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Linklaters Project North America
‘Unusual’ retired PwC partners serve on government boards
Edmund Tadros
It is “unusual” to allow former PwC partners who receive retirement payments from the firm to serve on government boards, the chairman of the Tax Practitioners Board has told a Senate inquiry.
“[I’ve] always thought it’s an unusual arrangement for people to be on a government board when they’re remunerated in that way,” Peter de Cure tells the Senate inquiry into consulting.
Tax Practitioners Board chairman Peter de Cure. Alex Ellinghausen
Two former PwC partners, Peter Hogan and Judy Sullivan, were on the TPB board during the agency’s PwC tax leaks investigation.
De Cure says he believed the pair had declared that they received retirement payments when they first joined the board. The payments, worth an average of $140,000, come out of the ongoing profits of PwC.
While Hogan and Sullivan recused themselves from meetings directly relating to the PwC investigation, they were present at a controversial board meeting attended by ATO commissioner Chris Jordan, which raised the PwC matter.
“It’s my understanding ... [they] were excluded from all discussions about [the leaks matter],” de Cure says. “There’s one exception to that and that was the September board meeting”.
Greens Senator Barbara Pocock suggests Hogan, who is still on the TPB board, and Sullivan, who has now left, should have recused themselves when the PwC matter was raised at that meeting.
Asked whether Sullivan or Hogan declared a conflict of interest when attending the September meeting, de Cure said they did not.
De Cure was a board member of the TPB and not the chairman at the time of the September 2023 board meeting.
Hogan and Sullivan, along with de Cure, a former KPMG partner, were appointed by former assistant treasurer Michael Sukkar. Sukkar worked for PwC in 2005 to 2006.
TPB believes PwC’s ‘dirty six’ are in NY, California
Edmund Tadros
The Tax Practitioners Board has not seen PwC’s report into the actions of international partners relating to the tax leaks scandal, a Senate hearing has been told.
TPB chairman Peter de Cure tells the Senate inquiry into consulting that PwC Australia could not provide him with the report, which was done by law firm Linklaters for PwC global.
He says he asked the firm for the report and was told PwC Australia did not have a copy of it.
Questioned by committee chairman David Colbeck whether he knows who the so-called dirty six are, de Cure says no.
“I’ve read the relevant emails ... I have a reasonable idea that they’re in New York and I think some are in California. That, again, that’s an inference from what I’ve read ... reading the emails, you can clearly identify PwC US personnel who were in receipt of information and in discussion with the Australian firm about Project America,” he says.
The emails show the firm put together an international team to use confidential government information to develop structures designed to sidestep new taxes PwC was helping to design.
TPB has nine ongoing investigations into PwC tax leaks
Edmund Tadros
The Tax Practitioners Board chairman Peter de Cure says there are now nine ongoing investigations relating to the PwC tax leaks matter.
“Can I simply say we have nine current investigations,” de Cure tells the Senate inquiry into consulting.
He says three of the investigations “are well advanced” and will assist with the remaining probes.
So the facts and circumstances identified through those three [investigations] will be significant informants of the next six as to what role the next six played,” he says.
“[We] intend to pursue those investigations in the course in the ordinary course of this year.
“I don’t want to talk about the exact timeframes ... for the purposes of protecting the probity of the investigation.”
De Cure says PwC has been mostly cooperative in terms of providing information, but he “would have appreciated” it if the firm had provided the TPB with the Linklaters report on the role of international partners in the tax leaks matter.
ATO did not impede PwC investigation: Hirschhorn
Edmund Tadros
The Australian Tax Office’s second commissioner Jeremy Hirschhorn has denied that the agency impeded the Tax Practitioners Board investigation into the PwC tax leaks matter.
Jo Hirschhorn, speaking on Friday morning at the ninth day of public hearings of the Senate inquiry into consulting, also outlined all the steps the ATO has taken to help investigate the matter and criticised unnamed parties for bringing up “historical disagreements” between the ATO and the TPB.
“Any difference of opinion between the ATO and the TPB has been over how our overarching principles of taxpayer secrecy and data stewardship have applied to this investigation,” Hirschhorn says.
He says the ATO had taken action to “detect, investigate and refer the PwC matter to the TPB” and has consistently cracked down on “inappropriate tax planning”.
“I remind the committee that it was the ATO which identified and cracked down on the inappropriate tax planning, identified the confidentiality breach and engaged with the TPB in late 2019 to provide details of several PwC partners including Mr [Peter] Collins after we had exhausted more serious legal avenues for the ATO to take action,” he says.
“Since that time, the ATO has provided the TPB with over 5000 pages of information that’s 5000 pages across 11 disclosures relevant to their investigation of Mr Collins and PwC and continue to support their PwC related investigations.
