PwC board warned over making Tom Seymour new CEO amid tax scandal concerns

PwC chairman Peter van Dongen was warned by authorities that incoming CEO Tom Seymour was potentially compromised by an ATO investigation, but appointed him anyway.

PwC chairman Peter van Dongen was warned by authorities that incoming CEO Tom Seymour was potentially compromised by an Australian Taxation Office investigation, but appointed him anyway.

Mr van Dongen, who chaired PwC’s board of partners from 2018 to July last year, was warned by several members of the firm that allowing Mr Seymour to take over the top job could create a massive headache given his links to the tax practice.

PwC sources have told The Australian PwC’s former chief executive, Luke Sayers, even warned Mr van Dongen about the tax office’s concerns with Mr Seymour after a meeting in early 2020 with ATO deputy commissioner Jeremy Hirschhorn.

After his meeting with Mr Hirschhorn, PwC sources report Mr Sayers sharing the ATO’s concerns with the firm’s governing board.

The board was already aware of issues around the tax partnership prior to Mr Sayers’ communication of the ATO’s views, with a standing item to consider the ongoing investigation into the tax practice at the start of every meeting.

Despite all this, Mr van Dongen approved Mr Seymour taking on the top job at PwC.

A timeline of the ATO’s investigation into PwC, released by parliament, shows Mr Hirschhorn met with Mr Sayers in February 2020, shortly before Mr Seymour was made CEO in May.

Former PwC Australia chief executive Tom Seymour. Picture: Bloomberg/Brendon Thorne

The document notes Mr Hirschhorn told Mr Sayers that it was not the ATO’s “role or appropriate to comment on election processes”.

But Mr Hirschhorn reports informing Mr Sayers “the PwC board should ensure that it is fully abreast of the range of concerns the ATO has had with PwC tax group’s behaviour”.

Sources with knowledge of the meeting have indicated Mr Hirschhorn, using the restrained language of the tax office, told Mr Sayers the board should fully consider the implications of appointing Mr Seymour as CEO.

Mr Hirschhorn is understood to have told Mr Sayers the board should be fully abreast of the ­issues around PwC’s tax practice and the issues in the practice, before making any decision around Mr Seymour as CEO.

Leading up to this meeting in 2020, the ATO had repeatedly clashed with PwC over the firm’s highly aggressive tax strategies, demanding tens of thousands of documents from the firm.

Mr Hirschhorn and Mr Seymour, who previously ran PwC’s tax practice, clashed in an August 2016 meeting in which the ATO raised its concerns with the firm over its Multinational Anti-Avoidance Law (MAAL) structuring strategies launched soon after the laws were introduced.

That meeting, which some have described as very direct and one in which both sides raise their voices, resulted in the ATO warning Mr Seymour that PwC’s practices would expose the firm to a direct response from the tax office.

The tax office skirmished with PwC over several years after growing increasingly concerned over PwC’s move in 2016 to offer artificial workarounds to the new MAAL introduced to force large companies to pay more tax.

The ATO discovered PwC had prepared for the MAAL’s introduction after the firm’s former head of international tax, Peter Collins, shared confidential government briefings with members of the firm in Australia, the UK, and the US.

Peter van Dongen, PwC’s former board of partners chairman.

Mr Sayers has said he had no knowledge of PwC’s use of confidential information until this year.

Mr Seymour has previously said he was a recipient of emails that highlighted the firm’s marketing approach of aggressive tax services but has denied he misused confidential information.

PwC said it first learned of Mr Collins’ confidentiality agreements in March 2021 and only formally started investigating the matter in May this year.

PwC has conceded to The Australian that a review into the firm’s tax practice, previously led by Mr Seymour, failed to identify the confidentiality breaches that have torpedoed the audit and consulting giant’s reputation and triggered a near total turnover of the firm’s leadership.

PwC has been under siege after the Tax Practitioners Board banned Mr Collins for two years after finding that he shared confidential information with partners at the firm. Documents released by parliament show PwC, while being led by Mr Seymour, approved an eight months redundancy payment to Mr Collins and allowed him to remain a member of the firm’s retirement program. However, this was rescinded after Mr Seymour stepped down from the top job in May.

A PwC spokesman said the firm tried to respond to ATO concerns about the “culture of the tax team”, but conceded its reviews failed to identify Mr Collins’ breaches. “PwC took steps to improve, including commissioning the Quigley review and implementing its recommendations,” he said. “We recognise that had we done a more thorough investigation at the time we would have identified the historical conduct that has since come to light.”

Greens senator Barbara Pocock said PwC had displayed a “failure of governance within the PwC structure”. She said: “Their board clearly failed to act on what’s been reported as pretty frank advice and now the firm is suffering the consequences.

“I think all the big four consults need to overhaul their partnership structures because they are not set up to provide the kind of guidance and accountability that is required for businesses of this magnitude operating in Australia.”

Mr van Dongen and Mr Seymour did not respond to requests for comment.