PwC emails referring to tax policy information that was “supposed to be secret” are “clearly disturbing”, Treasury secretary, Steven Kennedy, has told a parliamentary committee.
Kennedy made that remark on Tuesday, revealing that 144 pages of emails brought to light by the Senate economics committee had been “important” in the Treasury’s decision to refer the misuse of confidential information to the Australian federal police for criminal investigation.
Scrutiny on the embattled consulting firm is intensifying, with senators Deborah O’Neill and Barbara Pocock pressing the firm to release the names of all partners involved in the scandal after the decision to stand down nine pending an investigation.
On Tuesday the committee received advice from the clerk of the Senate clearing Pocock to table a list of partners understood to be involved, including by simply receiving confidential tax policy information.
Asked when she would do so, Pocock told reporters in Canberra “not today”, meaning it could be tabled as early as Wednesday when the Tax Practitioners Board appears before Senate estimates.
The clerk’s advice noted that the list could be received in private, with submissions from “AFP investigators and PwC about its veracity and any concerns that disclosing names from the list might interfere with ongoing investigations”.
“This would give the committee a firmer basis for deciding whether and how to publish the information,” it said, allowing PwC to identify which staff had been involved and how “rather than leaving those matters to further speculation”.
Pocock said it was “appropriate that we know the names and also what role they played in that chapter and the extent of their involvement”.
Pocock said tabling the names will “continue to be an issue in the parliament” and she is “confident they will reach the public”, before requesting PwC release the names of its own accord.
On Monday O’Neill told Guardian Australia anything short of PwC naming all 53 partners involved in the tax advice scandal would be a “continued obfuscation and coverup”.
In January the Australian Financial Review first reported that the firm’s former head of international tax, Peter Collins, had been deregistered as a tax agent for sharing confidential information about a proposed tightening of tax laws with colleagues.
O’Neill asked Treasury officials about emails in which Collins said there was “little chance of an anti-hybrid rule” because the board of taxation had “little real idea”.
The emails, which O’Neill read into Hansard, referred to the fact that Treasury consultations were “supposed to be secret” or “confidential”, although one noted that global partners “may have a copy from other sources”.
Another referred to a tax strategy as “OK in practice until the ATO gets grumpy and figures out the joke”, she said.
Kennedy said that “by any community standard one could say they’re clearly disturbing”.
Kennedy praised the Senate committee for uncovering the material, which was first tabled on 2 May, describing them as “a crucial piece of information, which allowed us to take a step”. “They were important to our consideration referring the matter [to the Australian federal police].”
The Australian Taxation Office commissioner, Chris Jordan, told estimates it became aware in 2016 of a “handful of multinationals suspiciously and quickly seeking to restructure” in response to a new multinational tax avoidance law.
The ATO began audits because it was was concerned by “artificial schemes marketed by PwC” and discovered a matter of “significant concern” in the Collins matter, he said.
Jordan said the ATO lacks “criminal investigative powers” so was not able to investigate further because the breach of confidentiality was “not a tax offence”.
The ATO referred information to the Australian federal police in 2018 and 2019, and formally referred it to the Tax Practitioners Board in July 2020.
“We got on top of this early ... we stopped any tax loss from this egregious behaviour,” Jordan said.
Jeremy Hirschhorn, the second commissioner, explained this was because the three companies which had restructured reversed those actions, and other companies decided against it.
Jordan said those companies were “all PwC clients” it has taken court action against: AB InBev, the owner of Carlton & United breweries; miner Glencore; and JBS, the Brazilian meat processing company.
In answers to questions on notice, Treasury said it first learned about the issue in September 2018 when the Australian Taxation Office asked it to provide information about “a possible breach of confidentiality in relation to the multinational anti-avoidance law”.
Diane Brown, Treasury’s revenue deputy secretary, told the committee the ATO had been “seeking information on PwC and their involvement” in the tax avoidance consultation “for the purposes of an inquiry into the conduct of Mr [Peter] Collins” including the confidentiality agreements he had signed. “We weren’t told a wider context.”
In late 2020 the Tax Practitioner Board made inquiries with Treasury, before Treasury became aware of the outcome in December 2022.
On Tuesday, officials at Defence estimates revealed that the defence department currently has 54 current contracts with PwC with a total contact value of about $223m.
The associate secretary of the Department of Defence, Matt Yannopoulos, said it had received assurance that “none of the individuals named have ever done any work for defence”.
