PwC told client it could cut Australian tax by $70m, court documents in privilege fight show

Global accounting firm PwC told Brazilian meat multinational JBS it would save about $70m a year in Australian tax if the company followed advice that was deliberately structured as a legal service in order to prevent it being seen by authorities, according to documents released by the federal court.

The company came to Australia in 2007, indirectly, through its purchase of US group Swift, which already had operations here. That deal was funded in part by a loan from a Brazilian government bank that prosecutors there alleged was fraudulently obtained. The allegations never went to trial and it is not suggested that JBS Australia is implicated in any wrongdoing.

As part of its audit, the ATO demanded documents from Flora Green and PwC, but the accounting firm refused to hand over nearly 44,000 documents on the grounds they were protected by legal professional privilege, which shields many communications between lawyers and their clients.

In court, the ATO said it disputed the claim over about 15,500 of the documents because the way JBS hired PwC did not establish a relationship of lawyer and client, in part because there were so many highly expensive non-lawyers involved in the work.

Justice Mark Moshinsky rejected this argument in a judgment handed down in March, finding that JBS did engage PwC as its lawyers.

However, after viewing a sample of 100 documents, Moshinsky found that 61 of them were not protected by legal privilege and an additional six were only partly privileged. The privilege status of the remaining documents is still to be determined.

The documents show PwC was keen to secure what would prove to be a steady stream of lucrative work from JBS ahead of competition from other consultancy firms.

In another email, Fuller was also excited about the possibility of structuring the takeover of Primo in a way that reduced tax, including state stamp duties.

The federal court documents also show how PwC deliberately set up the services it offered to JBS as legal advice so that its advice could be shielded from the ATO.

The lead partner PwC named on the deal was Glenn Russell, who in 2014 had been a partner for just two years and was completing his training as a lawyer. He commanded $862 an hour, far less than the $1,459 an hour at which Fuller was charged out.

The firm did not answer questions from Guardian Australia about the the restructuring advice.

Nor did PwC, or JBS, answer detailed questions about the advice PwC gave and the transactions discussed in the court documents.