Want our business? Learn to keep secrets, PwC told after tax leak

Edmund Tadros and Neil Chenoweth

Feb 21, 2023 Share

PwC partners and staff with security clearances will need to take part in extra training to remind them about their “confidentiality obligations” as the fallout from the firm’s tax leak scandal extends beyond the internal policy improvements already promised.

Peter Collins, former international tax leader for PwC Australia. 

The extraordinary move, revealed to federal parliament last week, came as the Labor government deflected calls by the Greens to blacklist PwC from further federal work.

Finance Minister Katy Gallagher instead said the government was looking to address gaps in existing procurement rules to stop a repeat of the breaches.

Parliament was also told last week that between 20 and 30 PwC partners and staffwere involved in sharing confidential government tax policy obtained by former PwC star Peter Collins.

Tax Practitioners Board boss Michael O’Neill told Senate estimates that the partners and staff used the information passed to them by Mr Collins, who had signed confidentiality agreements while advising Treasury and the Board of Taxation in designing anti-avoidance tax laws.

The big four consulting firm is keen to move on from the affair – Mr Collins resigned late last year and in December was deregistered by the Tax Practitioners Board for two years – by promising to reform its internal processes to ensure similar leaks do not happen again.

‘Additional training’

Greens senator Barbara Pocock: “The question for me is about the prevailing cultural norms within PwC.” Alex Ellinghausen

Department of Finance officials said they had written to PwC to “seek assurances” that the firm had taken actions “to prevent future breaches of confidentiality”, deputy secretary Andrew Jaggers told a Senate estimates hearing last week.

“They’ve also given us some assurances around the training that they provide to all staff,” he said.

“In particular, staff who have security clearance need to undertake additional training, which is really about ensuring that those confidentiality obligations are maintained, and training for their partners as well as their staff, not just the staff in the organisation.”

Greens senator Barbara Pocock, who has demanded a review of the way the federal government uses consultants, said PwC had escaped with a “tap on their reputational wrist”.

“The notion of training very well paid, often quite senior officers, in a trusted adviser relationship to government is a nonsense,” Senator Pocock said. “Either people behaviour ethically with strong cultural norms or they do not. The question for me is about the prevailing cultural norms within PwC.”

Stronger penalties

Senator Pocock wants PwC to be cut out of future work for the government for a period of time, and stronger controls around the use of consultants, including an evaluation of the quality and value for money of any work by external advisers.

“I think there should be much stronger penalties in terms of PwC’s future contracts. It is a serious issue and a serious breach,” Senator Pocock said.

PwC has repeatedly said that the Tax Practitioners Board investigation did not find that any client arrangements or structures were affected in connection with the matter.

The firm’s chief executive officer, Tom Seymour, said PwC “deeply regret confidentiality in this matter was not maintained”.

A separate Senate estimates hearing last week was told that the Australian Tax Office continued to use PwC services because the firm remains listed as an official supplier to the federal government.

Treasurer Jim Chalmers has accused PwC of a “shocking breach of trust” and asked officials to examine whether the breaches were a one-off or part of a pattern of behaviour.

Read more about the PwC tax leak

January 2023

• The Tax Practitioner Board investigation findings about PwC and former partner Peter Collins
• PwC partner leaked government tax plans to clients The former head of international tax for PwC Australia, Peter Collins, has been deregistered by the Tax Practitioners Board for dishonesty and for sharing confidential government briefings.
• Government puts tax professionals ‘on notice’ after PwC breach Assistant Treasurer Stephen Jones said the government may rethink its approach to consulting tax professionals after PwC and its former head of international tax were sanctioned for breaching confidentiality rules.
• Sukkar dismisses calls to sanction PwC over leaking scandal The former assistant treasurer and PwC alumni cemented the big four firm’s position as the dominant supplier of government tax advice.
• Treasurer slams PwC tax leak as ‘shocking breach of trust’ A furious federal Treasurer Jim Chalmers said the nation’s largest accounting firm had put economic decision-making and policymaking at risk.
• How a paper tiger mauled PwC Shock revelations by the Tax Practitioners Board offer the government a major reset of how it takes advice on tax policy from the big four accounting firms.
• PwC tax leak ‘once-in-a-lifetime’ chance for crackdown: former ATO exec The man who led the Tax Office’s moves on multinational profit shifting says revelations about the leak will allow the ATO to “get rid of the drivers of tax planning”, as PwC tax clients find themselves targeted.

February 2023

• Accountant adviser to Tax Office deregistered after $500,000 fraud Gavin Swan has been deregistered for “egregious” misbehaviour as the government battles fallout from the PwC leaks scandal.
• Tax agent regulator gets more teeth in wake of PwC leaks The Tax Practitioners Board will be given its own budget while loopholes that allow deregistered tax agents to continue operating will be closed.
• PwC leaks scandal widens Up to 30 partners and staff were involved in sharing confidential government tax policy, Senate estimates was told.

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Edmund Tadros leads our coverage of the professional services sector. He is based in our Sydney newsroom. Connect with Edmund on Twitter. Email Edmund at edmundtadros@afr.com.au

Neil Chenoweth is an investigative reporter for The Australian Financial Review. He is based in Sydney and has won multiple Walkley Awards. Connect with Neil on Twitter. Email Neil at nchenoweth@afr.com.au