New revelations about legal letter sent to PwC in wake of tax scandal

Embattled big four consulting PwC appears to have a fresh controversy brewing just a week after hundreds of jobs were slashed.

Embattled big four consulting firm PwC appears to have a fresh controversy brewing just a week after hundreds of jobs were slashed.

PwC has been in the limelight ever since its tax scandal was exposed last year, sparking allegations that the firm had used confidential information supplied by the Australian government to market tax avoidance schemes around the world.

On Monday morning, The Australian Financial Review reported that it had obtained a letter sent at the peak of the tax leak furore where PwC’s global arm demanded control of PwC’s Australian branch.

It cited “ongoing reputational and global brand damage” from the scandal.

According to the publication, PwC International sent a legal letter to PwC Australia last year stating it was a “defaulting firm” under the company’s own internal machinations and ordered Kevin Burrowes to be placed as the firm’s new interim chief executive.

That same letter also stated PwC Australia is under the “supervised remediation” of PwC International.

PwC said there was nothing secretive or scandalous about it.

Mr Burrowes was parachuted in as the interim chief executive of PwC Australia days after the scandal broke halfway through last year, rescinding his role with PwC International.

A general view of the PWC Building in the CBD in Sydney after PwC Australia staff have been told 366 jobs will be axed as part of widespread cuts announced within the firm last Wednesday. Picture: NCA NewsWire/ Gaye Gerard

He had previously been the global clients and industries leader at PwC International.

As Australian CEO, he now reports directly to PwC Australia’s board of partners and not the international branch.

PwC Australia Chair Justin Carrol said it was “entirely appropriate” for PwC Australia’s international organisation to become involved in the company’s running.

“As a member of the PwC global network, it’s entirely appropriate that we work with our global colleagues on our remediation actions and to rebuild trust,” he told news.com.au.

“As a firm, we are working hard on the necessary steps we need to take to improve our governance, culture and accountabilities to restore trust in our firm on behalf of our people and our partners.”

PwC’s conduct has drawn the ire of Australian regulators but the scandal has not yet spilled over to the global market.

However, the release of a much-anticipated report is expected to trigger investigations from the US and UK financial watchdogs.per

Called the Linklaters report, this document is expected to name and shame overseas partners with links to the tax scandal.

The Senate committee investigating the tax leak is keen to get their hands on this document but in February, Mr Burrowes said he had not yet obtained the report from PwC’s international arm.

A company spokesperson previously stated “there was no evidence that PwC personnel outside of Australia used confidential information from PwC Australia for commercial gain”.

“PwC Australia continues to co-operate fully with regulators,” they added.

PwC has been in the spotlight for all the wrong reasons for the past year amid a major tax scandal. Picture: NCA NewsWire/ Gaye Gerard

Since mid last year, PwC has been embroiled in a messy scandal.

Allegations emerged that its former head of international tax Peter Collins had received confidential tax information from the government, and proceeded to share it with colleagues.

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

The matter has sparked a Senate inquiry and resulted in the firm divesting all its federal and state government businesses for a mere $1.

This has resulted in hundreds of job losses as former employees found themselves with no title to return to.

Last week, the embattled firm announced it was slashing another 366 jobs as part of widespread restructuring in the wake of the scandal.

The company commissioned an independent review by Dr Ziggy Switkowski to inspect its governance, culture and accountability after the scandal erupted.

It then launched a ‘Commitments to Change’ strategy last year, admitting there had been a “failure of leadership”.

As part of this strategy, the firm vowed to bring in changes that would improve problems identified in the report, based around a vision of having the “highest ethical and professional standards with integrity at our core”.