AFP says its ‘complex’ investigation into tax scandal faces legal roadblocks

Though making progress, the AFP has told Senate Estimates that its investigations into PwC’s misuse of tax information is being stymied by legal professional privilege claims.

Former PwC partner Peter Collins at his home in Sandringham. Picture: Luis Enrique Ascui

An investigation into PwC Australia and several current and former partners “has made significant advancements”, according to Australian Federal Police investigators, as a search warrant of the firm’s Sydney office stretched into its second day.

Appearing before Senate Estimates on Tuesday, the AFP revealed the PwC investigation, examining the firm’s misuse of confidential government tax information, was proving to be “complex” as officers delved into the scandal.

AFP acting commissioner Ian McCartney told the Senate the police were grappling with the historical nature of the alleged offending as well as “the existence of derivative use immunity connected to other investigations, and legal privilege”.

The AFP launched its investigation in May last year, after Treasury referred allegations that PwC’s former head of international tax Peter Collins breached government confidentiality deeds, sharing details of a yet-to-be-introduced tax reform with others in the firm.

This saw PwC implement new tax structures for clients ahead of the 2016 introduction of the Multinational Anti-Avoidance Law, aimed at stopping major corporations offshoring profits while paying little tax.

PwC chief executive Kevin Burrowes gives evidence before a parliamentary joint committee.

Mr McCartney told the Senate AFP officers had executed two search warrants in August, including a search of Mr Collins’ house in Sandringham and a property in Sorrento believed to be connected to the former PwC partner.

Mr Collins did not respond to requests for comment.

AFP officers also entered PwC’s Sydney offices on Monday in an attempt to delve through internal firm records, sparking an email to partners from chief executive Kevin Burrowes warning police were reviewing “the historical tax matter and individuals who have left our firm”.

The AFP search came after PwC firm agreed to facilitate the entrance of investigators.

Sources in the firm told The Australian PwC had been handing over documents for some months to AFP officers.

They indicated the search of internal systems was an escalation of AFP investigations, with others pointing to the deep dive as a sign of the complexity of the documentary evidence.

A previous Australian Taxation Office investigation into the confidentiality breaches saw the ATO and PwC locked in legal combat over tens of thousands of documents, amid claims by members of the firm they were legally protected.

PwC head of risk Jan McCahey appearing before the parliamentary committee.

The AFP has previously said its investigation into PwC, which has been dubbed internally Operation Alesia, was a “priority”, noting they were treating it as a “sensitive” investigation.

AFP are investigating whether PwC partners breached Section 70 or 90 of the Crimes Act, which relate to the disclosure of information and official secrets.

Section 70 imposes a duty not to disclose confidential information and allows for a two-year prison sentence for those found to have shared official secrets without authorisation.

Section 90 deals with false statements in documents filed or lodged with the Commonwealth or intentionally making statements known to be false, also subject to a two-year penalty.

The furore surrounding PwC has seen the firm banished from government contracts, with the audit and consulting giant dramatically moving to sever its government services arm last year in a $1 deal with private equity player Allegro Funds.

This business, rebranded Scyne Advisory, is now responsible for much of the former government consulting work performed by PwC.

The firm was awarded 51 contracts, worth a combined $37.6m, in the 2023-2024 financial year.

However, PwC has said it will not seek to bid for government work while under a cloud in the wake of the tax leaks.

Senate Estimates heard the firm was now unlikely to return to bidding for government work until at least mid-2025.

PwC had said it would stay in the wilderness until December this year, but Finance deputy secretary Richard Windeyer said the deadline had been delayed after discussions between the government and the firm.

Mr Windeyer said Finance had spoken with a number of PwC senior figures, including its head of risk Jan McCahey and the firm’s board over the potential return to bidding.

Mr Windeyer said if PwC were to face criminal charges flowing from an AFP investigation into the firm’s breaches of confidentiality, the government may look to extend any return date again.