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Glencore asks for return of Project Everest documents from Australian tax office

Glencore PLC has launched an action with the high court of Australia to force the Australian Taxation Office, or ATO, to return its copies of documents that detail how the company moved A$30 billion of resource projects out of the Australian tax net, The Australian Financial Review reported Oct. 8.

The documents, which include emails, board briefings, step plans and PowerPoint presentations show how Glencore was able to move significant assets from its Australian investment portfolio into offshore structures in its 2014 restructure, called Project Everest. The ATO had approved of the scheme in November 2017, the company told the AFR.

However, the ATO changed its position after obtaining the documents in the Paradise Papers leak. Now Glencore says the ATO knows too much about Project Everest and is seeking court action to compel the taxation office to return its copies of the extensive files of Bermuda law firm Appleby.

Australian Taxation Office Commissioner Chris Jordan stated that "the big thing about this is that you look at emails, and you get to look at the real purpose."

"I've seen an email where some of the lawyers are complaining about a large corporation. And they say, 'Up to their old tricks,' and ask to backdate proxy nominations. That could be quite interesting to revenue authorities if it looks perfectly legal but if things weren't signed when they said they were".

Glencore, for its part, told the AFR on Nov. 2, 2017, that the key purpose of Project Everest was a simplification process "to streamline Glencore's industrial assets ownership", which would reduce administration costs and improve reporting transparency.

The company's claims of transparency seem at odds with its current action to force the ATO to give up documents.

"Our previous comments are correct," a Glencore spokesman told the AFR. "To be clear, it's important to understand that the High Court proceedings relate to the fundamental right to legal professional privilege."

Meanwhile, the ATO is disputing this believing that "it not only able but compelled to use information it obtains such as the Paradise Papers and Panama Papers, as would naturally be the expectation of ordinary Australians," a spokesman from the taxation office said. "The ATO will respond accordingly to any proceedings."

According to the report, the ATO inquiry is likely to focus on the huge debt flows that drove Project Everest. The ATO can focus on the four Glencore companies named as plaintiffs in the high court action - Glencore International AG in Switzerland; finance company Glencore Australian Holdings; and two companies interposed between Glencore Holdings and the Australian group – Glencore Investment Pty. Ltd. and Glencore Investment Holdings Australia Ltd. in Bermuda.

Glencore has previously insisted on its "simplification process", which is "designed to streamline [the company's] industrial assets ownership structure."

"We are a very large corporate in Australia, and we are a key taxpayer. We have actually undertaken a major simplification process to bring all our mining operations in Australia into one group," Glencore Australia's CEO Nick Talintyre told the Senate tax avoidance inquiry in April 2015.

"We have merged all that as part of this simplification process so that people who want to know what Glencore's operations in Australia look like will be able to get that information from 2014 onwards," he added.

Part of the simplifying involved "separating the group's material foreign assets from the main structure," Glencore told the AFR.

Glencore's complaint in the High Court begins with an email that a King & Wood Mallesons lawyer sent to Appleby's head office on Oct. 17, 2014, for help with a restructure of Glencore's "cumbersome and inefficient" structure in Australia, devised by PricewaterhouseCoopers.