Consulting firm PwC is under fire over revelations some of its senior partners misused confidential Australian government information to help big multinational companies avoid paying more tax.
The company's Australian CEO has quit, nine senior partners have been stood down, and the man at the centre of the scandal is being investigated by the Australian Federal Police, all while questions over who knew what and when remain unanswered.
Here's what the PwC scandal is about, who is involved, and what consequences the company could face.
Short on time?
There's a lot to unpack with this scandal — so if you want to jump to the relevant question (and its answer) use the links below to take you there.
- What is PwC?
- What did PwC do?
- How did it all unravel?
- Why am I only hearing about the PwC scandal now?
- Why is what PwC did a bad thing?
- Did anyone know this was happening?
- Did anyone tell the authorities about this?
- Who else was involved?
- What has the government said about it?
- What consequences are PwC facing?
- What happens next?
Read more about the PwC scandal
If you want to read more about the PwC scandal as it's happened, here are some key stories to fill you in:
- Treasurer Jim Chalmers furious former PwC partner leaked confidential government briefings
- ATO says millions in annual tax could have been lost due to PwC confidentiality breaches
- PwC Australia CEO Tom Seymour steps down after tax documents leak scandal
- ANALYSIS: Richard Boyle faces life behind bars while those in the PwC scandal are protected by the corporate world
- PwC in the firing line and AFP drawn in as Senate asks hard questions about conflict-of-interest drama
- AFP investigating former PwC executive over using confidential Treasury information
- Senator alleges 'perception of contamination' as police investigate firm working inside its buildings
- PwC orders nine partners to go on leave amid tax scandal fallout
- 'Clearly disturbing': Treasury referred PwC to police after emails exposed by Senate
- Lack of detail stopped Australian Federal Police initially investigating PwC breach
- PwC asked to hand over more information amid new investigation into leaking of tax information
- Treasurer Jim Chalmers says naming of PwC partners placed on leave will happen 'in time'
- ANALYSIS: The PwC scandal should be ripe for the National Anti-Corruption Commission's attention
What is PwC?
PwC is an abbreviation of PricewaterhouseCoopers, a global professional services company that provides accounting and consulting services.
In the business world, they're considered one of the big four firms that provide these kinds of services, with the other three being Deloitte, KPMG and Ernst & Young (EY).
They do a lot of things, like accounting, auditing, and advising big companies how to minimise their tax bill. They also provide a range of consulting services to clients.
Consulting is a somewhat vague term, but for the purposes of understanding PwC, we'll keep it simple by defining it as the practice of businesses hiring experts to provide advice to solve problems.
PwC's biggest Australian client is the federal government, which uses it for a range of services including consulting on defence, education and transport spending, and even potential changes to the law. (Keep this in mind as we move forward.)
Being consultants for the federal government is big business for PwC — in fact, it has been awarded more than $537 million in Commonwealth contracts in the past two years alone, and that makes up around 20 per cent of its annual revenue.
It's not just small government departments that PwC is consulting for, either. Large agencies like the Australian Federal Police, Defence and Services Australia (which runs Centrelink) have become reliant on firms like PwC to assist with parts of their roles.
PwC is also by far the AFP's preferred consultancy firm to deal with, and it has been awarded more than $20 million in contracts since 2021. (This is also worth bearing in mind for later.)
In other words, that's more than $537 million of taxpayer money that is being used to hire PwC's experts to provide advice on how to solve the government's problems.
As for why private companies are doing what was once the job of the public service — it comes back to decades of Australian governments winding it back in the name of cost cutting and efficiency.
Although you could argue that it is appropriate for government departments and enterprises to seek out outside knowledge to solve its problems, it also leaves the door open to potential conflicts arising.
What did PwC do?
To understand what's happened, we need to go back in time.
About a decade ago, the federal government asked PwC's international tax expert Peter-John Collins to help them design laws that would solve a problem: getting big overseas companies like Google, Facebook and Apple to pay their fair share of tax in Australia.
That legislation was known as the Multinational Anti-Avoidance Law (MAAL) and was a major strategy of the then-treasurer Joe Hockey under the Coalition government, based on the Organisation for Economic Cooperation and Development (OECD)'s Base Erosion Profit Shifting project.
The MAAL was designed to stop major companies, particularly tech giants, from shifting their profits away from higher-taxing countries like Australia to others with lower tax rates, such as the Netherlands and Singapore.
In his dealings with the government and designing the tax laws, Mr Collins was required to sign multiple confidentiality agreements which specifically stated that the knowledge could not be disclosed.
But the Tax Practitioners Board found Mr Collins shared that secret knowledge with people within PwC, which gave the firm an advantage by being able to come up with ways for companies to get around paying the new tax.
PwC then used this inside information to get new clients and make money. They were even boasting about it internally, and all of this was happening without the government's knowledge until earlier this year.
