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Adani takes Qld to court in bid to end secret royalties probe
By Sean Parnell
The Queensland government suspects Adani, also known as Bravus, has not paid the royalties required on the coal it has exported from its Carmichael mine.
Documents filed in the Supreme Court show the Queensland Revenue Office has been investigating Adani since April 17 last year, demanding various documents and explanations from the company and its advisers.
Adani has taken the Queensland government to court in a bid to end a royalties dispute.Credit: Bloomberg
Adani now wants to bring the investigation to a head, and has asked the court to order the QRO to calculate the required royalty payments so the company can move on.
In 2020, ahead of the state election, the Labor government struck a confidential royalties deal with Adani. At the time, Treasurer Cameron Dick declared: “Adani will pay every dollar in royalties that they have to pay to the people of Queensland and the taxpayers of Queensland – with interest.”
But after claims early last year that the India-based conglomerate used corporate structures to avoid tax, the QRO, which is part of Treasury and reports to Dick, put its Australian arm on notice.
In a letter dated April 17, 2023, the QRO said the investigation would cover the period from July 1, 2021, to March 31, 2023. Any underpayments would need to be repaid with interest and a “penalty of 75 per cent of the shortfall”.
“The investigation will initially focus on royalty return periods during the investigation period, but may be expanded if necessary,” the letter states.
Adani engaged accounting firm EY to respond, and initially claimed to have identified only “an overpayment of royalty of $318,760”. It then formally asked the QRO to provide a Gross Value Royalty Decision (GVRD) on the basis that its coal may have been on-sold to a related entity and therefore was not assessable at market rates.
The QRO declined to provide a GVRD, instead suggesting it would not be warranted if Adani could prove that Pan Asia Tradelink Pte Ltd, which Adani claimed had on-sold the coal, was unrelated to the company and operated “at arm’s length”.
While Adani insisted Pan Asia was not a related entity, the QRO persevered, asking for more documents about various transactions involving multiple entities.
In April, Adani engaged law firm Ashurst to again request a GVRD and clarity around whether the coal was a market value mineral under legislation. The firm told the QRO that “the investigation has generated unnecessary cost and delay for both the QRO and Adani”.
When the QRO again refused, Ashurst took legal action against Commissioner of State Revenue Simon McKee – on behalf of Adani, not Bravus – claiming the decision not to provide a GVRD was unlawful and had “prevented Adani from accurately determining its royalty liability, thereby impeding the management of its business”.
The government has until the end of the week to file its defence. McKee declined to comment on Tuesday.
In February last year, after Adani’s share price fell amid claims about its business practices, Greens MP Michael Berkman asked then-premier Annastacia Palaszczuk whether the government was assessing its financial risk from the royalties deal with Adani.
Palaszczuk told parliament she was not aware of any concerns, but “if there were concerns, then I am quite sure they would be raised with the Treasury department”.
Two weeks later, on March 6, 2023, the QRO issued Adani with a “Prompt Notice”, inviting the company to voluntarily disclose any irregularities. The company made no such disclosures and the investigation began.