Public is concerned by ‘aggressive’ tax advice: ATO
Edmund Tadros
There is an “inherent conflict” when firms working for the government also provide aggressive tax advice to clients, the Senate inquiry into consulting has been told.
“I think it has been a long-standing concern in the community and quite rightly that there can be an inherent conflict between being a large provider of services to government, at the same time as providing overly aggressive advice to minimise the revenues which support that government,” ATO’s second commissioner Jeremy Hirschhorn says.
“Within this, I’d say ... there are many good tax advisers in this tax system as complex as Australia’s is.”
PwC ‘deliberately hiding’ report into ‘dirty six’
Edmund Tadros
The Australia Tax Office is frustrated that it has still not seen a report into the actions of overseas PwC partners relating to the tax leaks matter, the Senate consulting inquiry has been told.
The investigation, by law firm Linklaters, cleared overseas PwC partners of using confidential information related to the tax leaks scandal “for commercial gain”, but disciplined six of the firm’s international operatives for not inquiring about the nature of the data.
But PwC Global is refusing to release the document and name the relevant partners. The Senate appears to have been provided a redacted copy.
ATO Second Commissioner Jeremy Hirschhorn. Alex Ellinghausen
“I think it’s fair to say that we share the frustrations of this committee that an organisation which claims to be cooperative, is deliberately hiding behind the difference between their local firm and the international firm,” the ATO’s second commissioner Jeremy Hirschhorn tells the inquiry.
Committee chairman Liberal Senator Richard Colbeck says the committee wants to know the identities of the “dirty six” tax advisers referred to in the report.
“The [Linklaters] report identifies six people who had knowledge of the data or the information that was misused by Mr Collins,” Colbeck says.
“It’s difficult for us [the Senate committee] to identify them through the redactions that have been made in the documents that have been provided to us. Do you know who PwC international’s dirty six are?”
Hirschhorn replied saying he did not know the six former PwC partners mentioned in the Linklaters report.
ATO did not impede PwC probe: Hirschhorn
Edmund Tadros
The Australian Tax Office’s second commissioner Jeremy Hirschhorn has denied that the agency impeded the Tax Practitioners Board investigation into the PwC tax leaks matter.
Hirschhorn, speaking on Friday morning at the ninth day of public hearings of the Senate inquiry into consulting, also outlined all the steps the ATO has taken to help investigate the matter and criticised unnamed parties for bringing up “historical disagreements” between the ATO and the TPB.
“Any difference of opinion between the ATO and the TPB has been over how our overarching principles of taxpayer secrecy and data stewardship have applied to this investigation,” Hirschhorn says.
He says the ATO had taken action to “detect, investigate and refer the PwC matter to the TPB” and has consistently cracked down on “inappropriate tax planning”.
“I remind the committee that it was the ATO which identified and cracked down on the inappropriate tax planning, identified the confidentiality breach and engaged with the TPB in late 2019 to provide details of several PwC partners including Mr [Peter] Collins after we had exhausted more serious legal avenues for the ATO to take action,” he says.
“Since that time, the ATO has provided the TPB with over 5000 pages of information that’s 5000 pages across 11 disclosures relevant to their investigation of Mr Collins and PwC and continue to support their PwC related investigations.
“This is over and above the 1000 or so other ATO TPB information exchanges which occur each year.”
The tax office has hit out at consulting firm PwC for "deliberately hiding" a report into the company's actions during an ongoing scandal
The agency expressed "significant frustration" with the embattled consultant for not releasing crucial details about an internal investigation into PwC conduct, a Senate inquiry heard on Friday.
An investigation by law firm Linklaters cleared overseas PwC partners of using confidential Treasury information for commercial gain.
However, the 2023 report said six international operatives from PwC were disciplined for not asking questions about the nature of the data.
Appearing before committee on Friday, ATO senior executive Jeremy Hirschhorn said PwC refused to provide the information on the six people mentioned in the report, despite repeated attempts.
"We share the frustrations of this committee that an organisation which claims to be co-operative is deliberately hiding behind the difference between their local firm and the international firm," Mr Hirschhorn said.
"It's fair to say PwC is very aware of the interest of the Australian community in that document.
"It would be preferable if that was (provided) in a spirit of true co-operation."
Representatives from PwC are due to appear before the Senate inquiry.
Members of other big four consulting firms, including KPMG and EY are also on the witness list.
The fourth firm, Deloitte, is not scheduled to appear.
The inquiry was set up following revelations one of PwC's partners used confidential briefings from Treasury to get clients.
Australian Associated Press