Consulting firm PwC engaged in a “calculated” breach of trust by using confidential information to help its clients avoid tax and engaged in a “deliberate cover-up” over many years, a Senate committee has found.
PwC should be “open and honest” by promptly publishing the names and details of its partners and staff involved, the finance and public administration committee has recommended.
In a unanimous report, tabled on Wednesday, the committee also recommended that PwC cooperate with investigations by the Australian federal police and Tax Practitioner Board, which deregistered its former head of international tax, Peter Collins.
The Greens will continue to push for harsher punishments, including calling on the Albanese government to cancel all PwC’s contracts and for the cancellation of PwC’s registration as a tax agent for two years.
The committee chair, Liberal senator Richard Colbeck, told the Senate PwC had engaged in an “egregious” breach of trust after Collins “was given the privilege of being part of a consultation process on new legislation being proposed to deal with multinational tax avoidance”.
The report found that Collins “intentionally shared confidential information obtained through Treasury consultations with PwC partners and personnel in Australia and overseas”, seeking to assist clients avoid new tax laws and putting at risk $180m of revenue.
The report found “Collins and certain other PwC partners had no regard for their obligation to maintain the confidentiality of Treasury consultations”, accusing them of “aggressively” monetising the information with “no regard for the public interest”.
“PwC subsequently sought to protect its reputation by effectively stonewalling the [ATO] in its pursuit of documentation related to the misuse of confidential information by Mr Collins and other PwC partners.”
The report cited tens of thousands of “inappropriate and incorrect” claims of legal professional privilege.
The report found that the Tax Agent Services Act required PwC to report Collins’ breach of confidentiality to the Tax Practitioner Board. “However, PwC chose not to do so, in breach of its legal obligations.”
“Taken together, the committee concludes that PwC engaged in a deliberate strategy over many years to cover up the breach of confidentiality and the plan by PwC personnel to monetise it.”
The report noted so far PwC has stood down nine unnamed partners, and has publicly named four former partners as having received confidential information: Peter Collins, Michael Bersten, Neil Fuller and Paul McNab.
The report said PwC had given the committee a list of 63 names of staff without “any indication of the extent to which each of the 63 named individuals were involved in the breach of confidentiality and the plan to monetise that information”.
However, the committee decided not to reveal these names to avoid creating a “pool of evidence inadmissible in court by dint of it being covered by parliamentary privilege”, and out of “procedural fairness in relation to naming everyone who appears on an email distribution list” although they may not have been involved.
The Labor senator Deborah O’Neill told the Senate that prior to the report she had received reports from whistleblowers in PwC “frightened to speak up because they’re being intimidated”.
The Greens senator Barbara Pocock said PwC “must move beyond a simple ‘fall guy’ strategy”. “It is untenable for the government to keep doing business with an entity that conducts itself like this,” she said in a statement.
“The Greens are calling on the government to cancel PwC’s registration as a tax agent [for two years] and will be introducing an amendment to do exactly this. The government must also enact an immediate ban on contracts with PwC.”
Pocock said the evidence to the committee “shows an internal culture at PwC so poor that it has lost the capacity to act honestly”.
“The evidence also creates a strong argument for breaking the link between political donations and big consultancies.”
PwC said in a statement: “We thank the Senate for its important work and we acknowledge today’s interim report. We will carefully consider its contents and await the government’s response.
“We have taken swift steps to improve the governance, culture and accountability within the firm, and we will not hesitate to take all appropriate actions necessary to re-earn the trust of our stakeholders.”
In May, PwC Australia’s acting chief executive, Kristin Stubbins, apologised to the community, the Australian government, its clients and its 10,000 staff for “betraying the trust placed in us”.
Stubbins acknowledged the firm “did not have adequate processes and governance in place”, and had a culture in its tax business that “both allowed inappropriate behaviour and has not, until now, always properly held our leaders and those involved to account”.
