Former PwC boss Luke Sayers grilled over tax leaks in senate inquiry

Senators are grilling the former chief executive of embattled consulting giant PwC Australia at a senate inquiry in Canberra.

Former chief executive of embattled audit and consulting giant PwC Australia Luke Sayers has fronted a senate inquiry into the federal government’s use of consulting services.

The probe follows revelations that the firm’s former tax partner Peter Collins shared confidential information with other staff and partners at the firm regarding multinational tax measures it was helping Treasury to develop in 2015.

The accounting firm subsequently used the confidential information to advise major corporations on how to sidestep the tax changes and market the firm.

Collins was deregistered in November 2022 as a tax agent for integrity breaches by the Tax Practitioners Board and was handed a two-year ban on becoming a registered tax practitioner.

The AFP has commenced a criminal investigation into the matter.

Former PwC boss Luke Sayers led the embattled consulting giant when the firm breached confidentiality over multinational tax measures. Picture: NCA NewsWire / Martin Ollman

Sayers reasserts no knowledge of confidentiality breaches

Mr Sayers, who serves as the president of the Carlton Football Club, served as the PwC boss for more than eight years, between April 2012 and May 2020, and has previously denied any knowledge of the confidential tax leaks.

Speaking at the senate inquiry, Mr Sayers reasserted he had no knowledge of the confidentiality breaches and said the Australian Taxation Office (ATO) should have notified him.

“I did not know of breaches of confidentiality agreements in PwC tax business until this year,” Mr Sayers said.

Despite Mr Sayers meeting with the ATO in the years after it knew of the confidentiality breaches he said the issues were not raised.

“Let me clearly say if the ATO had directly informally advised me as the CEO of PwC, Australia, that Peter Collins had breached obligations of confidence, I would have sought details and ensured a full and thorough investigation.

Previously, the ATO has claimed it had told Mr Sayers to “personally review the internal emails” at the firm relating to the tax leaks.

Mr Sayers reasserted he had no knowledge of confidentiality breaches at the firm. Picture: NCA NewsWire / Martin Ollman

Sayers in fiery exchange with senators

In a fiery exchange with Labor senator Deborah O’Neill and Coalition senator Richard Colbeck, Mr Sayers was quizzed over his recollection of notification he received from the ATO.

“Three occasions (ATO officials) met with you and you don’t recall. How do we accept that?” Mr Colbeck asked.

Mr Sayers said he had no recollection that he had been notified by the ATO.

“And you don‘t recall?” Senator O’Neill asked, adding “If you needed clarification, that was the moment surely you should have asked if it had happened.

“If it had happened, I would’ve asked,” Mr Sayers responded.

”One of you is not telling the truth,” Senator O’Neill said

Mr Sayers responded that he was not calling anyone a liar. “Senator, please. This is a respectful place.”

Senator Barbara Pocock asked the former PwC boss if the firm’s accountability and governance failings had deteriorated over his tenure. Picture: NCA NewsWire / Martin Ollman

Switkowski report does not reflect “balanced approach”: Sayers

Fielding questions from Senator Pocock, Mr Sayers batted away suggestions that the firm’s “shadow” culture, identified in the Switkowski inquiry, had festered over his tenure as chief executive.

“We had a balanced scorecard for qualitative objectives for the firm, for quantitative objectives for the firm. We subscribe to purpose first, and the approach through my eight years was very, very balanced,” Mr Sayers said.

But Senator Pocock argued the “forensic evaluation” of Mr Sayers’ tenure in the top job clearly demonstrated his failings.

“You cannot argue unless you want to call Dr Switkowski’s report an unfounded and untrue report? It is a report on your leadership Mr Sayers, is it not?”

In response, Mr Sayers said a number of recommendations provided by Dr Switkowski had previously been in place when he left the firm.

“We had a balanced scorecard. It was purpose and profit,” he said.

Mr Sayers found himself in a fiery exchange with senators. Picture: NCA NewsWire / Martin Ollman

Conflict of interest between consulting and audit arms troubling: Sayers

Mr Sayers said from 2017, while serving as PwC chief executive, he became troubled by the conflicts between its consulting and audit divisions.

“In 2017/18/19 I was becoming more and more concerned about the depth and breadth of professional services firms here, here in Australia,” Mr Sayers told the inquiry.

“I was becoming concerned about the audit quality and investing into the audit business and doing absolutely everything we can or should to protect citizens through the audit function.”

Mr Sayers said he was cognisant of the conflicts between providing consulting services to firms or organisations that PwC was also offering auditing services to.

