Prof. George Mickhail
Bryant University - Beijing Institute of Technology
Research Area：Financial Statement Analysis; Management Accounting; Financial Risk; Management; Accounting; Financial Analysis
Speech Title: The Corrupting Geopolitical Influence of Corporate Australia
Abstract：The‘Luxleaks’and‘Panama Papers’revelations highlighted the widespread financial and legal practices of aggressive tax planning and tax avoidance within the bounds of a Tax Code, while using sophisticated business and accountancy practices to minimise corporate tax liability. In most cases, it was a case of Tax avoidance which is different from the illegal Tax evasion practice of partial or non-payment of taxes due. In the wake of those revelations, the European Parliamentary Research Service estimated lost revenues to the European Union due to corporate tax avoidance to be around 160 to 190bn euro a year. A similar result was reported in a recent study by the U.S. National Bureau of Economic Research, which found that US Corporations Tax privilege due to US power and tax havens, translates into about $180 billion a year of lost tax revenue. Those lost revenues are critical to the provision of much needed services such as health, infrastructure and education in countries around the world – including Australia, Europe and the United States. The question is how do Australian, European or U.S. laws still ‘allow’ this harmful phenomenon of corporate tax avoidance? The obvious answer is that whatever mechanisms (and their ‘evolution’ over a long period of time), be that regulatory or otherwise, have failed to stop the problem in the first place. In considering this question and in the light of the obvious limitations of regulatory regimes, our attention needs to shift from a theorisation focused on regulation and practice to a focus on the people behind those regulations and practices. Most academic research and reports from Australian, European and U.S. institutions have studied corporate tax avoidance, its estimated cost and the different mechanisms of tax avoidance used by multinationals - but only a small number of investigative journalists have worked on the connections between regulators and companies having recourse to tax avoidance. The rationale is that the existence of connections between regulators and companies practicing tax avoidance could slow down the tax regulatory process. Thus, a focus on the enabling connections between regulators and (external audit firms acting as proxies for CEO’s of) corporations benefiting from corporate tax avoidance. The review of the existing literature highlighted that these connections could be explored through the educational and professional backgrounds of those connections. To answer the research question and to be able to either confirm or refute the propositions formulated, this research work adopted an abductive research approach and a descriptive type of research design. A social network analysis of the regulators, auditors and directors of corporations confirmed the existence of strong educational and professional connections between regulators, auditors and companies practicing tax avoidance. The findings are certainly topical in the fight against tax avoidance, and no doubt the recent removal of an elected Prime Minister for the fourth time in less than a decade by an alliance of politicians, think tanks and the media - acting as proxies for (‘shadowy’) corporate interests warrants a closer examination of corporations that would stop at nothing to destablise governments and the national interest, which dare to challenge their ‘rent seeking’ monopoly power over resources and markets.