Former ASIC boss Jeffrey Lucy warns of risks from PwC hysteria

Former ASIC chair Jeffrey Lucy has warned an overreaction to the scandal surrounding PwC risks ‘massive unintended consequences for our capital market and those who operate it’.

The former chair of the Australian Securities & Investments Commission and veteran accounting industry figure Jeffrey Lucy has warned an overreaction to the scandal surrounding PwC Australia risks “massive unintended consequences for our capital market and those who operate it”.

Mr Lucy, who ran the corporate regulator from 2003 to 2007 and was the PwC Adelaide managing partner from 1999 to 2001, said partners from the firm who disclosed confidential Commonwealth tax information should be punished.

“A very small minority have erred and so that’s fair enough – we should allow the law enforcement agencies to get to the bottom of what’s occurred,” he said.

“If they decide to lay charges the whole thing should lead to a prosecution of those responsible.”

But he warned the response to the scandal risked the “fantastic history” PwC had in providing services that were “valuable to capital markets”.

“We should take a mature view and realise the majority of people in PwC are honest, straightforward and competent people and business should continue for them,” he said.

In a letter published in The Australian, Mr Lucy noted that the breaches of confidentiality PwC stands accused of were “extremely rare”.

“We need to punish those who have broken laws, but at this time we also need to accept that it is likely to be a very small percentage of the many who work at PwC, and allow that majority to continue to carry on their business in a fully compliant manner,” Mr Lucy writes.

Former Australian Securities and Investments Commission chairman Jeffrey Lucy.

Mr Lucy, who was key to Australia’s adoption of the International Financial Reporting Stan­dards in his role as chair of the Financial Reporting Council, told The Australian he was surprised Treasury had given PwC’s former head of global tax Peter Collins access to consultation sessions over the Multinational Anti-Avoidance Law framework.

Mr Collins was deregistered by the Tax Practitioners Board for two years after it found he “failed to act with integrity”.

Mr Lucy said Mr Collins’ breach of confidentiality agreements signed with Treasury was “appalling”. “To breach confidence in a manner where there was a financial reward amplifies the problem,” he said.

A tranche of emails released by the TPB to federal parliament have revealed Mr Collins shared the confidential information with at least 53 current and former PwC staff and partners.

Several members of parliament have demanded the TPB, PwC, or the Australian Taxation Office release the names of PwC staff who received confidential information.

PwC has declined to do so, but the firm is understood to have assembled an internal list of about 36 names in a bid to establish who had access to the information and their potential culpability.

The firm stood down nine partners on Monday over the tax leaks, including Pete Calleja, who headed its financial advisory division, and chief strategy, risk, and reputation officer Sean Gregor.

Tom Seymour, who previously ran PwC’s tax practice and was chief executive after Luke Sayers retired from the role in 2020, was forced to resign after admitting to partners he was a recipient of the emails which highlighted marketing of the confidential tax advice.

Mr Lucy said the names of PwC staff connected to the tax scandal would come out, but caution on releasing the names was warranted.

Former PwC chief executive Tom Seymour. Picture: Gary Ramage

“Naming a person doesn’t indicate a level of responsibility they may or may not have,” he said.

“I think they’re right in taking their own advice considering all the issues and initiating when it is appropriate they will provide whatever information is available.”

PwC has faced days of bruising Senate estimates hearings, including revelations Treasury had referred PwC and Mr Collins to the Australian Federal Police.

The Department of Finance said it had directed PwC to stand down all partners linked to the tax scandal from government work.

Green senator Barbara Pocock, a vocal critic of PwC over its actions and responses, said it had not been transparent.

“Come clean about exactly who did what and when and what sort of transparency they will offer into the future,” Ms Pocock said.

Former prime minister Malcolm Turnbull said he was “absolutely” unaware of the PwC tax leak scandal when he was prime minister, noting the breach of confidence was ”mind-boggling”.

After the ATO said it was unable to reveal the breaches due to secrecy provisions, Attorney-General Mark Dreyfus said secrecy provisions were “key to tax compliance”.

Mr Dreyfus said the National Anti-Corruption Commission would be up and running next month, ready to manage a referral of the PwC matter, after Ms Pocock said she would do so.

“PwC needs to be fully accountable for its actions,” he said. “ This has got some way to run yet. The matter of the names is part of the continuing investigation that continues handling this matter by the Tax Practitioners Board and no doubt in the investigation by the Australian Federal Police.”

Originally published as Former ASIC boss Jeffrey Lucy warns of risks from PwC hysteria