“The audit and assurance business was growing, (the) tax and legal business was growing, and the advisory business consulting to both public sector clients and also to private sector clients was growing and this was a trend across the entire big four (accounting firms)”

PwC executives are appearing before a senate probe into the consulting firm’s infamous tax leaks scandal. Picture: NCA NewsWire / Martin Ollman

Burrowes reiterates PwC apology

Earlier, PwC’s newly appointed chief executive Kevin Burrowes appeared alongside senior executives Jan McCahey and Catherine Walsh in Canberra on Thursday.

In his opening statement to the committee, Mr Burrowes reiterated the firm’s remorse following the scandal that has beset the firm.

“For this, I am sorry … and PwC Australia is sorry to our people, our clients, our stakeholders,” he said.

“To the government and to the Australian people, we cannot apologise strongly enough for breaching the trust placed in us and we accept the justifiable questions this matter raised about our trustworthiness and integrity.”

Senators rubbish Switkowski report

Greens, Labor and Liberal senators have criticised the review into the firm’s culture, run by former Telstra boss Ziggy Switkowski, as vague, inaccurate and limited in its scope.

“Mr Burrowes, it’s an internal report. It’s an internal working document for PwC,” Senator O’Neill said.

“The review did not include interviews with several former PwC partners who are not available as a result of retirement or exit from the partnership during the course of the review.”

Senator O’Neill added that the terms of reference of the Switkowski report were never made public.

Greens senator Barbara Pocock accused the Switkowski report and the PwC’s subsequent response failed to ensure accountability could properly be pursued.

Coalition senator Richard Colbeck claimed that Dr Switkowski was prevented from conducting a full inquiry Picture: NCA NewsWire / Martin Ollman

“The report and your strategy skips that taking responsibility and accountability phase and go straight to the future,” Senator Pocock said.

Responding, Mr Burrowes argued the review was detailed and independent.

“It involved interviews with many people, the presentation of a huge number of documents to him, focus group meetings,” Mr Burrowes said.

“And, you know, I think he did a really thorough and diligent job in undertaking that investigation into PwC’s governance culture.”

But Senator Colbeck claimed that Dr Switkowski was prevented from conducting an adequate review into failings of the firm.

“I’m not trying to reflect on Dr Switkowski because I get a sense of how difficult the job was, having read the report,” he said.

PwC has lost its “social licence”: Pocock

Senator Pocock criticised the firm over its insufficient response, arguing that the Senate and the Australia public “no longer trust” PwC to implement new “self regulation” measures.

“You‘ve got self regulatory actions that you’re voluntarily committed … They’re motherhood statements about how good governance should look,” Senator Pocock said.

She said there were no regulatory consequences if the firm didn’t abide by the recent changes it had adopted to improve governance and accountability.

PwC chief executive Kevin Burrowes apologised. Picture: NCA NewsWire / Martin Ollman

“They do not have teeth, and they do not constitute a significant shift,” she said.

“You have lost the social licence to self-regulate and the self-regulations you offer are completely inadequate to the challenges and the disaster that you presented to the Australian people.”

But Mr Burrowes said the firm had adopted almost two dozen recommendations in the Switkowski review and was not in a position to change government regulations.

“I'm not in a position to be able to regulate my firm,” he said.

Ms McCahey, responded that the firm operates “within the regulatory framework that exists today in this country.”

Mr Burrowes was parachuted into the role from the firm’s Singapore office to assist Australia’s beleaguered audit and consulting arm. Picture: Supplied

PwC’s processes ‘crap’: Colbeck

Committee chair Colbeck questioned how the business could possibly regain the trust and respect of government clients again.

“On what basis can you say to us today that any of this is going to change?” Senator Colbeck asked.

Senator Colbeck said the firm already had significant processes in place to prevent wrongdoing at the time that had demonstrably failed.

“How outrageous we see this is and … I genuinely wonder how you believe that you can recover trust when all of the systems that you say that you have, all of the procedures that you say that you have, at a local and a global level were ignored,” he said.

The Switkowski report showed how “crap things were inside (the) business,” Senator Colbeck said.

PwC’s ‘shadow’ culture previously revealed

In September, PwC was savaged in an independent review that exposed the firm’s “shadow culture”.

The review consistently found the attitude among staff that “revenue is king” and partners who exceeded their KPIs were treated as “heroes”.

The report painted a brutal and unaccountable culture atop the big four firm, which was driven by a “growth at all costs” mantra with a myopic focus on “revenue, revenue, revenue”.

In an attempt to rebuild trust with the government, PwC hived off its government consulting arm and sold it to private equity firm Allegro Funds for $1 in July.

On Thursday, the newly established spin-off firm, Scyne Advisory was cleared by the Finance Department to take on PwC’s former contracts and consult on new government projects.