The boss of PricewaterhouseCoopers (PwC) Australia has stood down as the consulting firm feels the fallout of a partner betraying the trust of its biggest client: the federal government.
PwC chief executive Tom Seymour stepped down last night "effective immediately", a statement said. He remains a partner of the firm.
"We have appointed our Assurance Leader, Kristin Stubbins, to serve as acting CEO," the statement read.
"In the coming months, a new CEO will be elected by the Partners. We agreed with Tom that this is in the best interests of the firm and our stakeholders".
The 10,000-person-strong firm received $537 million in federal government contracts during the past two years, according to the Australian Financial Review (AFR), a revenue stream under serious threat after a Senate committee uncovered more details about a plan to dud the government of tax revenue.
What went wrong
About a decade ago, the government asked PwC tax expert Peter-John Collins to help it design laws to better tax multinational companies.
Large companies, particularly tech giants, were shifting profits from higher-taxing countries like Australia to others like The Netherlands and Singapore with lower tax rates.
Mr Collins signed multiple confidentiality agreements, specifying the knowledge could not be disclosed.
But he shared the secret knowledge within PwC and with overseas partners, helping the firm create a system for those companies to avoid paying the new taxes.
The company used the scheme to make money and win new clients, then gloated about it.
A ruling by the Tax Practitioner Board disqualifying Mr Collins from the profession for two years makes it clear.
"Internal communications within PwC indicated that Mr Collins was aware that the confidential knowledge he gained from the consultations with Treasury would be leveraged to market PwC to a new client base," the ruling stated.
Money maker
Internal emails, uncovered by a Senate committee examining consultants in the wake of the scandal, make it clearer: PwC made at least $2.5 million in fees from the deception.
An email from an unnamed PwC partner detailed the success — and how it had won new "brand-defining" clients for the firm.
"We got this outcome because … we were aggressive in telling these relationships they needed to act early (heavily helped by the accuracy of the intelligence that Peter Collins was able to supply us, and our analysis of the politics)," the email read.
The email continued that the first stage of the fee estimates would be "approximately $2.5 million".
An email from Mr Collins on September 3, 2015 is detailed by the Australian Financial Review, who broke the scandal.
"No need to share this because all supposed to be secret … The imported mismatch formulas will blow our mind but be easy to sidestep," the email read.
Scandal uncovered
In January, after the little-known board sanctioned Mr Collins for integrity breaches and the media exposed the scandal, the government came out firing.
Treasurer Jim Chalmers said he was "furious" about the revelations.
"[I'm] absolutely furious, absolutely ropeable about these revelations," he said.
"There is no consultation without trust, and we want to be able to consult in a meaningful way when changes to the tax system are in prospect. And the actions that we've seen alleged and reported cut across that.
"This is a shocking breach of trust, an appalling breach of trust."
PwC was set to sponsor a $5,000-a-ticket Labor fundraising event after tonight's federal budget, but newspaper reports suggest they have withdrawn.
'A crisis and a scandal'
Senator Barbara Pocock, the Greens spokesperson for finance and the public service, believes there is more to come.
"It is a crisis and a scandal," she told Alicia Barry on the ABC News channel.
"What we are seeing is more and more evidence of malpractice, of ethical failure, and of profiteering from public information.
"So this is a really important case for us in the Senate."
Senator Pocock contended there was "definitely a trust question with PwC" because the firm initially denied the issue and "described it as a 'perception problem'".
But there are implications for other consulting firms, who collectively draw billions of dollars of taxpayer funds.
"[PwC] have been dragged very reluctantly to an honest revelation through the Senate looking at a series of emails to reveal malpractice," she sad.
"The larger question for the consulting industry is also there for us: Is this the tip of the iceberg?"
The Senate committee hearings continue.
