PwC Australia has revealed a series of additional breaches of confidentiality as a new report details a litany of corporate failures that allowed confidential government information to be misused for years without any disciplinary action.
The confessions are detailed in what PwC Australia has described as “a statement of facts”, which was published alongside a review into its internal culture by the former Telstra boss Ziggy Switkowski. His report found some partners prioritised profit above ethics and internal dismay at the firm’s response to the scandal.
PwC Australia has admitted that, in 2016, a partner forwarded documents related to confidential consultation with the Treasury and Australian Taxation Office (ATO) officials regarding the GST treatment of digital currencies to colleagues who had not signed a confidentiality agreement.
In 2017, a now former PwC partner was invited to participate in Treasury’s Black Economy Taskforce Reference Group, provided a confidentiality agreement was signed. PwC allege the partner forwarded materials from the group to colleagues who had not signed agreements on several occasions.
Another partner is accused of sharing confidential information from a Treasury group called the Tax Treaties Advisory Panel on several occasions. That information was subject to confidentiality agreements that prohibited it being shared. The panel dealt with international tax policy.
The firm has also revealed three partners later shared a draft OECD report into profit shifting with colleagues, in breach of a confidentiality agreement.
“As part of the 2023 Investigation, PwC Australia has identified other internal communications in which information relating to Government consultations was disclosed by PwC Australia personnel,” the report said.
“In some instances, it has not been possible to determine whether the disclosures constituted a breach of a confidentiality acknowledgment because it is not clear from the documents whether a confidentiality commitment or expectation applied in relation to the disclosure.”
The document also outlines how former PwC partners beached confidentiality agreements by sharing secret information about Treasury’s proposed multinational tax policy. The information was used by PwC to win business from private sector clients and triggered the reputation crisis that resulted in its government services division being divested for just $1.
The firm has admitted that from May 2015, it marketed its ability to assist multinational companies “in anticipation of legislation that would be announced in the federal budget”. It confirmed that from then until late 2022, it failed to discipline anyone involved despite several people being aware.
PwC Australia has admitted that from as early as 2017, when its risk team first discovered an email from a partner discussing government information deemed “confidential at this stage”, it failed to properly comprehend the seriousness of misconduct and to adequately respond.
The firm has also conceded it should have taken the ATO seriously when its second commissioner, Jeremy Hirschhorn, warned in August 2019 about a potential breach of confidentiality.
“There is no evidence that any further investigation was done in 2019 relating to this issue,” the PwC report released on Wednesday said.
PwC Australia’s investigation confirmed that some staff had enough information to raise concerns about confidentiality breaches at an early stage, but decided to remain silent.
It has also admitted it had no proper process for monitoring what confidentiality agreements its partners had signed with clients. This meant the firm’s risk team could not enforce compliance and had to rely on staff disclosing them appropriately.
The “statement of facts” admits that once the Tax Practitioners Board established a formal inquiry into the breach in 2021, it should have launched a “rigorous internal investigation” into what happened. That did not take place until earlier this year.
In a statement released alongside the report, PwC Australia’s chief executive, Kevin Burrowes, said “we are sorry”.
“We take full accountability for our shortcomings and the culture in our firm that allowed them to go unchecked over time,” Burrowes said.
In response to multiple reports released this week, PwC Australia will overhaul its corporate structure, adding three non-executive directors to its governance board and a non-executive chair, as well as committing to publishing audited financial statements.
PwC Australia will in future apply ASX corporate governance principles and recommendations, “to the extent that is feasible”, the company said. PwC Australia is a partnership and structured differently to ASX companies.