Put simply, PwC had some juicy but confidential information that big companies could benefit from — and pay them for.
How did it all unravel?
Fast forward to December 2022 and the Tax Practitioners Board (TPB) announced it had suspended Mr Collins's tax licence for two years because of integrity breaches.
The TPB was scathing in their assessment of Mr Collins, finding he had been leveraging his insider knowledge to benefit PwC and had failed to manage his conflicts of interest — putting him at odds with the codes he must comply with as a tax agent.
The ruling stated:
"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."
It wasn't until a month later, in January, after the Australian Financial Review (AFR) published a story saying Mr Collins leaked government tax plans to clients which led to his deregistration, that Treasurer Jim Chalmers commented.
"[I'm] absolutely furious, absolutely ropeable about these revelations," he said on January 25.
"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."
Until this point, PwC had tried to keep news of the TPB's decision about Mr Collins's licence quiet.
In response to Mr Chalmers's comments, PwC Australia CEO Tom Seymour stressed that it was an isolated incident from almost 10 years ago, those involved had since left the company, and PwC had taken steps to stop it from happening again.
"We're deeply disappointed that in this government consultation process, we failed the high standards we set for ourselves as a firm," he said in January.
"We recognise and understand the need for our tax system to operate with integrity and deeply regret confidentiality in this matter was not maintained."
In early March, the Senate launched an inquiry into the use of consulting services by government, run by the Finance and Public Administration Committee.
Why am I only hearing about the PwC scandal now?
This scandal has been slowly simmering since January, but it wasn't until May 2, when dozens of internal PwC emails were released to Labor senator Deborah O'Neill, that we began to get a picture of the true scale of it.
Those emails formed the basis of a story by the AFR about the tax scandal, which published in detail the scale of the leak and how it potentially helped PwC's clients try to (legally) dodge tax.
The emails also showed that not only were several of Mr Collins's colleagues aware that he was leaking these secret government documents — in some cases, they were supportive of him doing so.
Overall, there were 138 pages of heavily redacted emails that were released to Senator O'Neill, with one reading:
"Awesome for our MAAL (multinational anti avoidance law) Defence work. Puts [us] in a great place."
The email does not state who the client is.
Another email from Mr Collins on September 3, 2015, published by the AFR, read:
"No need to share this because all supposed to be secret … The imported mismatch formulas will blow our mind but be easy to sidestep."
One email showed that PwC made at least $2.5 million from having the information, which had helped the firm win "brand-defining" clients.
A few days after their release, Mr Seymour admitted to staff that six to eight senior partners at PwC had shared the confidential information, while another 30 to 40, including himself, were on the email trails — but were unaware the information they were privy to was meant to be secret.
In the weeks since the internal emails were shared, we know that the confidential information was shared to at least 53 PwC partners, who then approached at least 14 global companies with a plan on how to dodge the new tax laws — with three of those companies going ahead with a restructure to avoid the scheme.
Why is what PwC did a bad thing?
The conflict of interest here should be pretty clear — it goes beyond the aftershocks of a minor administrative error that's playing out years later.
What PwC did was put profits before purpose. If they got away with it, the Australian economy would have been $180 million worse off, because these big foreign companies wouldn't have been paying as much tax.
It is also a breach of confidentiality agreements, which, when dealing with sensitive government information, can have major legal implications.
Labor senator Deborah O'Neill summed it up using parliamentary privilege, saying Mr Collins and Mr Seymour had been involved in:
"The deception of the Australian parliament, the Australian people, and a betrayal of the ethical and professional standards they should be upholding.
"This is a major cancer on the way that information that is vital to the national interest is being undertaken by those at PwC."
Did anyone know this was happening?
Here's where it gets a little complicated.
At a Senate Estimates hearing on February 15 this year, ATO Commissioner Chris Jordan said an avoidance scheme to help big companies avoid paying tax was being marketed to overseas companies "within weeks" of the new laws taking effect in 2016.
Mr Jordan told the hearing it was noted at the time how quickly the scheme had been put together, and found it frustrating that the new laws were being potentially dodged so quickly.
"Normally it would take a while for people to look at it, how it all fits together," he said in February.
"Within weeks, we became aware of a scheme being marketed to multiple companies."
Mr Jordan said he could not say whether the companies were PwC clients, but acknowledged "some were, some could've been prospective clients".
At another Senate Estimates hearing on May 30, Mr Jordan said his team had tried to investigate PwC back in 2016.
The ATO also raised their concerns with Treasury in 2018, but was hamstrung by secrecy laws.
It meant the ATO could not hand the information to the Treasury or the federal government — and because they were not tax offences, they could not investigate.
Then in late 2020, the TPB requested information from Treasury to assist with their investigation into Mr Collins, which culminated in his tax licence suspension in December 2022.
Did anyone tell the authorities about this?
Here's the kicker — they did.
