$2 Billion Social Media Fraud Exposed, 150 ATO Staff Implicated
150 staff at the Australian Tax Office (ATO) are currently being investigated after a social media scam surfaced, netting $2 billion ($US1.3 billion).
An initiative called Operation Protego began in December 2021 in response to a surge in GST refund fraud tip-offs, as well as an unusual rise in ABN and GST registrations.
The scam involved individuals obtaining an ABN for a fake business, then using the MyGov site to submit false business activity statements in order to receive GST refunds to which they were not entitled. The fraudulent activity was extensively promoted on social media platforms such as Facebook and TikTok, resulting in a large number of false claims.
Although the Tax Office had “largely effective” strategies to detect and address GST fraud, it was revealed that they lacked a specific procedure to respond to a large-scale fraud event like this one.
The ATO established a special task force and asserts that the investigation has led to “employment terminations and criminal proceedings.”
Warning Issued
Upon discovering the scale of the problem, the ATO reassigned about 470 staff from GST-related roles to work on Operation Protego. Furthermore, on May 6, 2022, the ATO issued a public warning against participating in GST fraud.
The auditor general’s report identified that individuals involved in “Operation Protego” fraudulently obtained GST refund amounts ranging from approximately $38,900 to $2.4 million, and attempted to fraudulently claim GST refunds ranging from approximately $8,100 to $32.3 million.
Having successfully obtained one payout, about 30 percent attempted a second time and 10 percent attempted it a third time.
A large number (57 percent) of those involved in the scheme were government welfare recipients, but there were also individuals who had their identity stolen and used to file fictitious business activity statements (BAS), or who were coerced into participating or providing credentials to third parties, including some ATO officials.
Twelve ATO Staff Sacked
Regarding personnel involved, the Tax Office stated that most of the 150 people being 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 individuals who committed 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.”
Although the ATO suspects as many as 57,000 people have engaged in GST fraud, the auditor general’s report as of Aug. 31, 2023, indicated that criminal investigations had resulted in more than 100 arrests and 16 convictions.
Furthermore, $123 million had been recovered by that date, including $67.6 million recovered via bank garnishees. Additionally, 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.
