PwC tax avoidance scandal gripping the finance world

A tax scandal gripping a top Australian firm is continuing to grow, with PwC putting nine unnamed partners on leave today.

The scandal gripping consultancy firm PwC has deepened, with nine of its partners to take immediate leave.

One of the “big four” accounting firms in Australia, PwC has been rocked by a tax avoidance scandal since January.

A criminal referral was made last week and there are reports that a secret list containing the names of 36 people allegedly linked to the scandal could be tabled in federal parliament.

PwC competitor Deloitte has weighed in, with the chief executive and chairman describing the storm as “deeply troubling and disappointing”.

The PwC (Price Waterhouse Coopers) building. Picture: Richard Milnes/Alamy

The scandal started when, in 2015, the Federal Government moved to crack down on multinational corporations avoiding tax by developing the Multinational Anti-Avoidance Law.

The former head of international tax for PwC Australia, Peter Collins, was brought in to help the government design the laws. He signed three separate confidentiality agreements as part of that process.

It’s alleged that Mr Collins received confidential information and documentation — and proceeded to share information within PwC with colleagues who were not authorised to receive it, a Tax Practitioners Board inquiry found.

His registration as a tax practitioner was terminated for breaching the Professional Conduct in the Tax Agent Services Act 2009, which required that he must act honestly and with integrity, and to avoid conflicts of interest.

It’s alleged that PwC used that information to effectively market tax avoidance schemes around the world.

As the scandal has grown, last week the Federal Government essentially banned PwC from doing any further business with the Commonwealth — a huge loss for the firm.

Treasury has also referred the scandal to the Australian Federal Police, which is weighing whether to open a criminal investigation into the matter.

Former PwC partner Peter Collins . Picture - Supplied

Treasury said in a statement that Peter Collins had “improperly used confidential information”. It also pointed to a “wide range of individuals within PwC who were directly and indirectly privy to the confidential information”.

“Treasury has referred the matter to the Australian Federal Police to consider commencement of a criminal investigation,” the statement read.

The list of people who had access to that information has not been publicly revealed — however that could soon change.

Greens senator Barbara Pocock has indicated she wants to table a list of the partners, who were named in emails.

It’s understood about 14 US tech companies and 50 PwC partners are named in the emails.

Those companies will likely be watching nervously and awaiting a potential PR nightmare.

PwC Australia acting chief executive Kristin Stubbins is expected front a Senate committee on June 7.

Nine unnamed partners were put on leave today, effective immediately, pending the outcome of an ongoing PwC investigation. Also two executive board members have stood down from their leadership positions.

Ms Stubbins released a statement today stating, “I want to apologise on behalf of PwC Australia. For sharing confidential government tax policy information and for betraying the trust placed in us.

“Specifically, I apologise to the community; to the Australian government for breaching your confidentiality; to our clients for any questions this may have raised about our integrity and trustworthiness; and to the 10,000 hardworking, values-driven PwC Australia partners and staff who have been unfairly impacted.”

Ms Stubbins admitted there had been a clear lack of respect for confidentiality and that PwC Australia did not have adequate processes and governance in place, citing poor decision making.

She added that PwC had a culture at the time in its tax business that allowed inappropriate behaviour — and that the firm had not properly held its leaders and those involved to account.

“Although investigations are still underway, we know enough about what went wrong to acknowledge that this situation was completely unacceptable,” she stated.

“No amount of words can make it right. But I am fully committed to taking all necessary actions to re-earn the trust of our stakeholders. And, as we work through this process, I am committed to being fully transparent.”

Originally published as PwC tax avoidance scandal gripping the finance world