PwC chief steps down over tax leaks scandal
KEY POINTS
PwC Australia chief executive Tom Seymour has stepped down three days after confirming he was linked to a tax leaks scandal that had threatened the firm’s ability to win work from its largest client, the federal government.
On Friday, Mr Seymour confirmed he was one of dozens of partners who received emails related to confidential Treasury information obtained by the firm’s former head of international tax, Peter Collins.
PwC CEO Tom Seymour has stepped down from his leadership role in response to the firm’s tax leaks scandal. Michael Quelch
The Brisbane-based partner was voted in as chief executive by the partnership in March 2020, after serving as the firm’s Asia Pacific Americas tax leader and managing partner of legal and tax.
He flew into Sydney on Monday ahead of telling partners and the firm’s staff he was stepping down from the post.
The firm’s managing partner of assurance, Kristin Stubbins, will be acting CEO until the partnership votes in a new leader in the coming months, the board said in a statement sent to The Australian Financial Review late on Monday.
“In the coming months a new CEO will be elected by the partners. We agreed with Tom that this is in the best interests of the firm and our stakeholders,” the board said.
The chairman of PwC’s board of partners, Tracey Kennair, said the firm needed to take immediate steps to “rebuild and enhance trust”.
“The independent review previously announced, in addition to the changes already made, will help us meet this objective,” Ms Kennair said in a statement.
Ms Stubbins, who has been on the firm’s executive board since 20202, also said she will seek to rebuild trust in the firm.
“I am honoured to take on this role at a critical time for our firm and our 10,000 people,” she said in a statement.
“We are committed to learning from our mistakes, listening to our stakeholders and enhancing our culture to build stronger trust and transparency.”
‘Legalistic’
Partners had complained that Mr Seymour’s ongoing preference to treat the matter as a legal argument instead of dealing head-on with the issues had become a threat to the firm’s reputation in the wider consulting and auditing market.
Against that concern, Mr Seymour was widely liked within the partnership and by staff and until last week’s cache of emails, there was general consensus he had dealt with the leaks scandal effectively.
The immediate concern was that the firm’s relationship with the Albanese government been become poisoned over the scandal and emerging calls for a complete ban on the firm winning further work from the government.
PwC has secured $537 million in federal government contracts during the past two years
Also not helping matters is the firm’s position as the main sponsor of the federal government’s major post-budget dinner where Prime Minister Anthony Albanese and Treasurer Jim Chalmers are scheduled to speak on Tuesday night.
As Mr Seymour stepped down, Labor national secretary Paul Erickson confirmed that the consultancy had also withdrawn as the major budget night sponsorship partner – a commercial arrangement worth $80,000.
The Australian Financial Review revealed in January that the Tax Practitioners Board had terminated the registration of Mr Collins as a tax agent for sharing secret information about the government’s tax plans with other staff at PwC, and ordered the firm to run additional training about managing conflicts of interest.
But the immediate crisis for Mr Seymour began late last Tuesday, when a Senate committee published a cache of internal firm emails that showed dozens of PwC partners and staff were involved in a plan to exploit, for profit, information that Mr Collins had gleaned while advising the government on developing the multinational tax avoidance laws from 2013 to 2018.
The emails, which had names redacted, also detail how PwC’s operatives used the leaked intelligence from Mr Collins to advise 14 clients how to sidestep new multinational tax avoidance laws in 2016, charging fees worth $2.5 million in the process.
Dozens of partners involved
Mr Seymour, who was head of tax at the time of leaks, responded to the cache last Wednesday by saying “those found to be directly involved in the breach of confidentiality arrangements in this matter have left the firm”.
But on Friday he revealed to the partnership “a number of partners who were in senior roles or remain in senior roles within our firm” and that he was named in the emails.
He also said that six to eight PwC partners shared the leaked information, while another 30 to 40 partners received the emails and were aware of the scheme to use the information to pitch to clients. But he maintained that this second group, which he was a part of, was not aware that the information provided by Mr Collins was confidential.
The revelations shocked many in the partnership who had believed earlier assurances from Mr Seymour that tax leaks were the result of one partner in 2014.
A defiant Mr Seymour also told the firm’s partners on Friday he would not step down as the leader of the firm but was open to their feedback.
It’s now clear he received that feedback in full over the weekend from partners and by Monday he had quit the leadership role.
Ahead of the announcement, many partners were despairing of the damage the scandal was doing to the firm’s brand and had braced themselves for Mr Seymour to try to hang onto the post.
“Partners are very angry. A lot of [are] now looking to leave. They’re thinking this will take a long time to overcome,” said an ex-partner who had spoken to multiple current partners over the weekend.
Another current partner said they could not reconcile how Mr Seymour could be in the emails but also claim he was unaware that the information being discussed was confidential.
Call for all partners involved to exit
It’s not clear if Mr Seymour’s move will be the circuit-break the firm needs to begin to rebuild its reputation with the federal government.
Labor Senator Deborah O’Neill, who first obtained the PwC emails through a Question of Notice, has already called for a clean-out of all partners and staff “actively or passively” involved in the leaks scandal.
She said that until this happened the firm couldn’t be trusted by the government or corporate clients to keep confidential material secret.
“PwC deliberately designed a scheme of theft and deception to cost the Australian people and profit PwC. That fact is not in dispute,” Senator O’Neill said on Sunday, after PwC on Friday said it would hold an independent review but not move for sackings or resignations.
“The question is – can all those involved finally accept that truth and respond appropriately to the nature and scale of the ethical collapse of which they were a part … Everyone actively or passively involved in the scheme needs to own up to that large-scale moral and professional failure.”
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