Three PwC partners sanctioned by Tax Practitioners Board not enough to deter Finance from readmitting consultant
The finance department claimed PwC's tax scandal was the work of former partners, but it knew that current partners had been sanctioned when recommending a government consulting ban be lifted, senate estimates has heard.
The Department of Finance cleared the way for PwC’s return to government work despite knowing the regulator had made findings against current partners over the tax leaks scandal.
PwC informed the department about the relevant partners and their link to the imbroglio ahead of being allowed to pitch for government work again earlier this year, the consultant said.
However, when Finance in August signed-off on PwC’s redemption, it was on the basis that police and regulatory investigations “apply to former partners of PwC Australia, not current partners or employees”.
The Tax Practitioners Board told Senate estimates on Thursday three current and former partners copped serious warnings over their role in PwC misusing government policy secrets.
PwC’s former head of international tax Peter Collins leaked the information, sharing it with other leaders inside the firm to set up tax structures aimed at defeating new laws targeting multinational companies offshoring profits and avoiding tax.
Board chair Peter de Cure told estimates the regulator had issued non-public findings against the three unidentified partners. Another partner sanctioned is appalling the matter in the Federal Court.
Mr de Cure said the Tax Practitioners Board had told the three PwC partners “that their behaviour had not met the standard” and they were “on notice”, but stopped short of banning them from the industry.
This is unlike PwC’s former chief executive Tom Seymour, who was handed a four-year ban in September.
PwC was barred from pitching for government contracts in the wake of the scandal until that order expired on July 14.
The government released its findings into PwC on August 7, when Finance urged other departments to treat the audit and consulting giant as “equitably” as any other professional services firm.
Finance determined while Australian Federal Police and Tax Practitioners Board investigations were still current, “they apply to former partners of PwC Australia, not current partners or employees”.
Earlier this week, Finance deputy secretary Richard Windeyer told estimates the department concluded PwC had changed and accepted the firm’s internal evaluations.
Finance was “looking to the future” and the “people that are there now and the processes and policies they’ve put in place” showed PwC was “changed and a different organisation and therefore one we can allow government to consider contracting with”.
“We were making a judgment about when we think the organisation is sufficiently changed and different,“ Mr Windeyer added.
Under the terms of its redemption, the department requires PwC to report “any potential or actual breaches of the Commonwealth Supplier Code of Conduct” including “the outcome of any resulting finalised investigations”.
A Finance spokeswoman said the department was reviewing “active investigations” and could “undertake any necesssary reassement” should new information come to light.
“PwC kept Finance informed of the status of investigations throughout this period,” she said.
A PwC spokeswoman confirmed the Kevin Burrowes-led firm had made reports to Finance complying with its obligation. “During the Department of Finance’s review of PwC, the firm regularly updated the department on all relevant matters, including the TPB’s investigations.”
Greens Senator Barbara Pocock questioned why Finance had allowed PwC back in.
“A slap on the wrist behind closed doors – that’s not punishment, that’s not deterrence. Allowing these individuals to remain at PwC would amount to protecting the PwC brotherhood and enabling unethical behaviour,” she said.
“This undermines the case put forward by Finance that the culture of PwC is all cleaned up, which was their justification for allowing PwC back into the fold of government contracts.”
Senator Pocock also questioned why the Tax Practitioners Board acted in secret.
“The PwC tax scandal was one of the most shocking breaches of public trust in recent memory. That the individuals found to have acted unethically remain within PwC’s walls is further proof that this government has no backbone.”
Liberal Senator Richard Colbeck was equally unimpressed.
Australian Federal Police confirmed its investigation into the PwC tax continues and had examined offshore links.
PwC has denied any of its offshore partners were involved in the scandal, but has declined to release a report into the confidentiality breaches prepared by law firm Linklaters.
Appearing in estimates on Wednesday, the AFP declined to be drawn on the details.
AFP Assistant Commissioner, Stephen Nutt said Operation Alesia, the AFP investigation, was bogged down dealing with extensive legal issues and reviewing over 90,000 documents.
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