Senate drubbing for PwC over tax leaks ‘cover-up’

A parliamentary committee has warned PwC it is failing to convince critics it has reformed.

PwC Australia has failed to be open and honest, a Senate Committee has warned, as the firm was told it cannot hope to recover its reputation “while it continues to cover up” the tax scandal haunting the audit and consulting giant.

In a report released on Wednesday, a Senate committee took aim at the professional services heavyweight over its responses to revelations its senior leadership and tax partners misused confidential information in a bid to make money.

The Finance and Public Administration committee warned PwC in a report titled “The cover-up worsens the crime”, calling on the firm and its local and global leadership to co-operate rather than continue to stymie attempts to understand the scandals surrounding the firm.

The report warned the tax scandal, which saw PwC international tax head Peter Collins share confidential tax briefings within the firm, showed “internal management and audit controls failed or were broken”.

A Senate Committee has lashed PwC. Picture: Gaye Gerard

The committee warned they were concerned PwC would struggle to change its “structure, practices, and culture”, noting they were “not convinced on the evidence provided to it at this point that such substantive change is forthcoming”.

The Senators also took aim at PwC’s current and former leadership, stating past chief executive Luke Sayers’ evidence to the committee was “implausible”, noting the veteran consultant risked having his “truthfulness” and credibility questioned.

The Sayers founder and chair of Carlton has attempted to steer clear of the scandal, which took place under his watch.

The committee said it was “impossible to reconcile the different versions and recollections of events provided by the witnesses”.

“Taken together, the evidence points to the unethical behaviour in PwC being ignored by senior leadership during Mr Sayers term as CEO and subsequently,” the report noted.

The report comes after months of hearings in the Senate, amid an ongoing investigation into the tax leaks by the Australian Federal Police as well as nine probes from the Tax Practitioners Board into the scandal.

The Senate committee warns PwC’s attempts to investigate the tax leaks have fallen flat, taking aim at the firm’s failure to share a report into the scandal prepared by law firm Linklaters on behalf of PwC international.

“PwC’s continued refusal to provide the Linklaters report is symptomatic of its problematic engagement with the committee,” the report said.

“A first step to restoring trust with the Australian parliament would be for PwC to provide the committee with the full Linklaters report at the first opportunity and to be open and honest with the Australian parliament and people.”

The committee said it had seen “nothing of real substance” from PwC showing the firm’s commitment to change or investigating the scandal.

“Rather, their ongoing approach appears to be to hide behind legal professional privilege and hope it will all go away,” the report said.

“The failure of PwC to be completely open and honest as per the committee’s recommendations in its first report is reflective of PwC’s failure to genuinely change.”

“The committee does not see how PwC can recover their reputation while it continues to cover up because the two are incompatible. Indeed, the cover-up worsens the crime.”

Greens Senator Barbara Pocock took aim at PwC, warning the firm’s response to the scandal had been “appalling” and noting “those who have held key leadership roles at PwC continue to evade any real consequences, particularly the former CEOs Luke Sayers and Tom Seymour”.

“The fact that a locally elected interim-CEO, Kristen Stubbins, was unilaterally replaced by PwC International who quietly took control of the Australian firm in what appears to be a coup d’etat against local leadership, means that PwC Australia is nothing more than a puppet on a string that stretches all the way back to head office in London,” she said.

Ms Pocock lobbed questions at finance minister Katy Gallagher in question time on Wednesday over the scandal, asking why the government did not take more severe action against PwC.

Senator Barbara Pocock. Picture: Martin Ollman

Senator Gallagher said the government was looking at potential reforms to the partnerships scheme in response to the scandal, as well as developing a code of conduct for suppliers to the public service.

Labor Senator Deb O’Neill said the commitee’s report highlighted the failures of leadership at PwC, singling out the firm’s new Australian boss Kevin Burrowes and global CEO Bob Moritz.

“It is disappointing that PwC remains unwilling to demonstrate a genuine commitment to reform,” she said.

“The release of the Linklaters report is essential, as is an assurance that all those who received and attempted to utilise confidential Australian government information have been held accountable and appropriately sanctioned.”

PwC has refused to release the Linklaters report, claiming it was confidential and legally privileged.

The report, which identified six PwC staff who received the confidential information, noted the firm’s overseas partners who were privy to the tax leaks had been sanctioned and did not benefit from the scandal. A PwC spokeswoman said the firm had taken steps to transform and “rebuild trust”.

“These include: the endorsement of a major governance reform package which will see PwC become the first of the big four firms in Australia to have an independent chair of its board; an improved enterprise-wide risk management function; and the implementation of cultural change from the top down,” she said.