By Rob Taylor

CANBERRA, Australia--A top Australian tax official who has helped lead global tax-evasion investigations is caught up in one of the country's biggest white-collar-crime cases after two of his adult children were arrested in an alleged $123 million scheme to defraud the government.

Taxation Office Deputy Commissioner Michael Cranston was ordered Wednesday to appear June 13 in a Sydney court, where prosecutors say they are considering charging him with abusing his position as a senior public official. He is helping to direct a Dutch tax investigation into Swiss banks and a related probe into an offshore tax-avoidance strategy known as the Panama Papers scandal.

Mr. Cranston and his lawyers couldn't immediately be contacted. A senior investigator said that while Mr. Cranston wasn't involved in the alleged fraud, his son is accused of asking his father to access restricted tax-audit records. Mr. Cranston was suspended from his position on Wednesday, a tax office spokeswoman said.

The case is embarrassing for Australia's conservative government, which has been a leading international critic of complex tax-avoidance strategies used by multinational companies and has led global calls for a crackdown on overseas tax-haven arrangements. Tax office Commissioner Chris Jordan and Mr. Cranston have been the leading voices of those efforts.

"We have zero tolerance for this type of conspiracy, this type of fraud, this type of abuse of public office," Australian Prime Minister Malcolm Turnbull said Thursday after a series of raids by the Australian Federal Police, an agency similar to the Federal Bureau of Investigation in the U.S.Michael Cranston, 58 years old, was issued a court summons after his son and daughter, Adam and Lauren Cranston, and seven other people were arrested and accused of being involved in a syndicate to defraud the government, police said. Police said tax office investigators had estimated the amount of tax obligations not paid to be worth be about $165 million Australian dollars (US$123 million).

Lawyers for Lauren and Adam Cranston couldn't immediately be contacted.

In addition to Michael Cranston, a small number of other tax office employees have been suspended, said Australia's acting taxation commissioner, Andrew Mills, after computerized tax records related to the alleged fraud were accessed without authorization.

"The investigation has so far not revealed any evidence of actual intervention or influence on audit cases, or of money being refunded, or of tax liability being changed," Mr. Mills said. "The information I have todate shows no compromise of the operations of our administration."

Six people, including Lauren and Adam Cranston, 24 and 30 years old, respectively, were charged with conspiracy to defraud the government. An additional three people were charged with a variety of offenses related to money laundering and extortion.

The group led lavish lifestyles, investigators said, buying 18 properties, two aircraft and expensive motor vehicles, as well as accumulating $15 million Australian dollars (US$11 million) in cash. Police deputy operations commissioner Leanne Close said police and tax agents also seized firearms, jewelry, artwork and vintage wines from syndicate members.

Police said they will allege in court that the syndicate laundered money by establishing a company to provide payroll services to legitimate clients. The money was then transferred to other companies allegedly controlled by syndicate members, where funds that shouldhave been used for tax obligations were illegally diverted, police said.

Write to Rob Taylor at rob.taylor@wsj.com

(END) Dow Jones Newswires

May 18, 2017 05:29 ET (09:29 GMT)

Copyright (c) 2017 Dow Jones & Company, Inc.