‘Potentialconflict’: PwC kept in the dark for a year on CEO pay

Luke Sayers accused of showing ‘contempt’ in fiery hearing into PwC scandal

Carlton president Luke Sayers was accused of showing “contempt” for a senior Australian Taxation Office figure as he was slapped down in a fiery hearing into the PwC scandal.

A “frustrated” Sayers complained “he had been belted in the media for 15 months” about how the consulting firm sold secret government tax advice for profit while he was the company’s chief executive. 

Mr Sayers was called back to an “ethics and professional accountability” Senate inquiry in Canberra on Friday to answer questions about his knowledge of the wrongdoing.

PwC was forced to chalk up a $1 billion loss on its government advice business, which it sold for $1 after the scandal broke in 2023.

Mr Sayers had not been accused of being involved in misusing secret tax advice, but has been questioned about whether he did enough to clean up the mess.

Labor Senator Deborah O’Neill read out a detailed note from ATO second commissioner Jeremy Hirschhorn about a meeting he had in 2019.

The note stated that Mr Hirschhorn had “read out” emails about the scandal, which Mr Sayers has previously denied.

Ms O’Neill asked Mr Sayers if Mr Hirschhorn was “lying” in his written record of the meeting and told him to “just answer the question.

In a tense exchange, Mr Sayers said he did not have a “recollection” because “I don’t have minutes, I don’t have records.”

But Ms O’Neill interjected saying: “Mr Sayers, just stop, I’m asking the question and you are answering another question.”

Mr Sayers added he needed “to please provide some context so that everybody can understand what I think has potentially happened here.

“I’m trying to be very constructive and helpful to the fixes that need to happen so this bloody cluster, I won’t use the full word here in Parliament House never happens again,” he said.

Mr Sayers said the ATO did not provide clear advice in the 2019 meeting, suggesting that it should have been made clear in writing and investigated.

“If it’s not your swim lane, give it to them so they can do their job. Don’t opine and pontificate and drop breadcrumbs,” Mr Sayers said of Mr Hirschhorn.

“I have been belted for 15 months in the media over a ‘he said, she said’ and like the bottom line is if there was a problem that he thought needs to be investigated, he doesn’t drop a few breadcrumbs – pass it to the people who can investigate it pronto.”

Ms O’Neill said that Mr Sayers was showing “contempt” for Mr Hirschhorn, which he denied. 

“That is my interpretation of the way you are recounting the experience,” Ms O’Neill said.

Mr Sayers left PwC in 2020, with the CEO role handed to Tom Seymour who quit when the confidentiality breaches were revealed. 

He set up his own consulting firm, called Sayers, and has won contracts, including providing advice on how to rebuild the Shane Warne stand at the MCG. 

Mr Sayers was voted in by members for an extension as Carlton president until the end of 2025 at a club meeting in February.

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‘Potential conflict’: PwC kept in the dark for a year on CEO pay

Maxim Shanahan and Edmund Tadros

Aug 2, 2024 

PwC Australia chief executive Kevin Burrowes did not inform key executives for almost a year that the firm’s global arm was paying nearly a third of his $4 million salary, a parliamentary committee has heard.

Mr Burrowes’ exact relationship with PwC International – which has placed the local firm under supervision in the wake of its tax leaks scandal – remains unclear, with the board unaware of both the terms of his engagement and to whom he reports.

Kevin Burrowes. left, did not inform PwC’s chief risk officer Jan McCahey, right, about his second role for almost a year.  Irene Dowdy

The role of PwC International, which has refused multiple requests to release an internal report into the involvement of overseas partners in scandal, is the focus of ongoing scrutiny of PwC’s efforts to reform its governance and culture in response.

Under questioning on Friday at a joint parliamentary committee probing misconduct in the accounting and consulting industry, Mr Burrowes repeatedly denied his role with the international firm presented a conflict of interest.

Mr Burrowes, who was sent from Singapore to take over PwC’s Australian operations in June last year after the scandal broke in The Australian Financial Review, instead argued his joint role was “aligned” with his objective of cleaning up the troubled Australian branch.

Earlier on Friday, PwC chief risk officer Jan McCahey told the committee she was kept in the dark about the arrangement with Mr Burrowes, and his dual employment could present a “potential conflict of interest”.

