Kevin Burrowes Serving Two Masters: Meredith Beattie - You should be sorry’: Former PwC GC slammed for role in tax leaks

The trio of CEOs appearing at the PwC inquiry on Friday were like AFL stars appearing at the tribunal over a dangerous tackle showing what Neil Chenoweth called the right mix of penitence and bravado.

Barbara Pocock

A year of awkward Senate appearances has taught PwC partners past and present just the right tone of penitence and bravado to bring to a Canberra grilling.

Former CEO Luke Sayers pioneered what we can call the “I take full responsibility, it was all the other guy’s fault” defence at an earlier Senate hearing, and it’s a credit to his leadership and the cultural values he embedded in the firm that so many others have followed his line.

Neil ChenowethSenior writer

Penitence, bravado and rattling the PwC can

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PwC boss “deceptive” over secret $1.2m payments

PwC wrongfully claimed legal privilege over documents to frustrate Tax Office, inquiry told

You should be sorry’: Former PwC GC slammed for role in tax leaks

Former PwC top lawyer Meredith Beattie refused to attend inquiry four times and is appearing today having been served under threat of arrest.

‘You should be sorry’: Former PwC GC slammed for role in tax leaks 

Amid shocking evidence PwC partners “weaponised” legal privilege to allegedly hide crucial documents from the tax office, its former general counsel was accused of shunning a “considerable problem”.

Naomi Neilson and Christine Chen02 August 2024

After learning in 2018 the Australian Taxation Office (ATO) was concerned PwC Australia members were sharing confidential information, former general counsel Meredith Beattie insisted she was the one “rattling the can” and alerting the executive board.

However, a parliamentary committee questioned the extent of her knowledge and intervention as general counsel, with chair Deborah O’Neill accusing Beattie of “turning your head and diverting attention”.

Appearing publicly for the first time since the scandal broke, Beattie said certain members of the tax group were not following legal protocols and had made invalid legal professional privilege claims. 

The ATO had raised “very serious allegations” that the privilege claims were used “in a way that was designed to hide matters”.

This caused “a very, very tense relationship” and the ATO believed the firm was purposefully failing to comply with compulsory notices and withheld information “on the grounds that privilege did not exist”.

“This issue was raised with the governance board, with the executive board, it was made known and at the time we were engaging with the ATO, the ATO had indicated it was going to take action.

“It did taken action, which resulted in the settlement agreement.

“Throughout that period…I continued to raise issues about the culture…and I continued to raise them in 2023 and 2022, there needed to be an outcome of this because while we dealt with the privilege issues, there needed to be accountability,” Beattie said.

PwC’s former chief lawyer points finger at ex-CEO Tom Seymour over handling of tax scandal 

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

PwC wrongfully claimed legal privilege over documents to frustrate Tax Office, inquiry told

'Cannot be allowed to continue': PwC scandal prompts fiery inquiry

By Connor Pearce

Amid shocking examples of governance failures at disgraced consulting firm PwC, a parliamentary committee is considering fundamental changes to overhaul the scandal-plagued consulting sector.

In a fiery inquiry in Parliament on Friday, joint committee members grilled current and former PwC executives about how the firm reacted when evidence of improper use of confidential tax information came to light.

Former general counsel Meredith Beattie explained how her concerns about the way the tax group operated, including claiming legal professional privilege for advice that did not follow legal protocols and an ATO investigation into the promotion of tax avoidance schemes, were brought to the firm's board between 2018 and 2023.

Deborah O'Neill said she found it "unfathomable" that Tom Seymour could be approved to be CEO given his oversight of the division that handled the tax scandal. Picture by Keegan Carroll

Ms Beattie said the preference of the firm was to let the investigation take its course before subjecting partners to consequences after fixing the immediate problem.

In the case of the leak of confidential tax information from the ATO to multinational corporations, this information was presented to the board around 2020 as former PwC chief executive Luke Sayers, who was in the role from 2012, was stepping down.

At PwC, which is a partnership, not a corporation, the process for selecting a new chief executive occurs through a kind of presidential-style election where each of the partners gets to vote.

Former PwC CEOs Tom Seymour and Luke Sayers appear at a Parliamentary committee. Picture by Keegan Carroll

Ms Beattie outlined at the time there were four contenders for the title, one of whom was former head of the tax group Tom Seymour.

Mr Seymour helmed the division that passed off confidential information from the Tax Office to multinational clients as far back as 2016.

This had already created what Ms Beattie described as an extremely tense environment, with the Tax Office submitting a series of requests for information from PwC and its clients, as it attempted to investigate how the information had leaked.

In the lead-up to the selection of the chief executive, this information about what was going on was communicated to the board, including the role of Mr Seymour.

Ms Beattie said based on the information presented, she believed that Mr Seymour could not become CEO.

"I left that meeting expecting that on the basis of facts put forward before the board they would form the view that Mr Seymour should not proceed," she said.

Ms Beattie, who as well as being general counsel was also a partner, told the committee she had never before voted in a CEO election, but felt compelled to vote in this election, given what she knew about Mr Seymour's conduct as the head of the tax group.

However, the board permitted Mr Seymour's candidacy to continue, and he was ultimately elected chief executive in 2020.

"Seems like some incredible reward," committee chair Deborah O'Neill said, given PwC was investigating Mr Seymour's role in the leaks.

Appearing at the committee, Tom Seymour said this was news to him, and while there was tension between himself and Ms Beattie he was not aware of Ms Beattie providing this advice to the board, and if he had known, he would have withdrawn his candidacy.

Ms O'Neill said she found it "unfathomable" given Mr Seymour's connection to the scandal that was consuming the firm for years and the fact the board knew of this, that Mr Seymour could become the most senior person at the firm.

