PwC tax leak made it harder for Australian firms to win government IT contracts
Scope of Switkowski’s PwC review revealed
The review of PwC Australia’s operations by former Telstra chief executive Ziggy Switkowski will not examine the firm’s tax leaks scandal or past conduct at the firm, according to its previously secret terms of reference.
Instead, the review will focus on ways the firm can reform its governance structure, how leaders are held to account and the culture of the organisation.
The scope of the Switkowski review, announced on May 15, were released as part of PwC’s response to questions on notice from Greens MP Abigail Boyd as part of a NSW parliamentary inquiry into consultants.
In the response, PwC says the review is due to hand its report to the firm by August 18, before being released publicly in September. The answers also reveal the firm does not keep a central list of personnel on secondment in the NSW public sector and that dozens of past and current personnel have mostly unpaid roles on public sector boards and committees.
The scope of the review states “the assessment of governance, accountability and culture is to be completed by reference to the point of time at which the expert [Switkowski] commences their fieldwork. However, we recognise documentation and other artefacts relating to specific matters may be required to inform the findings”.
The NSW inquiry is one of three parliamentary inquiries triggered by the firm’s tax leaks matter. It is the only inquiry to call PwC personnel. Former acting CEO Kristin Stubbins testified at a public hearing on June 26.
Legal investigations, Switkowski review
PwC has separately commissioned law firms King & Wood Mallesons and Linklaters/Allens to investigate the tax leaks matter, but has not made any commitment to release those reports.
The scandal, first releaved by The Australian Financial Review, involves former PwC partner Peter Collins sharing secret government information that was used by PwC personnel to advise clients on how to sidestep new tax laws.
Ms Boyd said the firm should release the legal reports into the tax leaks matter.
“I just think what they [PwC] have done here [with the Switkowski review] is more smoke and mirrors – and this is the one is they will make public. This is different to the investigations about what when wrong. This is no assurance that PwC will be righting [its] culture,” she said.
She was also disappointed it took an official government request for the firm to produce the terms of reference of the Switkowski review.
“It took a NSW inquiry to ask these questions to get this document,” Ms Boyd said. “I would have thought that PwC would want more transparency. Here we have real nothing ... a review of governance, accountability and culture as it exists today.”
‘Interviews, focus groups’
The Switkowski review will include “documentation review, interviews, case studies and focus groups” with the goal of making recommendations so that PwC can “address the observed gaps in culture, governance and accountability”.
The focus areas of the review include the role of the board, senior leadership oversight, how issues are managed within the firm, how pay is formulated, the firm’s disciplinary process, its culture and the firm’s leadership.
The firm also addresses questions about the independence of Mr Switkowski by stating PwC has not provided services him during the past two years.
The responses also detail how PwC has four former senior NSW public sector servants on its books:
Ms Boyd was concerned that NSW officials could step straight into private sector roles while their knowledge of government operations was still current. She contrasted this to the private sector where there were restraint periods, but she did not endorse paid “gardening leave” that is sometimes used to prevent an executive immediately starting at a new role.
“We need to stop people going to [these consultancies] in such quick succession,” she said.
The firm also said there were 68 current and past partners and board on a range of unspecified public sector boards and committees. The most common role was on a university advisory body, with 26 personnel in these types of roles.
Ms Boyd said there is a perceived conflict of interest in these types of public sector roles being held by working PwC personnel (or partners still receiving payments from the firm via its retirement payment plan), especially if the firm also wins work from the organisation.
In its response, the firm said: “Board and advisory roles are held in a personal capacity not as a result of PwC partners or employees’ roles with PwC ... [the] roles held by our people are done so on a voluntary basis and would generally be unpaid positions.”
No central list
PwC also told the inquiry that it does not have a central list of personnel that are, or have been, on secondment within a NSW government agency.
Ms Boyd said this was an inadequate response by the firm, especially since NSW “standard procurement framework” for professional services states that agencies must receive a 10 per cent discount on the cost of an adviser if they are on secondment.
PwC declined to comment on its response to the NSW inquiry. The inquiry has four more days of public hearings scheduled during the next three weeks.
