‘Nerds gone wild’: PwC’s ‘last hurrah’ before tax avoidance scandal erupted

Mere months before the PwC tax avoidance scandal exploded, rocking the Australian financial world, its big names gathered in Tasmania.

Six months before the PwC tax avoidance scandal exploded, rocking the Australian financial world, most of the consultancy firm’s 950 partners gathered in Hobart, Tasmania.

It was November of 2022. According to The Australian Financial Review, which reported on the event today, attendees now describe it as their “last hurrah” before the scandal.

Or, as one partner put it to the newspaper: “Nerds gone wild.”

The party reportedly included speeches from tennis star Dylan Alcott, surfer Layne Beachley, former New South Wales Premier Gladys Berejiklian and broadcaster Stan Grant.

The PwC building in Sydney’s CBD. Picture: Gaye Gerard/NCA NewsWire

The PwC tax scandal’s origins lie much further back 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 grew, the federal government essentially banned PwC from doing any further business with the Commonwealth – a huge loss for the firm.

Treasury also referred the scandal to the Australian Federal Police.

Peter Collins, former international tax leader for PwC Australia. 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.

In June of 2023, PwC Australia named its new chief executive officer and announced it would sell off its government operations to a private equity firm for just $1 in an attempt to repair its reputational damage.

In a bid to ward off further controversy, PwC confirmed that all of its federal and state government business would be divested exclusively to Allegro Funds for that meagre sum.

The new entity was referred to as project “Bell”.

PwC Australia operates on a partnership model, meaning it is not incorporated and is not subject to corporate governance oversight. Instead it has voluntarily adopted a code of conduct.

The deal involved about 130 partners and 2000 staff. The government consulting operations arm of PwC was responsible for about 20 per cent of the firm’s revenue in the 2023 financial year.

PwC boss questioned about bonus

Earlier this month, a committee inquiry heard claims current PwC Australia boss Kevin Burrowes was “serving two masters” by receiving an additional $1.2 million from the consultancy giant’s international parent.

That is what a bipartisan committee looking into the PwC tax scandal heard.

Mr Burrowes revealed he received the hefty sum for advising PwC International on the tax scandal on top of the $2.8 million salary he disclosed as PwC Australia’s chief executive.

The criticism came from Corporations and Financial Services Committee chair Deborah O’Neill during a hearing. She called it a “profound conflict of interest”.

Ms O’Neill lambasted Mr Burrowes for “misleading” her by not disclosing the secondary salary at a previous hearing.

Kevin Burrowes.

Asked about not previously disclosing the $1.2m bonus to a previous parliamentary inquiry, Mr Burrowes said he believed questions levelled at him previously were exclusively focused on his role as PwC Australia chief executive.

“I’m happy to discuss that other role,” he said.

“I actually don’t believe it is a conflict, and I’m happy to discuss that in detail.”

The Labor senator shot back, saying Mr Collins “didn’t believe it was a conflict to take information from the government” and share it with the firm’s corporate clients.

“I’m starting to be very concerned that there are a number of people floating around in this PwC ecosystem, who are not … considering there are conflicts of interest when to any other independent observer, your decision to accept payment from two masters is (riddled) with conflict of interest,” said Ms O’Neill.

“So we are perceiving this extremely differently, Mr Burrowes, and I can’t understand why you don’t see that as a conflict.”

Mr Burrowes hit back, telling the committee “we have been extraordinarily transparent with you”.

“We have answered hundreds of questions,” he said.

Originally published as ‘Nerds gone wild’: PwC’s ‘last hurrah’ before tax avoidance scandal erupted