Following public knowledge of the leaks, Mr Seymour publicly resigned in 2023, and the international arm of the firm took control of the Australian operation.

The joint parliamentary committee is the second parliamentary inquiry into the scandal at PwC. While the first highlighted issues with government consulting, the current inquiry is taking a deeper view and examining whether the regulation and governance of audit and accounting firms is fit for purpose.

Unlike corporations, which are separate legal entities from the people who run them, each partner in a partnership is personally liable for the business, and also has a direct stake in the performance of the firm, receiving a share of the partnership profit.

Partnerships are also distinct from corporations in that they do not have an independent board that oversees the business and have different reporting requirements, particularly compared to publicly listed corporations.

In this case, despite the evidence of unethical behaviour by the division Mr Seymour led, the board did not prevent him rising to become chief executive, and the decision was made by the partners.

"It is inexplicable that partners, who are liable, were not advised by you or anybody else of the concerns about Mr Seymour," Ms O'Neill said in response to Ms Beattie' evidence.

Ms O'Neill said the scandal shed light on whether the partnership structure was fit for purpose.

"This relates to governance and the structure of partnerships, the committee will make recommendations on matters that have been so revealed as wanting today," Ms O'Neill said.

"This cannot be allowed to continue."

‘Profound conflict of interest’: PwC boss accused of hiding extra income in senate hearing

PwC’s chief executive is facing a grilling over his “profound conflict of interest” in a probe into the firm’s infamous tax scandal.

Joseph Olbrycht-Palmer

August 2, 2024 

NewsWire

PwC Australia boss Kevin Burrowes hid from a parliamentary probe and his own ethics chief that he was “serving two masters” by receiving an additional $1.2m from the consultancy giant’s international parent, a bipartisan committee looking into the PwC tax scandal has heard.

Mr Burrowes revealed he received the hefty sum for advising PwC International on the tax scandal on top of the $2.8m salary he disclosed as PwC Australia’s chief executive.

The explosive charge came from Corporations and Financial Services Committee chair Deborah O’Neill during a hearing on Friday. She called it a “profound conflict of interest”.

O’Neill lambasted Mr Burrowes for “misleading” her by not disclosing the secondary salary at a previous hearing.

Senator Deborah O’Neill said PwC Australia chief executive Kevin Burrowes had a ‘profound conflict of interest’. Picture: Supplied

Asked if he could see how the failure to disclose the $1.2m looked dodgy, Mr Burrowes said he believed questions levelled at him previously were exclusively focusedon his role as PwC Australia chief executive.

“I’m happy to discuss that other role,” he said.

“I actually don’t believe it is a conflict, and I’m happy to discuss that in detail.”

The Labor senator shot back, saying Peter-John Collins, the ex-PwC partner at the centre of the tax scandal, “didn’t believe it was a conflict to take information from the government” and share it with the firm’s corporate clients.

PwC chief executive Kevin Burrowes denied any ‘conflict’. Picture: Supplied

“I’m starting to be very concerned that there are a number of people floating around in this PwC ecosystem, who are not … considering there are conflicts of interest when to any other independent observer, your decision to accept payment from two masters is replect with conflict of interest.”

“So we are perceiving this extremely differently, Mr Burrowes, and I can’t understand why you don’t see that as a conflict.”

The committee’s deputy chair Alex Hawke also weighed in, telling Mr Burrowes the government was having “a terrible time” getting transparency from PwC. 

“Do you see we’re a key stakeholder of yours?” Mr Hawke said.

“If you’re restructuring your firm completely from top to bottom … you’ve got a million things here, but why can’t we have transparency about what has happened and why it has happened?”

PwC Australia chief executive Kevin Burrowes faced accusations he hid a secondary salary from the firm’s international parent. Picture: Newswire/Gary Ramage

Mr Burrowes hit back, telling the committee “we have been extraordinarily transparent with you”.

“We have answered hundreds of questions,” he said.

Mr Hawke was quick to disagree.

“Volume of transparency in a firm like yours doesn’t really impress me,” the Liberal MP said.

“You can be transparent about 99.9 per cent of things (that) are mundane.”

He went on to say the committee did not “feel” PwC had been transparent where it was really needed.

“We don’t feel like you’ve been upfront with us about everything,” he said.

The parliamentary committee is probing the roles of current and former PwC Australia management in leaking government plans to tax big corporations in a scandal stretching back nearly a decade.

The misconductwas disclosed in 2022 when Peter-John Collins, a key architect of legislation targeting tax-dodging multinationals, had his tax licence suspended for integrity breaches.

Further probes revealed PwC used Mr Collins’ insider knowledge to lure in clients, advising them on taxation in Australia.

Former PwC Australia bosses were surprised to learn Kevin Burrowes’ was getting a secondary salary from the firm’s international parent. Picture: NCA NewsWire/ Gaye Gerard

Mr Burrowes has held several senior roles across PwC’s international operations since first joining the accounting behemoth in 1986.

He was parachuted into the top job at the Australian arm in June last year after a stint in Singapore as Global Clients and Industry Leader.

More Coverage

‘Not telling the truth’: Ex-PwC boss under fire

While Mr Burrowes brushed off the parliamentary committee’s concerns about supplementary renumeration from PwC International, two of his predecessors took a different view when they fronted the hearing on Friday afternoon.

Former chief executive Luke Sayers told the hearing he “would believe the Australian partners would perceive there to be a conflict.”

Former CEO Tom Seymour said he was surprised to learn of Mr Burrowes’ extra cash, saying it was “highly irregular”.