PwC signed secret settlement with ATO as scandal disclosure loomed

PwC signed a secret settlement with the ATO ahead of bruising parliamentary hearings into confidentiality breaches, it has been revealed.

PwC has disclosed it signed a settlement with the ATO in the lead up to parliamentary hearings. Picture: NCA NewsWire / Damian Shaw

PwC Australia and the Australian Taxation Office signed a confidential settlement in March, just weeks before emails were published showing the depth of the tax scandal surrounding the firm, a response to a NSW inquiry into the use of consultants has revealed.

The professional services firm on Wednesday disclosed it had signed a peace deal with the ATO in March.

The deal was disclosed in response to demands for details on all settlements signed by PwC.

PwC’s new chief risk and ethics leader Jan McCahey has declined to reveal further details to the NSW parliament.

“We are legally unable to disclose the details of this settlement,” Ms McCahey wrote in a response published on Wednesday.

The settlement came just weeks before PwC’s chief executive Tom Seymour left the top job, after the federal parliament published emails showing a number of staff at the firm had been aware of the misuse of confidential information.

The timing of the settlement came some years after the ATO and PwC first butted heads, after the tax office learnt the firm had secretly distributed confidential government tax briefings within its tax practice in a bid to get ahead of new laws set to be introduced in 2016 that would ratchet up tax paid by multinational companies.

Jan McCahey

The ATO has disclosed how it and PwC clashed repeatedly as the tax office sought to investigate the firm’s actions.

Appearing before the Senate in May, ATO Commissioner Chris Jordan and second commissioner Jeremy Hirschhorn were subjected to hours of questioning over PwC’s leaks.

PwC’s former head of international tax Peter Collins leaked the confidential briefings, which he was given after consulting with Treasury.

Neither Mr Hirschhorn nor Mr Jordan disclosed the ATO had settled with PwC in March in the hearings.

But, Mr Hirschhorn defended the ATO’s confidential settlements, noting they were “a really important part of the conduct of the tax system”.

PwC and the ATO have been contacted for comment.

Tax Commissioner Chris Jordan fronting a Senate inquiry into corporate tax avoidance along with ATO Deputy Commissioner Mark Konza and ATO Deputy Commissioner. Jeremy Hirschhorn. Picture: Tim Hunter.

The settlement disclosure comes just days after Ms McCahey signed off on disclosures to the Tax Practitioners Board of PwC’s response to orders demanding it conduct training sessions for its tax staff to obey confidentiality rules.

Ms McCahey’s response has also revealed the terms of reference of PwC’s investigation into the tax scandal being run by corporate veteran Ziggy Switkowski.

PwC has revealed Mr Switkowski’s report is due on August 18, but the firm would not release until some time in September.

But the terms of reference are light on which terms of reference relate to PwC’s tax leaks, despite statements from the firm in May that noted the review would “address issues identified by the Tax Practitioners Board’s investigation into the firm’s use of confidential tax policy information”.

The terms of reference note there should be a review of the role of the board in relation to “reporting, information, and escalation of issues from and to management (including of the related tax matters)”.

The review will also look at issues management “with reference to recent tax matters”.

NSW inquiry chair, Greens upper house member Abigail Boyd, said she was concerned over PwC’s response to questions around its hiring of public servants or how many of its staff were seconded to government agencies.

PwC told the inquiry it could only detail the names of four public servants currently working in PwC: Tim Reardon, Mick Fuller, Steffan Faurby, and Brett Lovett.

The firm said it could not detail seconded staff details as it did “not maintain consolidated records relating to secondments to state or federal government departments or agencies”.

Ms Boyd told The Australian that PwC’s response was a “cute answer to a really important question”.

“I didn’t ask them for their consolidated records, I asked for detailed information which I expect them to do the work to obtain in order to provide to the NSW parliament,” she said.

“PwC haven’t got the message about transparency. They’ve not got the message the public is expecting transparency and accountability from them.”

Originally published as PwC signed secret settlement with ATO as scandal disclosure loomed