Linklaters report

Mr Burrowes also defended his inability to provide a copy of a report into the involvement of overseas partners in the tax leaks scandal.

The report was paid for by PwC International and apparently cleared overseas partners of using confidential information related to the tax leaks “for commercial gain”.

PwC International, which has only released a brief summary of the report, disciplined six of the firm’s international operatives for not inquiring about the nature of what turned out to be confidential data.

The international arm has consistently denied requests to provide the report to the Senate, citing legal privilege. Mr Burrowes told the committee he had not seen the report.

He told the committee the report was not relevant to his role in Australia, even though the failure to meet repeated demands from parliamentary committees for transparency meant ongoing scrutiny of the firm.

“I don’t believe it’s pertinent to what we’re trying to do in Australia,” Mr Burrowes said, denying Labor Senator Deborah O’Neill’s proposition that he had been put “in a completely intolerable position” by not having access to the report while trying to reform the Australian firm.

Payment secrecy

Mr Burrowes was repeatedly questioned about his failure to disclose the additional payments when asked about his salary by a Senate committee earlier this year.

Senator O’Neill characterised Mr Burrowes’ prior answers on the topic as “not satisfactory” and “misleading”.

It emerged that Mr Burrowes had not told Ms McCahey, his chief risk officer, about the arrangement until June this year, almost a year after his appointment, and partners were not informed of the situation until shortly before the arrangement was due to become public.

Members of the Australian governance board were the only people aware of the arrangement, until the firm was forced to prepare responses to questions on notice from the Senate.

Mr Burrowes is due to appear before the joint committee again this afternoon, after appearances by former chief executives Luke Sayers and TomSeymour.

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False privilege claim denied tax office probe into PwC

Andrew Brown and Kat Wong

Fri 2 August 2024 

Embattled consultancy PwC falsely used legal privileges to withhold documents from tax office investigations, an inquiry has been told.

PwC executives appeared before a parliamentary inquiry on Friday into ethics in the sector, prompted after revelations PwC's partners had passed on confidential Treasury tax information to boost private sector business for the firm.

Speaking publicly for the first time since the tax advice scandal broke, PwC's former general counsel Meredith Beattie said the Australian Taxation Office had raised concerns in 2017 about the sharing of confidential material.

But Ms Beattie said PwC had used claims of legal privilege to deny the tax office access to critical documents it had requested as part of investigations.

Ex-PwC executive Meredith Beattie has spoken for the first time since the tax advice scandal. (Lukas Coch/AAP PHOTOS)

"Certain parts of the tax group had not been following the protocols, they had not been following the legal engagement letters, and the effect of that mean that the privilege claims that had been made ... were not valid," she told the inquiry.

"I raised the issues with a group within the firm  ... and as a result of the letter we had received from the ATO ... they were raising very allegations about the firm that was using privilege in  a way that was designed to hide matters from the tax office."

Former Telstra boss Ziggy Switkowski, who was appointed to lead an independent review into PwC's Australian operations, said he was not able to speak with previous chief executive Tom Seymour as part of the probe.

Mr Seymour, who will appear before the inquiry on Friday, was the head of PwC's operations in Australia when the tax advice scandal was playing out.

Mr Switkowski told the inquiry the governance of PwC was poor during the controversy.

"You could see what they were doing and how it was, at least superficially, like every other firm. But in practice it was not really match fit for what they had to confront during that period," he said.

Jan McCahey (right) wasn't told of Kevin Burrowes' salary boost for almost a year. (Lukas Coch/AAP PHOTOS)

Earlier, the inquiry was told PwC's chief risk officer Jan McCahey did not know for nearly a year the Australian chief executive Kevin Burrowes received $1.2 million extra from PwC's global headquarters on top of his $2.8 million salary.

Mr Burrowes was named as chief executive in July 2023 following the Treasury scandal, but it wasn't until June 2024 that Ms McCahey was told about the top up in pay.

"I wasn't aware of it ... I was surprised to learn of it at the time," Ms McCahey told the inquiry.

"(When I found out) I can't remember what I said. I was surprised."

Mr Burrowes said while the salary top up was disclosed to the firm's board, its risk officer was not told.

But Labor senator and inquiry chair Deborah O'Neill said, with the payment, Mr Burrowes could be seen as "serving two masters".