What is the PwC tax scandal? Who is Peter-John Collins? Who knew about it? Why does it matter?
What penalties does the consulting giant PricewaterhouseCoopers face for sharing confidential government tax policy information and (in its words) betraying the public’s trust?
At most, there’s possible jail time for the PwC partners who the company says shared the confidential information. There’s also the possibility of fines. But there’s also the possibility of nothing happening. Part of the problem is that what happened involves two different pieces of government legislation.
Exclusive
PwC names partners who received tax leak emails
KEY POINTS
PwC Australia has named four former partners who appear in the emails associated with its tax leaks scandal and has provided a Senate committee with the names of partners put on leave last week and the identity of a client the firm provided with confidential tax information.
Former PwC partner Paul McNab.
In an email to partners on Monday, acting chief executive Kristin Stubbins wrote that the Senate inquiry into consulting was also given a list of an additional 63 current or former partners and staff who received at least one email containing confidential information.
Former PwC partners Michael Bersten, Peter Collins, Neil Fuller and Paul McNab were named in Ms Stubbins’ email. The firm, which has responded to all the questions on notice posed by Greens senator Barbara Pocock, has provided the name of one company in response to the query about clients provided with confidential “information relating to the Multinational Anti Avoidance Law by PwC”. The firm declined to reveal the client it had named.
A spokesman for Mr McNab said he denied any wrongdoing and had departed from DLA Piper by mutual content on Sunday evening. “Paul has done the honourable thing while this issue is in the media and is acting in the best interests of his firm, DLA Piper,” the spokesman said.
Separately, the head of the corporate watchdog told The Australian Financial Review ESG Summit on Monday that PwC is “clearly only just starting” to deal with the tax leaks scandal. Joe Longo, the chairman of the Australian Securities and Investments Commission, said that if this process “plays out in a constructive way” PwC’s leaders can restore “trust and confidence” in the firm.
Ms Stubbins wrote to partners that “in response to the Senate questions, we provided the requested names of those involved in the confidentiality breaches as well as the names of partners who were directed to go on leave pending the outcome of our investigation related to the confidentiality breaches.”
Acting PwC chief executive officer Kristin Stubbins said the firm has provided a list of names to a Senate committee. Jessica Hromas
She added that former PwC Australia CEO “Tom Seymour no longer has any role in our firm”, and wrote the firm would “take appropriate action for these individuals when our investigation is complete.
“We also submitted the names of an additional group of 63 current or former partners and staff who received at least one email containing confidential information relating to the Multinational Anti-Avoidance Law (MAAL) based on our investigation to date,” she wrote.
Ms Stubbins said the group of 63 were informed that their names had been passed to a Senate committee “over the weekend”. Sources have told The Australian Financial Review that this move only added to an existing rush of partners seeking their own public relations and legal advice.
Mr McNab told the Financial Review that his work for PwC involved helping his clients “to comply with Australia law, not avoid it”. He also said “it is noteworthy” the firm has chosen to only publicly identify former partners.
“PwC has today released my name as one of four former partners they say were involved in confidentiality breaches. It is noteworthy that the firm has taken this action to name former partners only. I had no forewarning or opportunity to respond,” he said in a statement.
“For the record, I was not involved in any Treasury consultations regarding MAAL where confidential information was discussed. In addition, I trusted that the information shared with me as a partner of the firm would comply with any confidentiality agreements that may have been in place with Treasury.
“At all times I worked with my clients to comply with Australian law, and not avoid it.”
Mr McNab, who is the first current or former partner associated with the matter to speak publicly, worked at the ATO from 1980 to 1988. After a decade at BDO Nelson Parkhill, he joined PwC in 1997. He left the firm in May 2020 to become a partner of law firm DLA Piper’s tax dispute resolution division.
Mr Bersten was deputy government solicitor from 1996 to 1999 before serving as deputy chief tax counsel for the ATO from 1999 to 2001, his LinkedIn profile shows. He was a partner at Deloitte from 2001 to 2004 before moving to PwC where he helped set up its tax controversies division. He resigned from PwC in July 2018 and became a barrister.
Senator Pocock said the names and roles of each PwC operative should be released but also that “it is important to ensure that those who are not responsible for any wrongdoing do not suffer any adverse repercussions”.
“I have said before that the names of all PwC operatives involved should be released as soon as possible and that PwC needs to make clear the nature of the role that each person on the list has played in the tax avoidance scheme,” Senator Pocock said.
Information sent to ‘two large groups’
“It is important to ensure that those who are not responsible for any wrongdoing do not suffer any adverse repercussions. The onus is now on PwC to come clean with the Australian public and hand over this information.”
Labor senator Deborah O’Neill said PwC should release all the names publicly, instead of hiding behind “the cloak of the Senate to maintain confidentiality”.
”The whole of parliament, the Australian public, and the international audit, assurance and consultancy sector deserve to know the identities of those who participated in this egregious breach of trust and assault against the interests of the Commonwealth,” she said.
PwC has only released to the Senate the names of those partners within the group of nine put on leave last week that were associated with the emails. The firm has not revealed to the senate the identities of this group who were put on leave to take accountability as leaders at the firm over the matter.
Ms Stubbins emphasised that this larger group of current and former partners, which she did not name, were likely unaware that the material they were receiving was based upon confidential government tax information.
“The reason for the length of this list is because an email, which did not indicate that the information it contained was confidential, was sent to two large mailing groups,” she wrote.
“It does not follow that these people were responsible for or knowingly involved in a confidentiality breach. For that reason it would be unfair for those names to be released, and as a result we’ve asked the Senate not to publicly disclose the names in this group.”
The firm has received a reprieve from appearing at this week’s public hearing day for the Senate inquiry into integrity in the consulting sector. Instead, officials from Treasury, the Australian Tax Office and the CEO of rival KPMG will all appear on Wednesday.
Ms Stubbins acknowledged that the firm had received “calls from our stakeholders to release the names of those who were responsible for confidentiality breaches” but said she wanted “to respect the ongoing investigations and legal processes to ensure this matter is investigated appropriately, and that is what we are doing”.
She ended the note by thanking partners for “supporting one another and our people” and for staying focused on “delivering high-quality work”.
“While I know this is a challenging time, what happened here is a reminder that we need to live our values every day. Our firm is a people business made up of diverse and talented individuals and we will get through this together,” she wrote.
PwC has been under fire since May 2 when emails released by the Senate showed multiple PwC partners received emails relating to a plan to exploit, for profit, information that Mr Collins had gleaned while advising the government on developing the multinational tax avoidance laws.
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