PwC execs fly in to tackle growing scandal as parliament reviews whistleblower reports
Executives have flown in less than a fortnight before Parliament’s Senate Estimates is expected to scrutinise the leak of tax plans.
Consultancy PwC has flown in international executives to grapple with a scandal that threatens to break out into parliamentary revelations from whistleblowers in the coming weeks as furore around the firm’s leak of secret tax plans grows.
Parliament is expected to scrutinise PwC when Senate Estimates start on May 22. The Australian is aware of several whistleblower tip-offs that have arrived in recent days as an inquiry prepares to summon members of the firm to appear before it.
Several members of PwC’s senior global leadership flew to Australia in a bid to intervene in the crisis enveloping the Australian arm of the professional services giant, which has already cost the chief executive his job and resulted in two members of its executive committee bowing out.
The arrival of PwC’s international executives comes as it appears client names may be released in coming weeks as more documents come to light.
A source told The Australian PwC’s global general counsel, Diana Weiss, and its tax and legal leader, Carol Stubbings, had landed in recent days and there were expectations more figures from the network leadership team, including the chief risk officer Coenraad Richardson, would join them in coming days.
PwC has been embroiled in a growing scandal since a cache of emails – revealing senior members of the firm circulated secret briefings around plans to reform Australia’s tax laws – was raised in federal parliament.
The Tax Practitioner Board banned PwC’s former head of international tax, Peter-John Collins, after confirming he leaked confidential tax briefings gleaned from consulting sessions with the Australian government.
The Australian understands several PwC clients have questioned the firm over the week’s revelations, including concerned customers who may have engaged the firm for tax advice as well as several others seeking clarification about the crisis at the company.
Speaking on the sidelines of its annual general meeting, QBE chief executive Andrew Horton told The Australian he felt comfortable about the insurer’s use of PwC as an auditor “at this time”.
“We feel comfortable about that element. Of course, it is a challenge for PwC,” he said.
“We’ve been speaking with our PwC partner; they raised the concerns with us.”
PwC chief executive Tom Seymour announced he would quit the top job on Monday after admitting he was one of 53 current and former staff who had been included on emails that openly discussed using leaked confidential information.
A carefully worded statement issued on behalf of PwC Australia board chair Tracey Kennair said the firm had “agreed with Tom that this is in the best interests of the firm and our stakeholders”.
PwC confirmed assurance leader Kristin Stubbins would serve as acting CEO until a new election from the firm’s partners. Mr Seymour will stay on as a partner at PwC.
Mr Seymour had attempted to head off the crisis, announcing a review into the firm’s failures on Friday, but by Monday he was gone.
Two other members of the 16-strong executive board followed late on Wednesday – financial advisory boss Pete Calleja and chief strategy risk and reputation officer Sean Gregory.
They will continue as partners with the firm.
Rob Silverwood replaces Mr Calleja, while Tony O’Malley will take on the role of chief risk and ethics leader.
PwC has also appointed Nicole Salimbini to lead its response plan to set up “appropriate governance and structures”.
Details of PwC’s investigation into the leak are thin, but the Financial Times reports law firm Linklaters has been appointed to carry out the international portion of the review.
In recent days PwC has come under attacks in parliament where Greens Senator Barbara Pocock and Labor Senator Deb O’Neill criticised firm.
In a speech on Thursday night, Senator O’Neill said PwC had failed to live up to its standards, claiming it had “instead set up their own scheme for profit”.
Senator O’Neill told The Australian PwC must reveal the names of partners who had been privy to the confidential tax information.
“My concern is, it is not just the emails that are blacked out; there’s a communication blackout from the new acting CEO,” she said.
“There is no confirmation from the new leaders that they were not involved in this conduct.”
Senator O’Neill said she was concerned Mr Seymour had stayed on as partner and said it was “hardly a separation”.
“PwC has not put on the public record the terms of the so called independent inquiry,” she said. “There is no transparency at all; it is a blackout.”
Senator O’Neill said Deloitte, KPMG, and EY should condemn PwC’s breaches.
“Where is the condemnation from the other assurance companies?” she said.
“The information that assurance companies provide is a fundamental reason these companies use them. They trade in trust.”
Senator Pocock, who established an inquiry investigating the use of consultants by the government, has demanded the government assist in a referral of PwC to the Federal Police and National Anti-Corruption Commission.
The Australian Securities and Investments Commission has examined the case and opened a file.
ASIC deputy chair Sarah Court said the regulator could only take limited action due to PwC’s partnership model but warned: “We are liaising with other regulators closely.”
Treasury and Finance is considering how to respond to PwC in a move which could put at risk the firm’s rivers of gold from government contracts.
PwC has won more than $500m in contracts from the government in the past two years, and has sponsored budget dinners and lavished attention on the major political parties.
PwC has been largely mute during the week, but on Friday issued a statement noting it “deeply regrets that we have failed the high standards we set for ourselves as an organisation”.
“We now need to re-earn trust, which is why we have taken appropriate action, including the announcement that we will establish an independent review in relation to our governance, accountability and culture,” a spokesman said.
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