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ATO orders inquiry into raid on former employee

The Tax Office has ordered a high-level review after an Ombudsman's inquiry.

The Tax Office has ordered a high-level review after an Ombudsman's inquiry. Photo: Louie Douvis

The Tax Office ordered a high-level review of its internal crime-busting unit after a botched investigation led to a team of Canberra-based bureaucrats raiding a naval base in Victoria.

The review came after an Ombudsman's inquiry into allegations the unit had gone rogue, overstepping its powers in pursuit of a former employee on a "hunch" the man had threatened one of their own.

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The ATO also ordered a review of the conduct of senior officers in its feared Fraud Prevention and Internal Investigations branch (FP&II) who ordered the inquiries into their former colleague who was suspected of sending hate mail to a senior tax official.

The office has admitted it should have called in police to assess the case before it sent seven Canberra public servants, armed with a search warrant, to burst into HMAS Cerberus on the Mornington Peninsula in October 2011.

The officials, who had been flown from the capital to conduct the raid, scoured the man's workplace and living quarters for nine hours but found no evidence against the ex-employee who had enlisted in the navy after leaving Tax Office the previous year.

The target of the raid, Gary Setter, who has consistently denied any wrongdoing, is considering legal action while another investigation, by the Privacy Commissioner, into the unit's conduct of the case is under way.

The Tax Office ordered an "independent" assessment of the conduct of the managers who ordered the raid, rewrote behavioural standards for the FP&II unit and called in its integrity adviser Damien Bugg, QC, to review the outfit's "powers, processes and systems".

In its response to the Ombudsman inquiries, the Tax Office said it relied on advice from the Attorney-General's Department that it should go it alone on the investigation and not refer it to police. The ATO conceded there might be the "possibility" of a conflict of interest in allowing officials to lead the pursuit of their former colleague, who had resigned as an ATO fraud investigator in 2010.

Mr Setter had been the target of an earlier FP&II investigation after being accused of improperly accessing the tax records of members of his family and left the department before the matter was fully resolved.

He told the Ombudsman he believed the internal fraud unit became convinced he was seeking revenge on the officials responsible for the first investigation.

Mr Setter complained to the official watchdog that his former colleagues pursued him on a "hunch" that he was the man behind a series of letters and phone calls to a senior tax official that were deemed to be threatening.

In a final determination issued last month, the Commonwealth Ombudsman said it was satisfied with the steps taken by the ATO to address Mr Setter's grievances.

"While the ATO maintains that it had the necessary authority to conduct the investigation in this case, it has accepted that a referral to the AFP would have been appropriate to allow the AFP the opportunity to assess the matter," the Ombudsman's delegate wrote.

"The ATO has also agreed to seek independent assessment of whether any officer involved in this matter has breached the Australian Public Service Code of Conduct.''

The ATO has not responded to requests for the results of the reviews it agreed to undertake in the wake of the affair and Mr Setter says he is not satisfied with the responses and that he is considering further legal action. He says he believes he was the victim of an illegal vendetta conducted on taxpayers' money.

"The requisite ethical behaviour has not been met, and significant taxpayer funds were wasted on what could only be viewed as a personal vendetta against a member of the public by a senior public servant," Mr Setter said.

"Again, I state that the actions of the persons involved in this matter are tantamount to criminal acts. To date, I have never been shown any evidence to justify these actions instigated and undertaken by the ATO. How public servants can get away with this and be defended by their taxpayer-funded employer has me baffled."

15 comments so far

  • Mr Setter should and has every right to pursue damages against the Gestapo like tactics of the ATO.

    Commenter
    Dingbat22
    Location
    Sydeney
    Date and time
    January 23, 2014, 10:20AM
    • I note that it was poor advice from AG's that led to the raid. It does not excuse the ATO's poor form.

      Commenter
      Chris
      Date and time
      January 23, 2014, 10:25AM
      • Unfortunately there are people who get into these PS jobs that hold a fair bit of power and it is not always used as it should be and there are not the same standards, or understanding amongst staff that they can't or shouldn't do what they think they are entitled to as there may be in more formal authorities like police. Unfortunately having an AG dept that leaves a lot to be desired in the advice they give PS or that they don't spell info out sufficiently for non lawyer PS doesn't help. I hope Sutter sues and a precedent gets set that may remind Public servants where power has gone to their heads just where the power ends.

        Commenter
        Dont cross a Public Servant
        Date and time
        January 23, 2014, 12:14PM
        • A good friend of mine has been the subject of an ATO "investigation" into his financial affairs. He runs a small business. The whole thing has been running for YEARS now, and legal costs are escalating. This is despite the fact he told them at the earliest opportunity that his ex-wife, who is hooked on prescription drugs, is running a vendetta against him, including ringing all his friends and telling the most outrageous lies about him, including making some extremely serious allegations, all of which are total rubbish. It has gotten to the point that his accountant is gobsmacked at some of the deductions that were knocked back, saying he had never heard of anyone being denied these completely legitimate and PROVABLE deductions. It amounts to a vendetta from the ATO, based on innuendo from a drug-addled and vicious ex-wife. The family court system is chockers with the evidence.
          It seems to me that the ATO is a law apart, and once it sets on a course of action it will spend millions of taxpayer dollars to defend the indefensible. I'm convinced their mantra is "Never admit a mistake".

