The fight over billions from Alan Bond’s failed company sees George Brandis shift the blame to Joe Hockey

George Brandis. Photo: Scott Barbour/ Getty Images.

Attorney-General George Brandis has told the Senate there was no deal between him and the West Australian government – or between the federal government and WA – on the Bell Group and insisted that he had acted at all times to protect the interests of federal taxpayers.

Labor and the Greens say Senator Brandis has “thrown Joe Hockey under a bus” over the affair by tabling a letter which showed the matter was discussed by the then federal treasurer and state treasurer Mike Nahan. Senator Brandis says the exchange of letters does not constitute a deal.

His statement to the Senate at midday, addressed the controversy over what instructions he gave the Solicitor-General about a High Court challenge to WA laws that would have favoured the state as a creditor to the Bell Group over federal taxpayers.

Senator Brandis has told the Senate that he had backed the decision by the Australian Taxation Office to join the High Court case against the WA legislation in the interests of protecting federal revenue.

Further, he said he had taken the advice of former Solicitor-General Justin Gleeson that the Commonwealth should also join the action in its own right on the question of the implications of the WA laws for corporate legislation, in addition to the ATO’s action in support of protecting federal revenue.

“I saw the force of what Mr Gleeson put to me and I accepted his advice,” he said

Labor and the Greens wanted to know whether it was true he had effectively instructed Mr Gleeson to run dead on the revenue issue, or what instructions he had explicitly given to Mr Gleeson.

Senator Brandis’ statement leaves open the possibility that a cause of tension between Senator Brandis and Mr Gleeson may have been over the initial decision by Senator Brandis for the Commonwealth not to intervene in the case, and when Senator Brandis changed his mind, for it to only intervene on questions to corporate law not revenue powers.

The Attorney-General did not address in his statement the extraordinary coincidence between the controversy over this matter and his subsequent controversial move to put a legal control over government instrumentalities seeking advice from the Solicitor-General.

He also did not directly address an assertion that he had effectively instructed Mr Gleeson to run dead on the issue, or what instructions he had explicitly given to Mr Gleeson.

The Attorney-General told the Senate he had been unaware of exchanges between WA ministers and former treasurer Joe Hockey which the state ministers believed constituted a deal or an agreement that the federal government would not stand in the way of legislation to have the WA Insurance Commission take over the assets of the Bell Group – a move which would cost federal taxpayers (as creditors to the group) $300 million.

Senator Brandis told the Senate that the Bell Group liquidation has been going on since 1991 and was one of the most complicated in Australian history involving 30 separate legal proceedings in four countries and costing hundreds of millions of dollars.

He said he had only become aware of an exchange of letters – which the West Australians believed constituted the deal – in March and asserted that a reading of the letters “provides no basis for a claim that an agreement or understanding had been arrived at between the Commonwealth and WA although it is clear some ministers in WA had a different view”.

He told the Senate that Social Services Minister (and former WA attorney-teneral and treasurer) Christian Porter had spoken to him and to Revenue Minister Kelly O’Dwyer on March 2 asking if was aware of the case.

Mr Porter had explained the background to the deal, Senator Brandis said, but had not time to form view of the constitutional or revenue aspects.

He said he subsequently spoke to Ms O’Dwyer and a second commissioner of taxation to settled on whether the Commonwealth should intervene in the proceedings.

He said he did think it was “desirable that the ATO intervene to protect the Commonwealth’s interests” but “at that stage that it was not necessary for the Commonwealth to intervene” (in its own right).

The ATO had intervened on March 8 with Mr Gleeson appearing on the ATO’s behalf having been instructed by the Australian Government Solicitor

“My view at that time was this was a matter between the WA government and the ATO,” he said.

Mr Gleeson had subsequently spoken to him and strongly urged Senator Brandis that the Commonwealth should join the action to deal with matters relating to the Corporations Act and that he had taken that advice, though he noted that the High Court had eventually thrown the case out only on the basis of the revenue question contained in the ATO arguments.

Senator Brandis said that there has been much mention of an asserted agreement, but the only written record of those dealings “do not in my view constitute or evidence such an agreement”.

He also refuted any suggestion the matter was in any way linked to negotiations over the GST or that he had failed to protect the interests of federal taxpayers, noting both his support for the ATO’s intervention in the case and accepting Mr Gleeson’s advice about the Commonwealth also becoming involved.

“In summary the position is that so far as the Commonwealth was concerned my view is that this was about revenue and the Commonwealth’s interest was in that respect it was appropriately protected by the ATO decision to intervene, a decision I supported”.

He said that while he had not initially consider it necessary for the Commonwealth to intervene, he had done so on the advice of Mr Gleeson (though this was only on the corporations questions).

He once again stated that he was “not involved in… and had no knowledge of discussions”, with Western Australia.

Asked on Sky about whether he had asked Mr Gleeson to run dead on the case, he said he would not disclose legal advice, “of course you have discussions with your barrister and a range of options and posture and strategy you should take… but it’s enough to say in the end I was faced with a decision on whether the commonwealth should intervene on top of the ATO. Initially I was of the view it was a matter between WA and the ATO but Mr Gleeson said you are not thinking this through: there is also the issue of the corporations act.. and I strongly urge you to intervene”…

Meantime, the Insurance Commission of Western Australia (ICWA) released a statement saying it estimated the Bell Group litigation is estimated to continue for a further 15 years.

“ICWA will continue to pursue its statutory objective to obtain the return owed to it. ICWA assumes that Commonwealth agencies will also proceed on that basis. That objective, to deliver the return to the two Governments and other creditors in the near term, is ICWA’s understanding of the reasoning for the agreement between the two Australian Governments, for WA to take back referred Corporations Act powers for the defunct Bell Group companies.

“ICWA is aware of reports suggesting that the WA Bell Act attempted to gain a priority rating for some creditors over others. This is incorrect.

“ICWA is also aware of suggestions that an amount of the settlement funds was somehow agreed. This is also incorrect. The Bell Act allowed for the appointment of an independent administrator to assess fair returns for creditors based on submissions made by all creditors to the administrator. ICWA considers that its contractual and other legal rights entitle it to receive between $700 million and potentially more than $1.2 billion of the Bell Group settlement funds. ICWA welcomed the introduction of the state legislation last year as a method to avoid litigation costs for the expected 15 years to realise those rights.

“Fresh litigation has commenced since the Bell Act was struck down by the High Court. Opponents of ICWA and WA taxpayer interests have commenced actions in different courts in an effort to ‘jurisdiction shop’, imposing further burdens on Australian courts. ICWA will work diligently to manage the costs of the litigation. But it is expected to be expensive in the absence of an independent Administrator assessing claims to cut through to deliver a return to creditors.”

This article was originally published on the Australian Financial Review. Read the original here, or follow the AFR on Facebook.

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.