Friday, May 12, 2023

Audit and Assurance Industry: PricewaterhouseCoopers



The PRESIDENT (Senator Lines):  Order! I propose the question: 

That the Senate do now adjourn. 


Audit and Assurance Industry: PricewaterhouseCoopers


Senator O'NEILL (New South Wales) (20:25): I rise this evening to speak about the appalling misuse of confidential government information by auditing and assurance company PwC. In response to questions I asked in February at Senate estimates, and further questions I've put on notice to the Tax Practitioners Board, there's now a cache of emails that gives shape to an undeniable scheme of theft and deception undertaken by PwC, designed to cost the Australian people and profit PricewaterhouseCoopers. The deception was designed and known by at least 53 as yet largely unidentified partners and participants in the PwC email chain. References in Singapore, the United Kingdom, Ireland, the United States and Europe appear throughout the correspondence and it's clear this is an issue with global implications. 

There has been extensive discussion in past days in the community, and in the financial sector, about the immense and far-reaching implications of this misconduct by partners at the pinnacle of PwC's partnership hierarchy. Mr Peter-John Collins has been banned from practice by the Tax Practitioners Board for two years. Mr Tom Seymour has stepped down as PwC Australia's CEO but remains a senior partner at PwC. Mr Peter Calleja, head of financial advisory division, and Mr Sean Gregory, chief of strategy and risk and reputation officer, have stepped down as board members but remain partners at PwC. Acting CEO, Kristin Stubbins, has not released a media statement to the public. We do not know if she is one of the blacked-out recipients of the now-public and shocking email chain. There has been no reveal of the identities of any of the people whose names are currently blacked out in the documents we have. 

Claims have been made by PwC about the appointment of an independent inquiry, but there is no public document revealing the terms of reference of the inquiry. And the independence, or otherwise, of the inquirers, appointed by PwC to inquire into themselves, is completely unknown. With trust in PwC at an all-time low, you'd think they would have figured out that such an inquiry is not to be trusted when it is self-appointed. 

Given the impact of this situation for every Australian who has superannuation, it's not surprising that over recent days my office has been inundated by emails and letters from Australian citizens and key stakeholders deeply concerned about the recent revelations regarding PwC. Many told me that they had never written to a politician before but felt, due to the seriousness of this issue, they simply must communicate. Amidst the extensive coverage of this issue, I seek tonight to share the voices of a number of concerned Australian citizens, some with tangential connections to the assurance industry, who know deception when they see it. Others with deep and informed understanding of this sector, who abide by the professional standards—people who do abide by those standards are there—so clearly spell out the standard of behaviour that is required to be an accountant, auditor or tax practitioner, and they know those standards have been breached. 

Here are some voices from the Australian people who've been in touch with me this week: 'The actions of PwC are an outrage. This particular white-collar crime has helped the privileged to even more wealth, illegally. The opportunity cost to the Australian public of that money they acquired, and saved their clients in tax avoidance, would have done immeasurable good in improvements to health, education and infrastructure, potentially. Keep going after these unscrupulous bottom-feeders who have taken advantage of their privileged position to advance themselves. It's pure greed at the expense of the collective interests of the Australian public.' 

Another fine Australian wrote to me, saying: 'As someone who used to work at PwC, I want to thank you for your efforts in bringing their terrible behaviour to light. I encourage you to keep digging. I left because of bullying from my boss. After I reported it I was encouraged to take stress leave while there was zero accountability for her. In fact, I think she got promoted. There are so many who have been damaged by working at PwC. They truly seem untouchable, which is why your efforts mean so much.'

Another citizen wrote: 'I have worked in multinational service companies, and the arrogance of some of these companies and the arrogance of some of these executives is staggering. Some would truly drink their own bathwater.' Another wrote: 'It is evident that the firm is trying to wriggle out of an ethical and professional morass in which many of its personnel appear to be involved. There is only one way for a client of the firm, be they government or private clients, to have any confidence in the firm going forward: the bad apples need to go and the firm needs to suffer.' Another wrote: 'I personally don't think apologies and scapegoat resignations are enough. Yet again, white-collar crime has minimal impact on the perpetrators or the industry which promotes their behaviour. It will only check itself when publicly exposed or embarrassed.' And there are more. I hope to get their voices on the record as we continue our investigations into what happened at PwC. 

Some of my Senate colleagues have called for this matter to be referred to other bodies for further investigation, and that may yet occur. Any and all future action on this PwC matter needs, however, to be based on facts and detailed information, and any proposed action needs to be given due consideration. That's what responsible governments do. Chasing headlines for a day will not fix this problem. Knee-jerk reactions rarely manifest lasting reforms that have integrity. Irrespective of calls for action and what further developments there may be in terms of potential pursuit of criminal charges or investigation through the National Anti-Corruption Commission or, indeed, by professional bodies that supposedly oversee the sector in a self-regulatory model, there is a task for the Senate to undertake to further reveal the underbelly of the sector that is now a matter of public record. 

I use Joseph Conrad's words from his remarkable novel Heart of Darkness to express my personal response to what I have seen of this PwC scheme in these documents I have in hand here. There are 144 pages of communications across the globe inside PwC, with bits and pieces blacked out. There's still no transparency about who was involved from PwC. When a company thinks it's okay to steal from the government of a country, what does this mean for the multinational companies, the Australian companies and the small and medium enterprises that they are supposedly servicing? What does it mean in terms of the integrity of the advice they are receiving? What does it mean for us as holders of superannuation about the truth that they are supposedly assuring with their reporting of what's going on in the companies of this country? 

I assure you, those Australians who are listening to the broadcast tonight and those who read of this in the newspapers in Australia or overseas, that this is a matter I will continue to prosecute here with my colleagues in the Senate to bring light to the darkness and change the cultural realities that have been revealed. 

We need to propose thoughtful, substantive and impactful recommendations to government and other entities for the change that is necessary. Misconduct of this nature cannot occur within the assurance sector. For the Australian people's economic security, assurance companies in a healthy economy must be trusted actors. Section 30.10 of the Tax Agent Services Act 2009 establishes the legislated code for registered tax practitioners. The code sets out the professional and ethical standards required of registered tax practitioners. There is no mystery here. There are five categories, covering 14 principles: honesty and integrity; independence; confidentiality; competence; and other responsibilities. They had a manual, clear and explicit, to follow. They had a professional obligation. They did not accede to any of those standards and, instead, set up their own scheme for profit. Requirements are clear, but many at PwC have failed the test. The PwC cultural reveal is an issue which deserves far more than kneejerk reactions and snappy headlines. I intend to continue to pursue this issue through the Senate in the same reasonable and deliberative manner which originally brought these issues to light. I seek the support of my colleagues in doing that on behalf of the Australian people and for transparency in the financial markets of this country. I hope for the same determination from all my Senate colleagues. This is exactly the type of work that we were elected to do, and it's what we must do in this important place at the heart of our democracy.

The PRESIDENT: I remind honourable senators that legislation committees will meet to consider estimates commencing on Monday 22 May 2023 at 9.00 am. 

Senate adjourned at 20:35