PwC sues former partner Paul McNab over tax scandal

Audit and consulting firm PwC Australia is suing a former partner over links to its high-profile tax scandal, despite settling with others who faced similar claims.

PwC Australia CEO Kevin Burrowes.

PwC Australia is suing a former partner of the audit and consulting firm, alleging he was key to the firm’s losses from a tax scandal, despite settling with a trio of other partners who also exited facing similar claims.

The Australian understands PwC is attempting to sue former tax partner Paul McNab, claiming the losses the firm suffered under the tax scandal were caused by him.

Court records show PwC has filed a counterclaim against Mr McNab, who lodged claims against his former firm in February this year.

The case against Mr McNab comes after negotiations between his lawyers and PwC broke down, as the audit and consulting firm also negotiates in several other legal battles against former ­partners.

Former PwC partner Paul McNab

Mr McNab, who worked at PwC for almost 23 years, left the firm in May 2020.

However, he retained access to the audit and consulting firm’s lucrative retirement scheme before being cut off in June 2023.

PwC named Mr McNab alongside three other partners it claimed were linked to the firm’s misuse of confidential tax information.

The firm also removed a further eight partners from the firm, alleging they had breached professional standards, including the former chairman Peter van ­Dongen.

PwC remains under a cloud after the firm’s former head of international tax, Peter Collins, was banned by the Tax Practitioners Board, after he was found to have shared confidential government briefings with others in the firm in a bid to front-run new tax laws, the Multinational Anti-Avoidance Law, introduced in 2016. Mr McNab has previously claimed he was not involved in any consultations regarding the MAAL “where confidential information was discussed”.

“In addition, I trusted that the information shared with me as a partner of the firm would comply with any confidentiality agreements that may have been in place with Treasury,” he said.

“At all times I worked with my clients to comply with Australian law, and not avoid it.”

Mr McNab launched legal action against PwC in a bid to restore his access to the firm’s partnership retirement deed, echoing a similar move made by former partners.

Richard Gregg sued PwC last year to stop it removing him from the partnership, following up with a defamation case in May alleging the firm damaged his reputation by linking him to the tax ­scandal.

A spokesman for the tax partner confirmed Mr Gregg had agreed to settle his case with PwC, for an undisclosed amount.

A court has previously heard Mr Gregg was removed for failing to “discharge his supervisory ­functions”, rather than the tax scandal, despite PwC’s public statements.

This comes as PwC paid $2m to settle a similar case brought by the firm’s former corporate tax partner Wayne Plummer.

PwC has also settled a similar case brought against it by former tax “rover” Neil Fuller, an alleged key figure in the tax schemes spruiked using information shared by Mr Collins.

The current case against Mr McNab is the only case on foot by PwC attempting to pin the damage of the tax scandal on a ­partner at the firm.

Former PwC Australia CEO Tom Seymour.

This is despite parliament hearing former PwC chief executive Luke Sayers was warned by the Australian Taxation Office about the confidentiality breaches and the firm’s aggressive tax practices.

A parliamentary inquiry heard ATO second commissioner Jeremy Hirschhorn warned Mr Sayers about the issues, as well as putting the former PwC boss on notice over Tom Seymour, the then head of the firm’s tax practice.

PwC has identified six international partners of the firm who received confidential tax information from Mr Collins, but has not named them. PwC’s former general counsel, Meredith Beattie, has alleged the firm’s now-CEO Kevin Burrowes also consulted on who to punish for the tax leaks, alongside other members of PwC International, who took over the audit and consulting firm in the wake of public revelations.

Former PwC Australia CEO Luke Sayers. Picture: AAP Image/Lukas Coch

Greens senator Barbara Pocock said she had “long questioned the process adopted by PwC” in responding to the tax scandal.

“There are concerns PwC threw some people under the bus without proper process and we, the Australian community, are still to learn the full details of who did what,” Senator Pocock said.

Mr McNab’s matter is due to return to court on November 22.

PwC declined to comment.

Originally published as PwC sues former partner Paul McNab over tax scandal