As many as 150 staff at the Australian Tax Office (ATO) have been investigated after it was discovered some were involved in a social media scam that netted $2 billion ($US1.3 billion).
The multi-agency investigation, dubbed Operation Protego, was initiated in December 2021 by the ATO in response to a surge in tip-offs about GST refund fraud, and an unusual rise in Australian Business Number (ABN) and GST registrations.
It involved people acquiring an ABN for a fake business and using the MyGov site to submit false business activity statements to receive GST refunds to which they were not entitled.
It was widely promoted on social media such as Facebook and TikTok, leading to a high volume of fraudulent claims.
The auditor general found that despite the Tax Office having “largely effective” strategies to detect and deal with GST fraud, it “does not have a procedure to respond to a large-scale fraud event” such as this one.
Warning Issued
Upon realising the magnitude of the problem, the ATO reassigned around 470 staff from GST-related roles to work on Operation Protego. Additionally, on May 6, 2022, the ATO issued a public warning against engaging in GST fraud.
The auditor general’s report revealed that “Operation Protego targets are suspected of fraudulently obtaining GST refunds amounts between approximately $38,900 and $2.4 million and of attempting to fraudulently claim GST refunds between approximately $8,100 and $32.3 million.”
Having successfully obtained one payout, about 30 percent tried a second time and 10 percent attempted it a third time.
A significant portion (57 percent) of those who engaged in the scheme were government welfare recipients, but there were some people who “have had their identity stolen and used to lodge fictitious business activity statements (BAS) or have been coerced into participating or providing credentials to third parties, including some ATO officials.
Twelve ATO Staff Sacked
Regarding personnel involved, the Tax Office said in a statement that the majority of the 150 people investigated were former contractors or ex-employees and “were not working with the ATO at the time they are suspected of committing Operation Protego fraud.”However, action was taken against the individuals who committed the fraud while working at the ATO.
“We have taken action against the small number (12) of those who were substantiated as having committed the fraud while working at the ATO. This includes termination of contract, administrative action, and criminal prosecutions,” the ATO said.
“We are not aware of anyone currently working at the ATO who is suspected of committing the fraud.”
While the ATO suspects as many as 57,000 people have engaged in GST fraud in this way, the auditor general’s report as of Aug. 31, 2023, indicated that criminal investigations had resulted in more than 100 arrests and 16 convictions.
Additionally, $123 million had been recovered by that date, including $67.6 million recovered via bank garnishees. Moreover, penalties exceeding $120 million had been issued by June 30, 2023, with interest worth about $220 million that “will continue to accrue on amounts not repaid.”
Another $2.7 billion in suspicious GST refunds had been stopped before payment.
