of a collection of over 50 per cent plus we are still chasing other debts in relation to other matters, so that may give you some indication around that 85.

JOURNALIST

So if these people pay back the money will we ever know who tried to evade tax in the first place?

MINISTER O’DWYER

As a result of Project Wickenby as an example, we saw 46 convictions as a result of Project Wickenby. There were people taken to court as a result of the investigative activities of Project Wickenby and the taskforce there. It has been quite public in that sense and there have been some fairly high profile people who were caught as a result of Project Wickenby and the point that we are making today is that it doesn’t matter who you are, it doesn’t matter what your social standing is, if you have committed a financial crime we will bring you to justice as a result of the activities of the Taskforce. It is a powerful taskforce, it has strong investigative powers and we are very serious about bringing people to justice.

JOURNALIST

Can I just ask the Justice Minister on the Parramatta shooting, an issue on the Parramatta shooting?

MINISTER KEENAN

Okay are we finished with questions about the Taskforce?

JOURNALIST

In a report today that the Parramatta shooter Farhad Jabar spoke to Neil Prakash, renowned Islamic State recruiter, can you confirm that?

MINISTER KEENAN

What we need to do is give the police space to complete their investigations. It is not going to be helpful for me as Justice Minister to run a running commentary on that. Obviously the police are very keen to make sure that anybody who was involved in what is a very callous murder is brought to justice, but we need to give them space to complete those investigations, and when they have further to report once they have established all of those facts then they will report to the Australian people.

JOURNALIST

But is it your understanding that this 15-year-old wasn’t on the radar of intelligence agencies at all before he committed this act?

MINISTER KEENAN

That has already been commented upon. He wasn’t somebody who was on the radar of our law enforcement and intelligence community, and obviously if he was then things might have turned out differently, but as we have said we can’t possibly watch everybody within the community and the police and our intelligence community don’t have the resources to do that. What we need to do is to make sure that we are working with the community so that they can help us identify people within their community who might be moving down this dark path. We are very keen to do that. Tomorrow the Prime Minister is convening a summit of state and territory officials so we can discuss those efforts further and obviously we are keen to keep working with our state counterparts and with affected communities so they can help us to identify people that might be at risk of radicalisation and committing a violent act.

JOURNALIST

Applying a control order to the age of 14, how would that have helped in this situation given that he wasn’t on the radar of authorities?

MINISTER KEENAN

We are not doing that in response specifically to this situation. This is part of a fifth tranche of terror laws that has been flagged since the middle of the year. We have been in conversations with the states and the territories about the operational needs of their agencies to address this particular challenge [interruption] and obviously it is clear from the events in Parramatta and from what we know about people radicalising younger and younger that we do need to have a suite of powers available to our agencies to deal with that. Now I wish it wasn’t the case that we are required to have a control order for people as young as 14, but unfortunately the facts on the ground dictate to us that we do need those powers.

JOURNALIST

If changes to control orders were in place a fortnight ago have you received advice that this 15-year-old shooter would have been subject to a control order?

MINISTER KEENAN

As I said, what we are doing with control orders is not in response to the events in Parramatta. This is part of an ongoing process that we have had with the states and territories to increase the powers of our law enforcement agencies to deal with the fact that this terror threat is continuing to evolve. We are seeing younger people radicalised, we are seeing them radicalised faster, we need our agencies to have a whole suite of tools available at their disposal. We spent a lot of the past year legislating to ensure that is the case – passing four tranches of legislation. There is a fifth tranche of legislation that will be coming to the Parliament in coming weeks that will address some of the operational issues that have been highlighted to us over the past year by our own law enforcement agencies but also by state and territory law enforcement.

JOURNALIST

Assistant Treasurer, is it fair enough for Westpac to increase its variable mortgage rates to cover increased costs of capital requirements?

MINISTER O’DWYER

I’m going to let Westpac justify their own decisions that they have made with respect to their bank and the mortgage rates that you have raised. The Government will shortly be announcing its response to the Financial Systems Inquiry, that is not too far off, and when we do we will have more to say about capital adequacy requirements.

