Former EY partner in tax exploitation case a ‘rogue operator’
The firm says the former partner admitted receiving $700,000 and was sacked last year.
A former EY partner subject to court action over promoter penalty allegations was sacked last year after admitting they had received more than $700,000 from a client for a tax avoidance scheme, the firm says.
EY said it was not a party to the ATO court proceedings but was behind the partial lifting of a suppression order so that it could demonstrate its “commitment to transparency”.
EY Oceania CEO David Larocca said the partner, who remained unnamed, was a “rogue operator” who should have been detected earlier by the firm.
“The former partner’s absolutely unacceptable conduct led to their termination in August 2022,” he said. “Their termination is a clear demonstration that their conduct was, and is, completely contrary to the firm’s values and code of conduct.
“The allegations also involve deeply disappointing behaviour and actions by the former partner that contravene a range of firm policies that have been in place for many years.
“EY is very clear that the behaviour alleged against the former partner are the isolated actions of a rogue operator, and are in no way reflective of the way we do business.”
“We fell short in this instance and I regret that we didn’t identify and stop this behaviour earlier.”
EY said the former partner had disclosed they had received in excess of $700,000 in connection with the client transactions subject to the proceedings, but it had established the former partner acted in isolation and was now pursuing legal action against them.
The ATO proceedings in the Federal Court alleged the former partner proposed a tax exploitation scheme to clients and suppression orders remained in place in respect of the identity of a number of other parties affected by the proceedings, including the former partner.
EY said it had cooperated fully with regulators throughout the process and was introducing additional controls to strengthen its monitoring of compliance with policies and procedures.
“On 13 September 2023, EY entered into an enforceable voluntary undertaking with the Commissioner as a commitment to undertake these improvements. The enforceable voluntary undertaking is the first such undertaking EY has entered into with the Commissioner and includes undertakings that EY will:
- Continue to apply EY’s management processes for breaches of EY policy.
- Provide additional training on EY’s gifting policy and specific aspects of EY’s tax policies.
- Provide regular updates on progress of these matters and their effectiveness.
EY said it had notified CA ANZ about the proceedings and the enforceable undertaking.
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