Jury told former ATO boss had ‘clear conflict of interest’

Court hears intercepted phone calls show ‘level of concern’ from former tax deputy commissioner when speaking to son over Plutus probe.

Michael Cranston arrives at the NSW District Court today. Picture: AAP

Former deputy tax commissioner Michael Cranston had a “clear conflict of interest” when he used his position to help his son get highly “protected’ information about an Australian Taxation Office investigation into his business partner’s company, a Sydney jury heard on Wednesday.

Michael Bede Cranston, 59, has pleaded not guilty to two charges of dishonestly using his very senior position in the ATO to try to find out why it had ­ordered a freeze on $46.6 million in funds from a private company called Plutus Payroll.

Opening his address to the trial jury in the NSW District Court, crown prosecutor Peter Neil SC said between January and May of 2017, Adam Cranston had twice asked his ­father to look into any audits the ATO was conducting against Simon Anquetil, a business partner of Cranston’s son financially linked to Plutus Payroll.

The audits led to the ATO issuing a letter of demand for Plutus Payroll’s outstanding payroll taxes and GST, and another $21.8m for Mr Anquetil’s unpaid personal taxes. At the time, Adam Cranston was also director of shareholding company Synep, which was directly connected to Plutus Payroll.

Mr Neil said the jury would hear recordings from a series of phone calls between Michael Cranston and his son. In one conversation, Mr Cranston said to his son the investigation was “blocked” and the only way he could find out what it was was “to ask other people, and I don’t want to do that”.

Mr Neil said the phone calls conveyed “the level of concern” Adam Cranston and his father had about the ATO investi­gation but the father should have “cut him off right from the start”.

“This close relationship between the father and the son … it’s not an excuse in circumstances like this when you have a substantial function … to protect the taxpayers of Australia.”

Mr Neil said Michael Cranston had also recruited two ATO assistant commissioners to make inquiries for him. He said Mr Cranston had deliberately misled one of them, Tony Poulakis, when he approached him for help on May 1, 2017, when news of the Plutus Payroll freeze had gone public. In a phone call, Mr Cranston said: “I don’t want to get involved in the details … but there’s a lot of urgency now because people are going to the bloody press … I’m just worried about it blowing up in the press and we will get hurt, too.”

Defence barrister David Staehli SC told the jury his client believed he had the right to make inquiries about the Plutus Payroll investigation. He said while Mr Cranston had been unaware of the investigation, it was his signature on the ATO letter to Plutus Payroll advising them the $46m in their bank account had been frozen because of the audit.

The ATO was also undergoing “something of a reinvention” and it was part of Mr Cranston’s role to ensure the ATO was not seen to be abusing its powers.

Mr Cranston, he said, had been given the “express directive” by Tax Commissioner Chris Jordan that the ATO was not caught up in the kind of bad publicity generated by the Plutus Payroll freeze, which left 2000 companies unable to pay staff.