JOURNALIST

Are you concerned that the other three will follow suit?

MINISTER O’DWYER

I’m not going to get into a commentary about individual decisions of individual banks.

JOURNALIST

Minister, can you explain to us why you are changing the Government’s model for Industry Super Funds when they outperform their bank colleagues?

MINISTER O’DWYER

This issue has been an issue that has been around for quite a long period of time. Under the previous Government in 2010, Jeremy Cooper conducted a review of superannuation and made some very strong recommendations that in order to improve the governance arrangements for superannuation funds you needed to have a third of independent directors on the board of those super funds. Since then David Murray in the Financial Systems Inquiry has made even stronger recommendations to improve governance. He argued for there to be a majority of independent directors on superannuation funds. The Government has been listening to both of them in their reports. The Government has also been listening to consumer groups as well. Groups such as Choice, National Seniors Australia, as well as the Council of Small Business, COSBOA, and all of them have said that it is important to have the strongest possible governance arrangements in place that will deliver the best outcomes for the retirement savings for Australians.

The Government has announced legislation that will bring into effect a third of independent directors on superannuation funds, I think this is a very measured and balanced response to both of these inquiries and reviews, it is international best practice. APRA, the prudential regulator insists upon the majority of independent directors for banks. It would be surprising for superannuation funds not to do the same. There have however been some superannuation funds who have already voluntarily gone down this path and we have seen that across the industry with strong support from Vic Super, Uni Super, Sum Super, Suncorp, Mercer, LG Super, First Rate Super, Qantas Super and the BT Financial Group. So we think this is a very prudent and sensible response to improved governance arrangements for superannuation funds and that is in the best interest of all Australians because all of us have super and all of us want strong retirement incomes when we do retire.

JOURNALIST

[Inaudible] Just on Farhad Jabar, if he managed to speak to Australia’s number one ISIL recruiter unnoticed, doesn’t that show that the system is flawed and what is being done to prevent this from happening again?

MINISTER KEENAN

We know that this is an enormous challenge. The Government has been talking about it for the past year. We have people in the Middle East who are actively trying to recruit young Australians to commit domestic acts of terror and it is very difficult for our authorities to get inside that process because it can be happening privately, it can be happening very quickly, and they groom people in the same way that a paedophile might groom a victim. We have made extensive efforts to resource our agencies to be able to deal with this challenge and we have changed the legal framework in which they operate, so we have lowered the arrest thresholds, there is new offences that can be committed of supporting a terrorist organisation but we shouldn’t underestimate that this is an enormous challenge for our authorities. One of the reasons that we are keen to redouble our efforts with the community is that we do need to work very closely with affected communities so they can help us to address this challenge as well, so if there is a young person within that community going down a dark path, exhibiting the behavioural changes that result from that, then they need to get in contact with authorities to help us to save that person from going down this path of violence and radicalisation.

JOURNALIST

Minister, New South Wales wants control orders extended to 28 days. What do you think about that and would that be in line with the Constitution – is that constitutionally okay?

MINISTER KEENAN

The Attorney has commented on this yesterday and obviously these matters are open for the New South Wales Government to legislate if they feel that is appropriate. Obviously there are some Constitutional challenges as the Attorney has outlined for the Commonwealth in doing so.

JOURNALIST

Minister would you pursue the fifth tranche of national security laws if some states and territories did not agree with some of the elements, for example the ACT Government has concerns about lowering the age of control orders. Are you seeking consensus with all of the states and territories before you pursue that fifth tranche?

MINISTER KEENAN

Clearly that is best that we can achieve consensus, but we have had an ongoing process of dialogues with all of the states and territories including with the ACT. Both myself and the Attorney would be very happy to talk to Simon Corbell if he has got specific concerns, but we have actually been talking to all of the governments around Australia because it is better if we all move forward together on these matters and it is a shared challenge between the Commonwealth and every single jurisdiction.

Thanks very much guys.