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PwC stands down partners over Treasury tax scandal

Embattled consultancy firm PwC has stood down nine partners and its CEO has apologised for “betraying the trust placed in us” over a Treasury tax advice scandal under federal police investigation.

May 29, 2023, updated May 29, 2023

Australia Federal Police will investigate the firm – which has won government contracts worth more than $500 million in the past two years – after Treasury said PwC’s former head of international tax Peter Collins improperly used confidential tax information.

Treasury said the measures to bolster tax laws, including rules stopping multinationals from lowering their tax bill by shifting profits from Australia to other jurisdictions, were shared with dozens of PwC staff and was used to attract new clients.

In an open letter, acting chief executive Kristin Stubbins said members of the company sharing confidential tax policy from the Treasury department were “betraying the trust placed in us”.

The letter said nine partners had been directed to go on leave effective immediately, which included members of PwC’s executive board and governance board.

Stubbins said the company had failed in multiple ways, due to a lack of confidentiality and poor governance.

“No amount of words can make it right. But I am fully committed to taking all necessary actions to re-earn the trust of our stakeholders,” she said.

“We understand that we betrayed the trust of our stakeholders and we apologise unreservedly. We know that action is critical to restore confidence in our firm and rebuild trust with our stakeholders and I am committed to taking all necessary steps to make this happen.”

Two independent non-executive directors have been appointed to PwC’s governance board in the wake of the scandal.

Stubbins said PwC had started work to “ringfence” services it was already providing to the federal government.

An independent report into the scandal, headed up by former Telstra boss Ziggy Switkowski will be released, but not until September.

“We recognise that enhanced governance, structures and controls are necessary and the decision to ringfence our federal government business is a critical next step,” Stubbins said.

It comes as the prime minister said the list of employees allegedly involved in the tax advice scandal should be made public.

Anthony Albanese described the scandal as a terrible indictment and said transparency was needed.

“All of this should become public at the appropriate time, of course there are investigations under way and I don’t want to say anything to interfere with those processes,” he said.

“Quite clearly, what went on there is completely unacceptable.”

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The Greens during Senate estimates sought to release the list of names of employees who had leaked confidential Treasury information.

But finance department officials said naming the partners involved in the tax advice scandal could disrupt the criminal investigation.

Stubbins said in the open letter she believed not all names listed in emails released by the Senate had committed wrongdoing.

“We believe that the vast majority of the recipients of these emails are neither responsible for, nor were knowingly involved in any confidentiality breach,” she said.

“We have and will continue to take appropriate action against anyone who is found to have breached confidentiality or failed in their leadership duties.”

Albanese said it was crucial the scandal was investigated.

“In the fullness of time, of course, there needs to be proper transparency about all of this,” he said.

“This is the fault of PwC. As soon as it has come to light, there are now appropriate investigations taking place.”

Albanese said the leak reinforced the need to bolster the federal public service.

“Any government department undertaking work needs to bear in mind the ethical considerations that come from this PwC behaviour,” he said.

“There’s also been over a period of time a loss in the capacity of the federal public service to provide that internal advice and avoid all of these risks, all of these for-profit motives.”

– with AAP

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