New PwC boss Kevin Burrowes could be hauled before inquiry

PwC Australia’s new chief executive, Kevin Burrowes, could be called to appear before the joint federal parliamentary committee as it deepens its probe into the firm’s tax leak scandal.

PwC Australia’s new chief executive, Kevin Burrowes, could be called to appear before the joint federal parliamentary committee on corporations and financial services as it deepens a probe into the knowledge among PwC Global partners about its tax leak, committee chair Labor senator Deborah O’Neill said.

The beleaguered consulting firm on Sunday drafted in Mr Burrowes as chief executive along with a move to spin off its government advisory business into a separate company. However, politicians continue to seize on the crisis amid pressure to widen an investigation.

“There is a warning to everyone who would like this thing to go away,” Senator O’Neill told The Australian.

“This wasn’t just PwC Australia which was embedded into this tax leak failure, it was the entire PwC global network of tax practitioners.

“This didn’t happen in a single office, this is a chair of the board and a senior counsel decision and I dare say some ­reportage to the PwC global network as well.

“I will be leading the charge to investigate all of these things.”

Senator O’Neill said PwC Australia and PwC Global were still “putting profit ahead of truth telling and without consideration of the potential risk to the nation”.

“It is beyond belief that PwC Australia and Global think they can just phoenix their way out of the deep cultural failures that are a matter of record and are unresolved,” she said.

“More of the same with a new name is still more of the same.”

Senator O’Neill said she was pleased that a PwC executive had issued an apology for the tax leak scandal and said it could be good that someone from outside PwC Australia was being brought in.

She said she would like to call Mr Burrowes before her committee, but this would be a matter for the broader committee.

She said she hoped that the arrival of the new boss, who is set to transfer from his current role in Singapore to take over from acting chief executive Kristin Stubbins once his visa is approved, would usher in a new era of more transparency at the firm.

Incoming PwC Australia CEO Kevin Burrowes.

But she said there was still a lot more detail about who knew what about the tax scandal to be made public, with the names given to the committee of people who had been copied into emails about the Project America tax structuring, including the names of executives in the firm’s tax practice in the UK, Ireland, Singapore, The Netherlands and the US.

Senator O Neill and Greens senator Barbara Pocock both expressed scepticism about whether the new company – which will be owned by private equity company Allegro with 130 partners also having an equity stake, and operating under the working name Bell – could be seen as independent from the cultural problems at the firm that led to the scandal.

Senator O’Neill said the 130 or so partners who would head off into the new company to focus on government consulting were partners at the time of the tax leak scandal.

“If they leave the partnership, they will be a new company but what is the relationship of that company to PwC?” she said.

“With more than 130 partners involved, it will be hard to imagine that there wouldn’t be a cultural transfer of practice from one entity to another.”

Senator O’Neill will ask more questions about the situation in the joint parliamentary hearing on Tuesday that will hear from Australian Securities & Investments Commission chairman Joe Longo.

Senator Pocock said PwC’s proposal to spin off its public sector work into the new company did not “deal with the internal inherent conflicts of interest that exist within consultancies doing work for the government”.

“The conflicts are still there, they don’t just magically disappear when you rebadge the partnership and put up a fence,” she said.

“This new set-up doesn’t stop unethical practice. There is still an opaque partnership model, which will continue working to harvest government contracts – a stream of contracts that is likely falling to a trickle in view of recent events.

“There are key questions about ethical practices, proper management and the internal culture at PwC which remain unaddressed by a restructure.

“What happens if there are fines or criminal charges? How will they be dealt with under the new entity? Is there any actual liability for what’s happened that can be addressed by this phoenix rising from the ashes of PwC? How will it deal with adverse findings from the several inquiries being conducted?”

She said PwC’s business model remained intact and its conflicts of interests remain unaddressed.

“We should be hearing about what the solutions look like, not about how the partners will survive the crisis,” she said.

“These events raise questions about the break-up of the Big 4. Should the partnership model be abandoned? Should partnership behemoths be broken up to limit structural conflicts of interest?

“These are the larger issues that must be dealt with going forward. Including the significant question of ensuring ethical behaviour.”