PwC misled the ATO and the Foreign Investment Review Board, tax official says

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PwC misled the ATO and the Foreign Investment Review Board, tax official says

Senior staff at PwC Australia ­potentially exposed themselves to five years jail after allegedly coaching or assisting clients to mislead the Australian Taxation Office and the Foreign Investment Review Board, a tax official has claimed.

In a response to questions on notice, ATO second commissioner Jeremy Hirschhorn has revealed he allegedly told PwC’s former chief executive Luke Sayers he was concerned partners at the firm were coaching clients on how to mislead regulators. 

Senators are now demanding an inquiry into the claims, following the revelations.

Mr Hirschhorn said he told Mr Sayers in an August 2019 meeting he was concerned PwC’s tax practice was failing to comply with ­demands for documents, including making improper legal professional claims.

This came as the ATO was investigating PwC over the firm’s misuse of confidential government documents. 

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PwC Australia tax staff allegedly coached or assisted clients to mislead the ATO and FIRB. Picture: Gaye Gerard

Mr Hirschhorn alleges he told Mr Sayers PwC was engaging in potential tax-promoter penalty activity, including advising clients to subvert the multinational anti-avoidance laws, as well as minimise taxes through cross-currency interest-rate tax swaps, research and development schemes and goods and services tax schemes. 

The ATO second commissioner said he told Mr Sayers he was concerned PwC partners were assisting the firm’s clients in preparing responses to requests for information, noting this included incidents where information provided was “false or misleading to the knowledge of the PwC staff involved”. 

Mr Hirschhorn also claimed he warned Mr Sayers PwC had also been involved in providing misleading information to FIRB on behalf of clients “through omission and commission”. 

This came as the ATO was closing in on several key clients advised by PwC, including overseas meat giant JBS, which purchased Australian deli goods business Primo in a $1.45bn deal in 2015. 

JBS has sought FIRB approval on multiple occasions for its local expansion. However, the ATO has also pursued the business over its tax arrangements. 

Australian Taxation Office second commissioner Jeremy Hirschhorn.

Mr Hirschhorn told the committee he also read out several PwC emails to Mr Sayers, noting “many of the above behaviours seemingly arose from the overlap of PwC’s multidisciplinary partnership and use of the ‘rover’ model, and that senior management had not adequately tested the operation of this business model”.

Labor and Greens senators said the allegations were extremely concerning, coming as a parliamentary committee prepares to hand down its review of the use of consulting services by government, which will also canvass the PwC tax scandal. 

Greens senator Barbara Pocock noted Mr Hirschhorn’s comments that PwC had assisted in misleading regulators. 

“This alone warrants action by the government to investigate breaches of the law which, if proven, would have very serious consequences,” she said. 

“These revelations, shocking as they are, confirm our impression of PwC, led by Mr Sayers, as a dishonest player that has continually sought to mislead the Australian public about the true nature of how they go about their business. I will be calling for a full investigation of the allegations raised in the ATO.”

Labor Senator Deb O’Neill said the allegations PwC had assisted in misleading FIRB were serious and concerning. 

The ATO and PwC declined to comment.

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CFPB Creates Registry to Detect Corporate Repeat Offenders

“The Consumer Financial Protection Bureau (CFPB) today finalized a rules to establish a registry to detect and deter corporate offenders that have broken consumer laws and are subject to federal, state, or local government or court orders. The registry will also help the CFPB to identify repeat offenders and recidivism trends. 

The new registry is part of the CFPB’s ongoing focus on holding lawbreaking companies accountable and stopping corporate recidivism. “Too often, financial firms treat penalties for illegal activity as the cost of doing business,” said CFPB Director Rohit Chopra. “The CFPB’s new rule will help law enforcement across the country detect and stop repeat offenders.” 

When a financial company violates the law, a government agency may take an enforcement action against them. Typically, this leads to an order entered by a court or the agency. These orders are not suggestions. While these orders are publicly available, they are not comprehensively tracked. 

The CFPB’s new registry will facilitate better understanding of bad actors that seek to restart a scam, fraudulent scheme, or other illegal conduct that harms the public. 

The CFPB expects that the registry will be used by state attorneys general, state regulators, and a range of other law enforcement agencies. The registry will also assist investors, creditors, business partners, and members of the public that are conducting due diligence or research on financial firms bound by law enforcement orders…”