          Commenter
          truthy
          Date and time
          January 23, 2014, 12:18PM
          • This is a common problem when agencies are given too much power. This should have been left for the AFP to investigate. Power in the wrong hands can be dangerous as illustrated in this article.

            Commenter
            Q
            Date and time
            January 23, 2014, 12:49PM
            • The problem is that this type of case rarely gets a start at the AFP under their case priorisation model and they are even less likely to get a result. I think the advice from AG's simply anticipated that outcome. However, it has exposed some serious flaws in the investigation decision making at the ATO.

              Commenter
              Greg Mc
              Location
              Canberra
              Date and time
              January 23, 2014, 2:58PM
              • Noel Towell’s article contains a number of inaccuracies.
                The ATO is restricted from commenting publicly about matters before the courts or disclosing information about former ATO employees and investigations into their conduct.
                However, we can correct a number of inaccuracies in the article.
                1. The search warrant was properly issued by a magistrate and executed by the Australian Federal Police with two ATO staff members attending as well as forensic officers and naval police. Evidence was found.
                2.The investigation was not launched on a ‘hunch’ - the ATO provided evidence that met the Australian Government Investigations Standard to the Commonwealth Director of Public Prosecutions (CDPP). The CDPP independently made a decision that the evidence was robust enough to lay charges.
                3. Mr Setter has not always denied wrongdoing. Mr Setter has pleaded guilty to four counts of unauthorised access to taxpayer information and is scheduled to face court in January 2014.
                4. There has been no review into the ATO’s fraud prevention and internal investigations branch. The ATO is yet to receive the final Ombudsman’s report and consider any recommendations. The comments in the article are not from the final report.
                As a trusted government agency, we work hard to ensure the public is not misled about how we deal with matters as serious as this. This includes working cooperatively with journalists to ensure correct and balanced articles are reported.

                Commenter
                A/Commissioner of Taxation Geoff Leeper, Australian Taxation Office
                Date and time
                January 23, 2014, 3:24PM
                • What a typical response from the ATO. How about undertaking an investigation into the officers involved given the findings that were made by the Ombudsman. Blind Freddy would know that a matter that has no relevance to an ATO offence such as these issues most certainly should have been referred to the AFP for consideration and investigation if warranted. What is the ATO saying that the issue was that serious it warranted a full blown investigation by themselves, which included the seeking of search warrants, but not serious enough to refer to Police? Come on.

                  But instead, lets protect the public servants involved who have abused their power and position and wasted taxpayer funds pursuing what could only be viewed as a personal vendetta against a former employee. Having some knowledge of this matter, and what wasn't published was the fact that the investigation was instigated by the Director of the FP&II unit without any senior level endorsement and who was himself listed on the search warrant as a victim.. Not only is this a conflict of interest but a serious abuse of office bordering on corruption by a senior public servant. Why wasn't that mentioned in the ATO response?

                  Commenter
                  John
                  Location
                  Canberra
                  Date and time
                  January 25, 2014, 10:54PM
                • I believe it is warranted to put forward the true facts relating to this matter given the ATO are defending the actions of their officers. The offence for which the warrants were sought were based on the receipt of 'advertising material' received by a senior ATO officer, which he deemed threatening.

                  This officer coincidently is a former Director of the FP&II unit. The material in question included two brochures from Insurance Line, a brochure from the Berean Bible Institute and a brochure from the Bradford Exchange. This material was deemed 'threatening'. The carriage service offences, deemed 'harassing' related to 14 telephone calls received over a 3 month period and 4 advertising text messages received from the yellow pages website.

                  The investigation was instigated by the current Director of the FP&II unit. That person was also named on the search warrant as a victim of these alleged harassing telephone calls. No senior level endorsement was obtained and no investigation plan was prepared, which is a mandatory requirement designed to uphold the integrity of the investigation process and provide necessary safeguards to the community from the misuse of investigative powers.

                  Contrary to the ATO's published response implying evidence was seized, the search conducted found no evidence whatsoever that related to the offences listed on the search warrant. Computer records were seized and I was questioned over some ATO files, which were found and which related to old fraud cases previously worked upon from home. No evidence whatsoever was found to link me to the sending or causing to send junk mail.

                  The telecommunication records were provided by the Dept of Defence prior to the search warrant actions. I will let the public make the decision as to whether search warrant actions were justified based on these facts.

                  Commenter
                  Gary Setter
                  Date and time
                  January 26, 2014, 8:00AM
                • That's all good but the investigators and managers involved in this matter have a history of botching investigations. This is only the tip of the iceberg. Dick Tracy and the Keystone Cops. There is more to come.

                  Commenter
                  Batman
                  Date and time
                  January 26, 2014, 9:40AM

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