There's an incredible theory on why George Brandis and Justin Gleeson fell out, involving Alan Bond and the ATO

The late Alan Bond. Photo: Tony Feder/Getty Images.

When federal attorney-general senator George Brandis and solicitor-general Justin Gleeson has a spectacular and very public falling out this year, which led to Gleeson’s resignation last month, there was a great deal of speculation about what led to the rift.

The fight between the politician and the country’s second highest law officer began after Brandis insisted he must approve any requests for legal advice from Gleeson. The solicitor-general offers legal opinion to government ministers, as well as representing the Commonwealth in legal matters.

The West Australian has published a possible explanation for what led to the senator tightening the leash on his top legal eagle and it’s a remarkable story about the late failed businessman Alan Bond, $1 billion, a supposedly secret deal between the federal and WA governments, with Gleeson and the Australian Tax Office getting in the way.

Senator George Brandis Photo: Bradley Kanaris/Getty.

The paper says the incident was critical to Gleeson’s resignation.

At stake were attempts by authorities to claw back hundreds of millions of dollars in outstanding debts from Bond’s failed Bell Group amid more than 20 years of legal wrangling.

The WA government had attempted to take control of $1.8 billion in remaining assets at Bell, which a creditor and the liquidator challenged and the case was before the High Court.

The fight was in part about the order of the queue for debtors to be paid from Bell.

The Western Australian claims Brandis gave Gleeson verbal instructions to avoid a certain line of argument, explaining the Commonwealth had an agreement with state AG Michael Mischin.

But the ATO, owed $300 million and one of the top creditors, approached Gleeson to act for it and challenge the constitutional validity of the WA government plan.

The paper says: “Mischin was infuriated by the ATO’s move, not only because its argument in the High Court was on a basis the Commonwealth had promised not to advance, but because he thought the tone of the agency’s submission professed WA’s ignorance of the Constitution.”

The West Australian says the WA attorney-general repeatedly tried to call Brandis and assistant treasurer Kelly O’Dwyer over the weekend before the case came before the court for a promise that the Commonwealth would stay out of the fight, but failed.

The paper outlines how things played out over the next four weeks:

The ATO was heard in the High Court case with its arguments — that the WA laws were inconsistent with Federal tax law — used to effectively “kill” the State’s legislation.

On April 12, five days after the High Court had heard the case, Mr Mischin and Senator Brandis had what witnesses say was a “blazing row” when the two attorneys-general met in Perth. Mr Mischin told Senator Brandis he was unhappy that the Commonwealth intervened in the case on the grounds pursued in court.

On May 16, the High Court ruled 7-0 that the legislation, which sought to elevate the Insurance Commission of WA to the front of the queue of creditors, was “invalid in its entirety”.

It led to Senator Brandis believing Mr Gleeson, as the second law officer, had disobeyed instructions from him, the first law officer, the Federal source said.

On May 4, Senator Brandis issued a directive that any department or agency seeking legal opinion from the Solicitor-General must first get Attorney-General approval.

If true, it’s not only a fascinating insight into the battle between the country’s top two law officers, it’s also an incredible peek behind the curtains of federal-state relations, and a deal that would have seen the state-government owned Insurance Commission of Western Australia take around half – $930 million – of the $1.8 million remaining in Bell, as an unsecured subordinated creditor, ahead of organisations like the ATO that could have profound implications for business and the nature of secured and unsecured creditors.

Read the full story here.

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