PwC agrees to overhaul of its boardroom

PwC Australia has caved in to public pressure for an improved board structure, revealing it will overhaul its governance to meet ASX standards.

Consulting firm PwC Australia has caved in to public pressure for an improved board structure, revealing it will overhaul its governance to meet ASX standards as it prepares to release the much-anticipated Switkowski report into its tax leak scandal.

Alongside the report’s release on Wednesday, PwC will detail measures to appoint a non-executive chair and at least three non-executive board members, and release audited financial statements by September 2025.

Chief executive Kevin Burrowes said the publication of the Switkowski report was an important moment for the firm as it worked to rebuild government and corporate trust.

“From the top down, we are committed to rebuilding and re-earning the trust of our stakeholders,” Mr Burrowes said.

“We are committed to learning, changing and leading. It marks a moment from which we, and others, can measure progress against our commitments to enhance the firm’s governance, accountability and culture.”

Dr Switkowski had “90 consultations with senior leaders and partners, and held 18 focus groups across PwC offices”, in preparing the report, according to PwC.

The firm has already announced a new CEO and leadership team, started its search for

non-executive board members, changed the way partners are paid to emphasise non-financial measures, and created a better risk management regime.

However, senators involved in a parliamentary inquiry into consultants on Tuesday questioned why they or the Australian Taxation Office or the Tax Practitioners Board had received an advance copy of the Switkowski report.

At Tuesday’s Senate hearings, the inquiry also heard former PwC Australia chief executive Luke Sayers was warned of “significant concerns” the ATO had about former tax partner Peter Collins and his spread of confidential government tax information throughout the firm, the government was told at a senate hearing into consultants.

Mr Sayers is highly-connected Melbourne businessman is president of Carlton Football Club and has direct links with Victorian premier Dan Andrews — who announced his resignation on Tuesday — and billionaire Lindsay Fox.

The once-secretive workings of tax consultants and auditors exploded into the public consciousness earlier this year when PwC was found to have deliberately shared confidential information the government gave it as part of its advice on the so-called Google tax, and used this information to pitch to international companies how to avoid Australian tax.

Mr Sayers was in charge of PwC at the time Mr Collins was giving advice to the government on the Google tax, which the cross-border tax partner then went on to share with a newly created team known as Project North America — set up to capitalise on the learnings.

ATO second commissioner Jeremy Hirschhorn told the Senate inquiry he had several meeting with Mr Sayers in 2019 and 2020 and told him they had come across “various concerning emails” that he suggested the PwC boss investigate, though he said they weren’t as neatly complied as they later were for senate estimates.

“I suggested that he look through those emails provided to us to find the concerning emails,” Mr Hirschhorn said.

Senator Deb O’Neill, who played a key role in uncovering the tax leak scandal, questioned Mr Hirschhorn about whether there could be any doubt Mr Sawyers understood that there was material within the emails that was of concern to the ATO.

“I thought the matters I had raised were significant, and of sufficient concern that the firm would respond accordingly,” said Mr Hirschhorn.

Senator Barbara Pocock then suggested that Mr Sayers was directed to “emails which showed global and local interactions, so he was aware”.

“The first page of those emails makes it clear that there is sharing of confidential information with parties within global and local PwC that is evident on the first page, not to mention a whole bunch of pages that follow,” Ms Pocock said.

Mr Hirschhorn replied: “I think it is fair to say that within the emails there are multiple references to both the email marketing arrangements and references to confidentiality agreements and indications that the information was confidential.”

Mr Sayers made a public statement about the matter several months ago, in which he said he did not realise the information was confidential.

Mr Sayers made a public statement about the matter last month, in which he said he did not know about the breach of a confidentiality agreement by Mr Collins.

“I was working through a number of issues with the ATO, but a breach of a confidentiality agreement was not one of them,” Mr Sayers said at the time. “I was not aware of the existence of a confidentiality agreement signed by Peter Collins until I read about it in the media this year. I regret that I did not know about the breach of it earlier, as I would have taken firm action.”

PwC will on Wednesday release a report it commissioned by corporate veteran and former Telstra boss Ziggy Switkowski into the firm’s governance, accountability and culture.

The firm has had the report since last month, and the firm is expected to make several changes to its governance structure as a result.

The Tax Practitioners Board also fronted the inquiry and told senators that it was further investigating one individual relating to the PwC tax leak scandal, but would not say whether it was one of the nine people that PwC had already outed as being involved.

Meanwhile, Boston Consulting Group fronted the senate inquiry for the first time and told senators that it had “no known” breaches of confidentiality and a strong corporate governance structure.

However, when the firm was questioned about a submission made by a former public servant into work conducted by BCG, that he questioned may fall into the category of “unethical behaviour by consultants” and “the management of risks to public sector integrity,” BCG’s witnesses provided obfuscatory responses.

A former public servant, Mark Warburton, raised the issue of how a $1.8m contract awarded through an open tender process was expanded by an extra $880,000 without requiring any pricing approval, for research that some in the government viewed as unnecessary.

Ms Pocock said the consulting sector leaves the public “clueless” as to the value or content of their work and they are largely unaccountable to the Australian taxpayers who fund them.

“BCG tried to sell us on their high ethical standards, but then wouldn’t tell us what kind of research work they did for the Department of Social Services for $110,000 a week, or how they justify getting contract extensions that are not subject to competitive tender and undergo no value for money test,” Ms Pocock said after the hearings ended.

The government department involved and BCG have refused to release the work done in the $880,000 report, and Ms O’Neill asked for it to be released under notice.

McKinsey also fronted the senate for the first time and told the inquiry it had no known conflicts of interests and that it provided good value for money.

“We are very proud of the work we do for the Australian government,” said McKinsey CEO Wesley Walden.

However, when questioned about the value of its $660,000 contract to provide advice on Covid vaccinations, he said he would not explain what was in the report and referred all questions to the Department of Health.

Mr Walden also refused to reveal any details on partner remuneration or his own pay as CEO.