PwC facing 10 tax scandal investigations after revelation of global scheme

Consulting giant PwC faces 10 ongoing investigations, including a federal police inquiry, over the firm’s tax leak scandal, which a government agency revealed went beyond tax avoidance schemes in North America.

The final report from the Senate committee investigating the behaviour of consulting firms comes 14 months after it released a cache of emails that revealed dozens of PwC personnel were involved in a brazen attempt to use confidential government tax plans to create fresh business from notorious corporate tax avoiders such as Google and Facebook.

A Senate committee has handed down its final report into the PwC scandal.Credit: Luis Enrique Ascui

The revelations have led to more than 700 staff and dozens of partners leaving PwC Australia, including chief executive Tom Seymour, a splintering of its local operations with the spin-off of its government relations arm into a new firm, Scyne, and the Department of Finance banning any personnel from the firm working on government contracts while investigations are ongoing.

In its report released on Wednesday, the committee made 12 recommendations to strengthen transparency around federal government contracts with consultancies, including that the finance minister publish consulting contracts worth $2 million or more, and provide the total cost of all contracts in each government department.

The committee also said it was worried about Tax Practitioners Board evidence that the scheme was used to influence negotiations about international tax system reforms.

“The committee expresses concern at the evidence from the TPB that the confidential information was used more broadly than to promote tax avoidance schemes through Project North America,” the report said.

“Rather, it was used to influence the direction of negotiations to reform international tax systems.”

Committee chair, Liberal senator Richard Colbeck, said that had been an “oh wow” moment in the Senate’s inquiry, and much more detail would be teased out in coming weeks.

“It goes to my perspective, that I’ve held from the outset, that there’s more to it than a local story, it’s an international one,” he said after the release of the report.

The Tax Practitioners Board has nine ongoing investigations into the scandal, the Australian Federal Police has one of its own, and the Australian Taxation Office is in talks with seven countries over it.

The committee said the government should establish a separate committee to review and approve consultancy contracts and make changes to the way the Department of Finance dealt with consulting firms, including providing better training for officials in procurement to ensure the government was getting value for money.

It also repeated its previous recommendations that PwC publish “accurate and detailed information” about the firm’s partners and personnel who were involved in the breach, including through releasing the internal Linklaters report into the scandal.

Labor senator Deborah O’Neill said if implemented, the recommendations would “provide meaningful changes” to the way the government contracted consultancy firms.

“This report provides the disinfectant of sunlight,” she said.

“Implementation of the recommendations will ensure that the public good and our national interests have primacy over the greed and cosy relationships that have previously advantaged only a small handful of wealthy and powerful individuals within this system.”

The Greens produced a dissenting report, and Greens senator Barbara Pocock, who has also referred the PwC scandal to the National Anti-Corruption Commission, said the main committee’s recommendations had not gone far enough.

“The failure to recommend an end to political donations from big contractors does not pass the pub test. Even big consultants see this as a problem,” she said.

“PwC should be banned for five years from all government work based on its known transgressions, and it should certainly be banned until all the current investigations are completed and they have handed over the Linklaters report.”

A PwC spokesperson acknowledged the final report, and said the firm would consider its contents.

“PwC continues to make progress on delivering on our commitments to change. This includes significant steps to enhance our governance, culture and accountability, and we continue to work hard to rebuild trust and confidence with our stakeholders,” the spokesperson said.

While the Finance and Public Administration References Committee inquiry is over, Colbeck said parliament’s work was not, pointing to a separate inquiry by the Parliamentary Joint Committee on Corporations and Financial Services chaired by O’Neill, as well as the regular Senate estimates hearings.

“Given that the TBP [Tax Practitioners Board] and ATO appear together at estimates three times a year, I have little doubt that there will be more done by the Senate,” he said.

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