In March 2018, about two years after the ATO first became suspicious, the ATO raised its concerns about a confidentiality breach with the AFP.
But due to a lack of detail, they couldn't proceed with an investigation.
"Despite our best efforts, due to the obstacles placed in our path, it took a long time to obtain the information requested," said Mr Jordan.
"We had to issue further notices to obtain information that was clearly not subject to legal professional privilege, such as internal PwC emails."
Some information was passed onto the AFP, but Mr Jordan explained that the ATO's laws meant it was limited in what it could provide.
In 2019, after a "year's consideration", the AFP and ATO agreed that they couldn't pursue an investigation into Mr Collins because of an insufficient amount of evidence.
The ATO then unsuccessfully tried to apply the "promoter penalty" laws (or laws to deter promotion of tax avoidance schemes).
They then referred the matter to the TPB, which ultimately resulted in Mr Collins's suspension in 2022.
Who else was involved?
Despite all this information, there are a lot of missing pieces of the puzzle. Currently, the only person we know that was for sure involved was Mr Collins.
At the time of writing, we don't know who the 53 partners are, nor do we know the identities of the 14 global companies.
We also don't know how many of those 53 partners at PwC are still at the firm or have since left to work with other companies, and if so, where they work.
In the weeks since the scandal broke, PwC Australia CEO Tom Seymour has quit the firm, and on May 29, PwC confirmed that nine partners have been stood down on leave.
Again, we do not know the names of those nine partners, nor do we know what their jobs were, what they knew about the leaks, or whether they also passed on the information.
But despite the ongoing calls to release the names of those involved in the name of transparency, PwC Australia's acting CEO Kristin Stubbins has consistently resisted the demands.
In an open letter published on May 29, Ms Stubbins wrote:
"There has been an assumption by some that all those whose names have been redacted must necessarily be involved in wrongdoing. That is incorrect.
"Based on our ongoing investigation, we believe that the vast majority of the recipients of these emails are neither responsible for, nor were knowingly involved in any confidentiality breach."
What has the government said about it?
To describe the federal government as seething over this would be an understatement.
Treasurer Jim Chalmers has repeatedly said he was "ropeable" and "furious" about the PwC scandal.
"I am personally, the government, I think the country is absolutely filthy about what's happened with PwC. We want to be able to consult in good faith with the business community on changes that have the capacity to affect them," he said.
"We cannot have a repeat of this absolutely appalling episode, where people were monetising government secrets."
He believes the PwC partners involved in misusing the confidential information would be publicly named "in time".
In an interview with Sky News on May 31, Assistant Treasurer and Financial Services Minister Stephen Jones said the scheme was an "absolute disgrace", and commended the ATO for taking action.
"We want to be a government that consults, but it's incumbent on those whom we consult with to ensure that they keep that information and that trust to ensure that they're not using the information they gain through that consultation process to weaponise or monetise the information they've gained," he said.
"That is the evil at the heart of what's going on in this PwC affair."
Prime Minister Anthony Albanese has also described the tax leak as "completely unacceptable" and called for full transparency over the leak, but has stopped short of saying they should be banned from any government work.
The Senate has since launched an inquiry looking at the use of consultants by the federal government, with a final report due in September.
What consequences are PwC facing?
Some people want the government to stop giving them contracts immediately — something the government has remained coy on — but they have committed to cracking down in response to "the PwC experience".
The Greens have repeatedly called for a crackdown on government use of consulting firms, and are demanding PwC be banned from all future government contracts.
They have also asked the TPB to suspend PwC's registration, which would stop it from operating in the lucrative consulting field and providing any tax advice.
In New South Wales, a parliamentary committee will be held into the state government's use of consultants.
The AFP has also launched a criminal investigation into Mr Collins, but no charges have been laid.
The consulting firm is also conducting an internal investigation into the scandal, run by former Telstra boss Ziggy Switkowski.
But PwC isn't without work to keep them busy. They are conducting an audit of the RBA after the central bank found it had underpaid its staff, although RBA governor Philip Lowe has said the bank would not use the firm again.
PwC also holds four current contracts with Treasury, and has 54 contracts with the Defence Department worth more than $223 million.
The scandal has also trashed PwC's global reputation, and they are facing a future without getting business from their biggest client — the federal government.
What happens next?
The AFP is still conducting their criminal investigation into Mr Collins, and that is expected to take some time.
If he were to be charged, the matter would need to be referred to the Department of Public Prosecutions (DPP) first, but there has been no word on whether that will happen.
In the meantime, more details will continue to come to light through Senate Estimates hearings, the inquiry into the government's use of consulting firms, and media reporting.
Many PwC clients are evaluating their relationship with the consulting firm — especially the federal government and its slew of departments.
But given the scale of the operation and how many questions remain unanswered, the investigation into the PwC scandal has only just begun.
