PwC former general counsel takes aim at tax scandal evidence

The former general counsel of PwC Australia has taken aim at, and directly contradicted, evidence given by former CEO Tom Seymour.

PwC Australia’s new chief executive Kevin Burrowes consulted on who to remove from the firm in response to its tax scandal, parliament has heard, as a key former leader of the audit and consulting giant warned evidence given by a previous CEO to an inquiry may have been misleading.

Appearing before the Parliamentary Joint Committee on Corporations and Financial Services, PwC’s former general counsel Meredith Beattie pointed the finger at Mr Burrowes, the firm’s imported CEO, in taking a key role in deciding who to sack in response to the scandal surrounding the firm.

PwC has been hammered over revelations the firm’s former head of international tax Peter Collins shared confidential government tax briefings and information with other members of the firm ahead of the introduction of new laws in 2016.

Ms Beattie said Mr Burrowes, before being formally installed as CEO, consulted with interim-boss Kristin Stubbins and the firm’s local governance board as well as the global general counsel Dianna Weiss about who should wear the consequences for the tax scandal.

Several of the partners removed from the partnership have since launched legal action against PwC including Neil Fuller, Richard Gregg.

PwC has settled with Mr Fuller, who some credit as key to the firm’s “Rover” model, which saw it sell tax strategies to major US clients using the confidential information.

It comes as parliament bristles over PwC’s refusal to provide findings into PwC partners outside Australia found to have misused the confidential information.

Mr Burrowes told parliament he had no knowledge of a report which “found no evidence that any PwC personnel outside of Australia used confidential information from PwC Australia for commercial gain.”

PwC’s review found six international staff members “should have raised questions as to whether the information was confidential”, noting some remained with the firm.

Ms Beattie said Mr Burrowes was involved in directing PwC prior to taking on the top job at the firm from his former base in Singapore.

Mr Burrowes, who is paid $2.8m as CEO, is also paid a further $1.2m from PwC International for services linked to providing advice to other senior members of the global arm of the firm about the tax scandal.

The PwC boss did not reveal the extra payments to other partners at the business until just days prior to it being disclosed to a parliamentary inquiry.

Ms Beattie said she was surprised Mr Burrowes had not disclosed the extra payments, warning it was not possible to determine if the extra cash presented a conflict of interest for the firm’s boss without knowing more about the deal, something PwC has refused to divulge.

“As a partner of the Australian firm he has to act in the best interest of the Australian firm, he has obligations to the Australian firm,” she said.

Ms Beattie shed light on the extent of PwC International’s control of the Australian firm in the wake of the scandal, telling the parliamentary committee she believed the firm’s former boss Tom Seymour was seeking advice on how to handle the scandal from former PwC North America boss Tim Ryan.

Mr Ryan has since resigned from PwC.

Ms Beattie also directly contradicted evidence previously given by Mr Seymour, warning the tax scandal was “not an issue that came out of the blue in 2018” and claiming the former CEO was aware of the issue for some time.

“Mr Seymour was well aware of the notices that were served because they were served on Mr Calleja, who reported to Mr Seymour,” she said.

“It was a source of great pressure for Mr Calleja that he had these obligations to respond to the notices and Mr Seymour was fully briefed on a regular basis in relation to this process.”

Mr Seymour previously told the committee he had not “condoned” the confidentiality breaches and was not aware of it.

Evidence given by former PwC CEO Tom Seymour has been directly contradicted.

Ms Beattie said she had intervened to override PwC’s handling of legal claims over documents, amid discovering the Australian Taxation Office was growing increasingly frustrated and concerned over the behaviour of senior members of the tax practice.

She told the committee the ATO wrote a very pointed letter to PwC as well as meeting with former CEO Luke Sayers to raise the scandal.

Ms Beattie said Mr Sayers called her after his meeting with ATO second commissioner Jeremy Hirschhorn in a “quite agitated” state, noting she took a quick note of his concerns in an internal email.

She said the handling of the issue so concerned her she told PwC’s governing board not to go forward with Mr Seymour’s selection as CEO.

“There was a call … Mr Sayers was on the call and the chairman (Peter van Dongen) … I remember it as quite a forceful discussion about the matter and as a result of that the call ended on the basis that Mr Sayers would go and speak to Mr Seymour,” Ms Beattie said.

“My understanding of Mr Sayers’ position was that he was urging the chair to consider this very carefully because of the issues that have been raised by Mr Hirschhorn, and that he also raised a consideration about how this could, in fact, be managed if Mr Seymour were to become the CEO, and if the conflict position that Mr. Hirschhorn had foreshadowed were to arise.”

Lawyer for Mr van Dongen, Robert Magnioni, has previously warned The Australian the former chair was not warned about Mr Seymour, did not appoint him as CEO, and was not warned “by any members of the firm” allowing the former partner to take the top job would create issues.

Mr Seymour told The Australian “I stand by my testimony to the senate on August 2.”

A previous version of this article incorrectly stated Paul McNab was departed PwC due to the tax scandal. Mr McNab retired from PwC many years before, and his departure was unrelated to the matter.

Originally published as PwC former general counsel takes aim at tax scandal evidence