PwC boss Tom Seymour’s big fail on tax leak
Joe AstonColumnistPricewaterhouseCoopers CEO Tom Seymour offered a wild take last week on the firm’s tax leak scandal, suggesting it was largely “a perception issue”.
Contradicting Tax Practitioners Board secretary Michael O’Neill, who told the Senate last month that 20 or 30 PwC staff were involved in the leaking of confidential government tax policy information, Seymour claimed “there [were] no findings that 30 people got the information”.
PwC Australia chief executive Tom Seymour. Michael Quelch
“No, what was said at the Senate committee was that there is a perceived issue around the 20 to 30. And if you read the … actual TPB findings, they say one partner shared information.
“The issue for us is there’s a perception issue, and that’s because we didn’t have the right [conflict] management tool in place.”
This is Tom Seymour dancing – very badly – on the head of a pin in his steel-capped boots. He is saying that only one PwC partner signed (and breached) a confidentiality agreement with Treasury, therefore PwC colleagues circulating the information downstream of him do not count as part of the leak.
An intrepid construction, to be sure!
The TPB findings, which Seymour has implored us to read, say that “Internal communications within PwC indicated an awareness amongst the internal PwC recipients, including PwC taxation partners, that the confidential information gained from the consultations with Treasury would be leveraged to market PwC to a new client base and influence the structures of existing clients in a manner that may be perceived to circumvent the intent of the proposed legislation regarding [international profit shifting].”
Perception issue? Try flaming turd emoji.
They are experts at minimisation, so there’s no irony when they also prefer this as their PR strategy.
Yet by resorting to semantics, by implying the misconduct is only perceived, Seymour betrayed a sublime delusion about where PwC suddenly finds itself reputationally.
Let’s just zoom out here. A decade ago, PwC’s head of international tax, Peter Collins, was advising Treasury and the Board of Taxation on the Abbott government’s plans to combat international tax avoidance.
Bear in mind, global action on profit shifting kicked off at the St Petersburg G20 summit in 2013. From that point, information about what governments might be planning was red hot in tax circles.
Collins breached his 2013 confidentiality agreement with Treasury in 2014 by sharing confidential documents setting out Australia’s proposed legislation with his PwC colleagues in Australia and overseas.
That legislation came into effect in January 2016.
By April of that year, the ATO had to warn a major accounting firm over a new tax structure – marketed mainly to US-based clients – designed to circumvent the new Multinational Anti-Avoidance Law.
By September, the ATO had issued two more warnings. Deputy Tax Commissioner Mark Konza said at the time, “Some firms are saying, ‘We’ve got the MAAL inoculation, come to us.’”
Of the third alert, Konza said, “We were so disturbed by such a blatant attempt to undermine the will of parliament.
PwC admitted in 2018 that this particular structure was theirs and the ATO has since clarified that “at least one” of the three 2016 structures was PwC’s.
According to Tax Commissioner Chris Jordan, Konza was “surprised at how quickly [after the commencement of the legislation] a scheme had been developed and in fact started to be marketed”.
Remember, this was years before anyone (outside of PwC) knew about the massive headstart Collins had given his firm. The ATO only stumbled upon Collins’ historical breach during a tax audit around 2018.
And throughout most of the relevant period, from the St Petersburg G20 through to June 2016, who was the boss of PwC’s Australian taxation practice? Yep, you guessed it, Tom Seymour. We are not suggesting he was involved in, or aware of, any misconduct. We are merely saying that if he did know about it, that would be bad, and if he didn’t know about it, that would also be bad.
Who in their right mind could characterise this wholesale debacle as “a perception issue”?
It is a profound failure of risk management. Canberra is a sacred revenue stream for PwC. The firm entered into contracts with the Australian government worth $330 million in FY22. Suddenly, the Senate is conducting an inquiry into “the management and assurance of integrity by consulting services provided for the Australian government”, expected to focus on PwC.
And this is a deep cultural issue. How many PwC partners or staff blew the whistle when they clapped eyes on the unauthorised contents of the Australian government’s intercontinentally explosive pipeline of anti-tax evasion measures? Not one of them. These were taxation specialists, experts in their field, and this was the hot button issue of their craft. Are we really supposed to believe they didn’t know that information was secret?
PwC doesn’t have a perception issue, it has a reality issue. Seymour’s real problem is that the perception finally matches the reality and the mirage that PwC is an ethical organisation has evaporated.
Seymour has betrayed an attitude that the lack of particular findings against other PwC personnel involved in the leak somehow equates to a clean bill of health. We’d love to see him argue that toss with someone like Kenneth Hayne. That would be entertaining.
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