Friday, October 25, 2024

TPB - Regulator clears four of nine PwC tax agents over leaks scandal




TPB - Regulator clears four of nine PwC tax agents over leaks scandal

 Edmund TadrosProfessional services editor

Oct 24, 2024

The tax agents’ regulator has cleared four of the nine former PwC tax agents it was investigating in the firm’s tax leaks scandal, with five other investigations expected to be finished by the end of the year.
The Tax Practitioners Board, which regulates the country’s tax agents, told parliament on Thursday it is still investigating links to overseas partners who received confidential government information as part of its ongoing inquiries into potential wrongdoing by former PwC Australia personnel.
So far, the TPB has worked out that 22 overseas PwC staff received confidential federal government tax policy information from Australian partners of the firm – almost four times the number the firm has admitted were sanctioned over the leaks.
The outcome of the investigations, made in response to questions from Greens senator Barbara Pocock as part of the joint inquiry into the structure of the big four consulting firms, raise concerns about the extent of wrongdoing by overseas PwC personnel in the leaks matter.
PwC International has for more than a year resisted requests from the Tax Office, the TPB and parliament to release its report into the actions of overseas partners in the leaks matter, arguing it is privileged and confidential.
Instead, PwC International has only released a brief summary of the report, by law firm Linklaters, in which it described disciplining six of the firm’s international operatives for not inquiring about the nature of what turned out to be leaked data. PwC Australia is a member firm of the global firm network run by PwC International.
Report into ‘the dirty six’
A Senate committee in March said the global organisation’s use of “legal professional privilege” was “symptomatic of its problematic engagement with the committee”. It said PwC Australia had yet to demonstrate that it reformed its operations “beyond superficial commitments to change”.
In response, the Australian firm argues it has made sweeping reforms to its governance and said it cannot force PwC International to hand over the report.
The final report of that committee demanded that PwC International provide the committee with the report into “the dirty six” overseas PwC partners linked to the leaked tax information.
The tax leaks scandal involved former partner Peter Collins sharing confidential tax information with PwC personnel to market the firm’s tax advice services. The firm then designed schemes to help clients sidestep the new multinational tax laws he was helping Treasury develop.
Separately, PwC Australia revealed two partners and six staff had been fired for “misconduct related to data breaches” in 2023-24. The non-partners earned between $80,000 and $242,000, the firm told the joint inquiry in response to separate questions by Senator Pocock.
PwC said those fired had been involved in either the “exporting or inappropriate access, copying, printing or disclosure of documents” or in “sending of client or PwC-related information to personal email addresses.”
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Edmund Tadros leads our coverage of the professional services sector. He is based in our Sydney newsroom. Connect with Edmund on Twitter. Email Edmund at edmundtadros@afr.com.
The Tax Practitioners Board is considering the role played by PwC staff who received the information sent from Australia to the firm’s other offices.
Tom Ravlic
Tom Ravlic 
Chair of the Tax Practitioners Board Peter de Cure.
Chair of the Tax Practitioners Board Peter de Cure. (AAP Image/Lukas Coch)

The Tax Practitioners Board has finalised four of nine outstanding matters relating to the PwC tax policy confidentiality, with no further action recommended.

TPB chair Peter de Cure advised Senate estimates last June that the tax agent regulator had nine cases on its books related to breaches by the firm and former partner Peter Collins of the code of professional conduct in the Tax Agent Services Act 2009.

A response to questions on notice put to the regulator by Greens Senator Barbara Pocock provides the parliamentary joint committee on corporations and financial services with an update as it deliberates on its report on accounting, auditing and consulting firms that is due for release before the end of this year.

The TPB advises that the caseload has shrunk because the regulator has decided no further action is required.

“The [TPB’s] evidence provided at the Senate Economics Legislation Committee Estimates hearing on 25 June 2024 was that we had nine current investigations,” the TPB response says. 

“Four of those investigations have since been finalised, with decisions made to take no further action. There are still five ongoing investigations that the TPB is seeking to conclude as soon as possible having regard to procedural fairness, legal and factual complexity.”

The TPB said that it was considering the role played by PwC personnel who received the information sent from Australia to other network firm offices.

“The evidence that is available to the TPB identified approximately 22 personnel from PwC’s international firms who received email correspondence connected to the breach of confidentiality issue,” the response from the TPB says.

“The degree of involvement, if any, of those personnel is still under consideration.”

Further responses to questions posed by Pocock have come from PwC and these responses reveal that the firm did finally hand over a copy of the services agreement requested from PwC Australia’s chief executive officer Kevin Burrowes.

That services agreement between Burrowes and PwC’s global network has been a sore point between the firm and the parliamentary committee because the parliamentarians have sought to better understand what Burrowes was required to do for the global network to earn the $1.2 million portion of his $4 million remuneration package.

The balance of the $4 million that Burrowes pockets relates to his role as the firm’s chief executive in Australia. 

“A copy of Mr Burrowes’ Services Agreement was provided on 27 September 2024 following the confidentiality issue associated with that document being resolved,” the response from PwC says.

“The document contains a description of the services to be provided by Mr Burrowes under that arrangement. Both the Governance Board and [Jan] McCahey have a copy of the Services Agreement.”

McCahey was unaware of the services agreement struck between the Australian chief executive and the global network in July 2023 until June 20 this year, when the firm was due to begin drafting responses to questions on notice from Senator Deborah O’Neill asking for further remuneration details.

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