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Phillip Fry |
Australian tax investigation forces Vanuatu to abandon banking secrecy
Australia's investigation of tax evasion by individuals and businesses has
forced the Pacific tax haven of
Vanuatu
to reverse its long standing policy of banking secrecy. Agius, a partner in PKF Vanuatu, has been a Vanuatu resident since 1979. The Project Wickenby team, which is led by the Australian Tax Office (ATO), alleges that he established offshore accounts for more than 400 wealthy Australian individuals and businesses. The accounts were held by ANZ and Westpac banks. Around 90% of the accounts were set up by PKF Vanuatu. The AFP says that the accounts were used to evade more than US$94 million in Australian taxes. Eighty companies now face tax audits as a result of the inquiry's revelations. Following the arrest of Agius, the Vanuatu Financial Services Commission (VFSC), the jurisdiction's regulator, said that it would overturn its policy of banking secrecy. A complete overhaul of Vanuatu's legal structure related to companies would be introduced shortly and put into force by the end of the year. Australia's tax commissioner Michael D'Ascenzo has previously identified Vanuatu as the chief target of the tax office. The commissioner of the VFSC, George Andrews, said the regulator would, in future, penalise Vanuatu institutions which provided services allowing Australian citizens and companies to avoid domestic tax. All company and trust service providers will be licensed by the VFSC and any breaches of regulation could lead to revocation of an operating licence. Two former PKF Vanuatu directors have also been cited by the Australian police in relation to this investigation: Fiona McConnichie, who was manager of client services from 1991 to 2003, and Kelly Jane Fawcett-Mougues, who began working at PKF Vanuatu in 2001 and is now a partner of the firm. Project Wickenby was launched in 2004 and cost $287 million to fund over seven years. Agius is its third high profile arrest. The inquiry team has been the target for criticism for failing to prosecute Michael Brereton, a wealthy Melbourne lawyer, who has represented various Australian celebrities including Kylie Minogue. It did succeed in jailing sports entrepreneur Glenn Wheatley but critics argue that the exercise has been wasteful and it has failed to capture the big tax evaders including multinational corporations and individual billionaires. Vanuatu is the last of the six Pacific offshore centres which were targeted by the OECD's harmful tax practices initiative to announce its compliance. Nauru and Niue have closed their offshore banking sectors. The US Marshall Islands has now agreed a so-called COMPACT arrangement with the US which includes various transparency codes. The Cook Islands has reformed its regulation and Samoa has also been removed from the blacklist. Project Wickenby is a joint ATO, Australian Crime Commission, Australian Securities and Investments Commission, AFP and Commonwealth Department of Public Prosecutions initiative. ANZ and Westpac banks said they had both worked closely with the Project Wickenby inquiry. PKF International was asked for a comment but did not reply.
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