PwC suspends nine over tax leak scandal which has dragged in Irish operation

Big Four firm pledges to publish results from internal review this year amid scandal at Australian unit

PwC suspended nine partners and pledged to publish the findings of an internal review later this year as it works to contain a tax leak scandal engulfing its Australian operations and threatening its business in other countries, including Ireland.

The company has been under intense public scrutiny after the release of emails showing it had used confidential information about changes to Australian tax laws from the government there to win new business.

The move to suspend nine partners – including members of its executive and governance board – is the latest escalation of a scandal that erupted in February. PwC said it would ringfence the work it does with the federal government in Australia to minimise conflicts of interest.

The PwC staff have been told to “go on leave effective immediately... pending the outcome of our investigation”, according to the company.

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Emails released by an Australian senate committee earlier this month show former PwC Australia tax partner Peter-John Collins emailed other PwC offices details of discussions he had been involved in with Australian officials on tax policy. The released emails show that on April 17th, 2015, Mr Collins wrote to a colleague at PwC Ireland, whose identity has been blacked out, saying he was helping the Australian government “think about” tax proposals that he expected to be released in the country’s then forthcoming budget.

The PwC Ireland individual – whom the firm declined to name when asked by The Irish Times this month – responded in an email, copied to two other PwC Ireland staff members, that they had been following developments in Australia and suggested a “chat” the following week.

The are no details of any follow-up in the released email chain. There are also no suggestions that anyone at PwC Ireland was aware that Mr Collins was seeking to share information that was the subject of confidentiality agreements.

The release of redacted emails between Mr Collins and other PwC partners, both in Australia and internationally, has created a global crisis for the firm. Tom Seymour, the head of PwC Australia, resigned this month, while the Australian Treasury has referred the situation to the federal police to consider a criminal investigation.

Kristin Stubbins, acting chief executive of PwC Australia, published an open letter on Monday to apologise. “I want to apologise on behalf of PwC Australia. For sharing confidential government tax policy information and for betraying the trust placed in us,” said Ms Stubbins. “No amount of words can make it right.”

Ms Stubbins said the leak had highlighted a “failure of leadership and governance” and what she called a “culture of aggressive marketing in our tax business” in Australia.

Tracey Kennair, chairwoman of PwC Australia’s governance board, and Paddy Carney, chairman of its risk committee, have stood down from their roles.

Ms Stubbins said the firm would publish the findings of an internal review conducted by former telecoms executive Ziggy Switkowski at the end of September.

PwC has not released the names of partners who were included in the emails or the clients who potentially benefited from the advice it tailored based on the confidential information. A senator attempted to force out the names in a hearing last week but was unsuccessful.

Deborah O’Neill, a senator for the ruling Labor party that triggered the release of the redacted emails, said the scandal had raised questions about the entire consulting industry. “The contagion is real,” said Ms O’Neill. “Those people who have put money above integrity have had a field day.”

Prime minister Anthony Albanese told the 2SM radio station on Monday that the scandal was a “terrible indictment” on the sector and that any government would need to consider the “ethical considerations that come from this PwC behaviour”.

Ms Stubbins described the scandal as “personally and professionally devastating”. However, she tried to provide some distance for its customers. “Our clients were not involved in any wrongdoing and no confidential information was used to enable clients to pay less tax,” she said.

Collins has not responded to requests for comment since the scandal emerged. – Copyright The Financial Times Limited 2023