New chair of body that exposed PwC tax leaks opposed release of emails
The head of the Tax Practitioners Board has been replaced just days out from his expected appearance before a parliamentary inquiry into how the professional body came to expose the PwC tax leak scandal.
The Labor government on Friday announced that Tax Practitioners Board chairman Ian Klug had been replaced by former KPMG partner Peter de Cure, who as a board member pushed to keep explosive information about Collins and PwC quiet.
Former TPB chair Ian Klug will not be available for Senate questions on how PwC investigation was conducted. Michelle Smith
Mr Klug’s departure means the Senate will not be able to question him about the Tax Practitioners Board’s investigation into PwC and former partner Peter Collins, and whether it faced pressure to curtail its inquiries.
Mr Klug did not apply to extend his seven-year term after Treasury indicated it was changing the role of the Tax Practitioners Board chair to be more involved in active management oversight.
The move to appoint Mr de Cure, who was a KPMG partner for 25 years until 2011 and has Liberal Party links, raises questions about whether any further material will be released in the PwC matter.
As a member of the board, Mr de Cure opposed the release of any of the redacted PwC emails that were published by the Senate on May 2 and revealed by The Australian Financial Review.
Three-year appointment
Mr de Cure, who has a three-year appointment as chair, will attend estimates in Mr Klug’s place.
He will face questioning over his direct role in deciding penalties for PwC and for Mr Collins, the firm’s former head of international tax.
Internal emails obtained by the TPB show that he shared confidential government briefings with other PwC partners who used them to win clients. Mr Collins has not spoken publicly since his suspension.
Mr Klug appeared before the Senate in February after the Tax Practitioner Board reported that PwC partners used confidential government information obtained by former partner Peter Collins to pitch for clients. He declined to comment on his replacement after his term expired on May 17.
In the February estimates session, Labor senator Deb O’Neill questioned Mr Klug over the disciplinary measures the Tax Practitioners Board took, cancelling Mr Collins’ registration as a tax agent for two years and ordering PwC to run training classes to help its partners recognise conflicts of interest.
Mr Klug was not a member of the conduct committee which decided on the sanctions, after it found that PwC partners used confidential information obtained by Mr Collins to offer new clients schemes to sidestep new taxes on which Collins was advising Treasury.
“It’s extraordinary to me,” Senator O’Neill said, that Collins’ ban was for two years, when the maximum term available was five years.
Conduct committee
Senate filings show Mr de Cure sat on the four-member conduct committee, with the decision on sanctions dragging out over three separate meetings from October to November last year. He declined to comment to The Australian Financial Review.
Tax Practitioners Board chief executive Michael O’Neill told estimates in February that the conduct committee “had regard to the fact that some of this misconduct happened some years ago and there were referee reports in support of Mr Collins ... And in the course of the investigation, Mr Collins did indicate some genuine remorse”.
Mr de Cure, whose term is due to expire in October, was appointed on advice from Treasury which conducted a merit-based review.
The redacted emails were supplied to the Senate in the teeth of Tax Office and Treasury opposition.
ATO opposition
A senior Tax Office source said that senior ATO officers had “robust discussions” with Mr Klug and Mr O’Neill, urging them not to release the redacted emails because of the precedent which it would set.
After the Financial Review contacted all members of the board, several said that the pressure from the ATO and Treasury had caused disagreement, with some pushing for all emails to be provided to the Senate unredacted, while Mr de Cure supported the ATO’s position that the emails should not be released.
As a KPMG alumni, Mr de Cure shares history and has a good relationship with senior ATO executives who previously worked for KPMG, including Commissioner Chris Jordan and Second Commissioner Jeremy Hirschhorn.
Such history is not unusual – three of the current seven members of the Tax Practitioners Board are former partners of big four firms including PwC alumni Peter Hogan and Judy Sullivan.
Another KPMG partner, Rosheen Garnon, has been reappointed as chairman of the Board of Taxation for another three years.
Read more on the PwC tax leaks scandal:
Find out the inside scoop about Accenture, Deloitte, EY, KPMG, PwC and McKinsey. Sign up to our weekly Professional Life newsletter.
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
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
