A secret political deal has triggered claims of potential corruption against Attorney-General George Brandis and appears to shed new light on his toxic feud with former solicitor-general Justin Gleeson.
The Commonwealth and the states reportedly struck a deal allowing Western Australia to claw back $1 billion from Alan Bond's collapsed Bell Group earlier this year.
But the arrangement was torpedoed in the High Court following submissions by Mr Gleeson on behalf of the Australian Taxation Office, in defiance of a direct order from Senator Brandis, The West Australian reported on Friday.
Senator Brandis had reportedly instructed Mr Gleeson not to run a certain constitutional argument against WA but when the ATO later approached the solicitor-general he provided it to them.
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Shadow attorney-general Mark Dreyfus said if correct, it was "as clear a case of corruption as one could imagine".
"It's attempting to favour the West Australian Liberals over the interests of the Commonwealth," he told Sky News.
"That's the one thing that no commonwealth attorney-general should even countenance doing and that's why this story is so disturbing."
Mr Dreyfus vowed to use "whatever parliamentary processes are available" to uncover exactly what transpired.
Mr Gleeson's advice to the ATO was given just weeks before the attorney-general issued a directive demanding all requests for advice from the solicitor-general first be approved by him.
Senator Brandis was forced to drop the controversial directive earlier this month under immense political pressure from Labor, the Greens and crossbench MPs.
Mr Gleeson later resigned, saying his professional relationship with Senator Brandis was irretrievably broken.
Treasurer Scott Morrison on Friday flatly rejected Labor's claims Senator Brandis acted inappropriately.
Finance Minister Mathias Cormann also leapt to the attorney-general's defence, describing suggestions he should be sacked as typical overreach.
"This is just another example of (Labor) getting way ahead of themselves," Senator Cormann said.
Opposition Leader Bill Shorten said the only ethical thing the prime minister could do was sack Senator Brandis immediately.
"George Brandis is the most accident-prone minister in an accident-prone government," he told reporters in Canberra.
"How many lives does George Brandis have?"
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