PwC wrongfully claimed legal privilege over documents to frustrate Tax Office, inquiry told

Consulting giant PwC systematically frustrated the Tax Office by wrongfully claiming legal privilege over thousands of documents, according to the evidence of the former general counsel and chief executive in their first statements since they resigned following the tax leaks scandal.

Former chief executive Tom Seymour and general counsel Meredith Beattie appeared on Friday before a parliamentary committee examining structural challenges in the audit, assurance and consultancy industry in a hearing that became heated at several points during the day.

Former PwC chief executives Tom Seymour and Luke Sayers appeared before a parliamentary inquiry on Friday. Credit: Irene Dowdy

Current chief executive Kevin Burrowes was accused of misleading an earlier Senate inquiry for not disclosing he was being paid $1.2 million by the international arm of PwC while running the Australian firm.

While former chief Luke Sayers became visibly frustrated explaining his dealing with former Australian Taxation Office deputy commissioner Jeremy Hirschhorn, who he said liked to gossip, and “wax lyrical” and “pontificate” on PwC’s culture rather than use his regulatory powers to identify and rectify problems.

Friday’s inquiry was examining whether the partnership models at professional services firms were appropriate to continue with, and whether the regulation and law were adequate. The parliamentary probe was sparked after the Tax Practitioners Board last year found former PwC partner Peter Collins shared confidential government information on tax reform, and the federal police launched an investigation into the matter.

Seymour told the committee he had asked PwC lawyers to investigate Collins over a confidentiality breach in 2018, and was told there had not been a breach, adding he would have “loved that not to have happened”.

Earlier, Beattie said she had raised concerns with Sayers about how parts of the tax practice were operating while Seymour was its leader.

Around 2017-18, the Tax Office had asked the consulting giant to produce thousands of documents, putting the firm under huge pressure, the inquiry heard. Beattie claimed PwC’s tax division had not been appropriately responding to the ATO’s requests, laying the blame at the feet of Seymour.

Meredith Beattie made her first public statements on the PwC tax scandal. Credit: Irene Dowdy

“The firm ... was using privilege in a way that was designed to hide matters from the Tax Office and that concern had been ignited by the firm’s response to the ATO notices,” she said. “It was apparent to me at the time that this issue became evidence, and that there was a culture within parts of the tax group that were problematic.”

Appearing alongside Sayers later in the afternoon, Seymour blamed Beattie for the systematic issues. He conceded there was tension between the pair, and said the former general counsel was responsible for the wrongful claims to the ATO of legal privilege over documents.

“I was frustrated with the legal process, that it wasn’t quick enough, and we couldn’t deliver the documents faster and get them delivered to the Tax Office,” he said. “I had a view we were being too legalistic with the document delivery process from a general perspective.”

The firm’s chief risk and ethics officer, Jan McCahey, as well as Sayers and Seymour, conceded there was a potential conflict of interest between Burrowes’ dual roles in the Australian and international firm, where he is being paid $2.8 million for the former and $1.2 million for the latter. Australian partners were not informed of Burrowes’ salary from the global arm until shortly before it was due to become public at a Senate hearing.

PwC general counsel Kylie Gray, Australia chief executive Kevin Burrowes, chief risk and ethics officer Jan McCahey, global board member Paddy Carney and tax and legal leader Chris Morris (on screen).Credit: Irene Dowdy

Burrowes denied there was a conflict, while McCahey added she saw the two divisions’ interests as “aligned”.

Ziggy Switkowski, who led an independent review of PwC, also appeared before the inquiry, saying he believed the firm’s cultural failures arose because they were “handicapped by being successful for a long time”.

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