AFP raid on PwC turns out to be a Halloween prank. AFP was given charges in May 2023

Australian federal police begin search of PwC headquarters amid tax leaks scandal

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AFP search PwC’s Sydney headquarters over tax leaks scandal

Edmund TadrosProfessional services editor

Nov 4, 2024

Federal police have entered PwC Australia’s headquarters in Sydney as they investigate whether secrecy laws were broken when a partner disclosed confidential government information to clients and others at the firm.

Officers entered the office in Barangaroo early on Monday as part of an arranged visit and will examine documents and computers as part of their inquiries. One person familiar with the Australian Federal Police investigation said officers were now focused on four former PwC partners.

The PwC Australia headquarters in Sydney’s CBD were visited by AFP officers on Monday. Dion Georgopoulos

The visit comes after officers visited former PwC partner Peter Collins at his residence in late August, according to two people briefed on the investigation. Comment was sought from Mr Collins.

Mr Collins shared with other partners confidential details about changes to federal tax rules designed to combat multinational tax avoidance. Those partners used that information to win new clients and develop new structures that sidestepped the laws the firm was helping to design

The AFP may be on the firm’s premises for several days, PwC Australia chief executive Kevin Burrowes said in a note to partners on Monday morning.

‘Expected development’

“I am writing to advise the Australian Federal Police is attending our Sydney office today and may be on the premises for several days,” Mr Burrows wrote.

“This step is an expected development in relation to an investigation the AFP commenced in 2023 into the historical tax matter and individuals who have left our firm. We have been working with the AFP to facilitate its attendance, and we will continue to co-operate with its investigation.”

Mr Burrows added: “Despite the potential for distraction, let’s all encourage our teams to continue business as usual and remain focused on their important work with our clients and in the community.”

The investigation, dubbed Operation Alesia, was launched last May after a referral from Treasury over “an allegation involving the disclosure of confidential information by a former partner of PricewaterhouseCoopers”.

Operation Alesia has been designated a sensitive and priority investigation, parliament was told in February. At the time, the AFP also indicated that the investigation had extended overseas.

It is unclear if officers have been given access to a report by PwC International outlining the identity of the so-called “dirty six” international partners punished over the tax leaks matter.

This would cause concern for PwC International, which does not want the tax leaks scandal to extend beyond the Australian firm because it could trigger further scrutiny from regulators in the United States and Britain.

Officers in Operation Alesia are examining whether former PwC partners breached Section 70 or Section 90 of the Crimes Act, which relate to the disclosure of information and official secrets. Breaching the sections carries a maximum penalty of up to two years’ imprisonment.

As part of the consultations with the government, Mr Collins signed three confidentiality agreements with Treasury – in 2013, 2016 and 2018.

A spokeswoman for the firm said the investigation related to “individuals who have left the firm”.

“In the past 18 months, PwC has introduced significant governance, business and cultural reforms, and our people remain focused on delivering the best outcomes for our clients and communities,” she said, declining to provide further details.

AFP officers raid PwC Sydney office as part of tax leaks probe

AFP officers will sift through documents and computers at PwC’s Sydney office in an escalation of its investigation into the audit and consulting giant’s Treasury disclosure probe.

CHRIS HERDE and DAVID ROSS

November 4, 2024

Australian Federal Police officers have raided the Sydney office of audit and consulting giant PwC Australia as they prepare for days of searches through the firm’s systems as part of a probe into its misuse of confidential government documents.

Plain clothes detectives entered the firm’s Barangaroo headquarters early on Monday, with PwC chief executive Kevin Burrowes saying the AFP would be combing through records for several days.

The move comes as the AFP prepares to appear before Senate estimates next week, with police known to be examining Pwc’s international links to the tax scandal.

In an email to partners on Monday, Mr Burrowes said the AFP arrival was “an expected development in relation to an investigation … commenced in 2023 into the historical tax matter and individuals who have left our firm”.

“We have been working with the AFP to facilitate its attendance, and we will continue to co-operate with its investigation,” he said.

“Despite the potential for distraction, let’s all encourage our teams to continue business as usual and remain focused on their important work with our clients and in the community.”

The escalation of the police probe comes as parliament prepares to hand down a report into the audit and accounting sector in light of the scandal surrounding PwC, with Greens senator Barbara Pocock saying the firm had lost its “social licence”. PwC has been in the public glare for more than a year, after the firm was revealed to have used confidential government tax briefings provided as part of a private consultation round to construct new strategies for clients.

The firm’s former head of international tax, Peter Collins, was banned by the Tax Practitioners Board over the scandal, while PwC was slapped with a good behaviour bond.

Mr Collins shared confidential government information with partners in the firm, with emails tabled to a Senate inquiry showing staff around the world were included in emails gloating about the briefings.

But the exposure of the firm’s failures triggered a second wave of outcry, with Treasury referring PwC and Mr Collins to the AFP for investigation over allegations they disclosed official secrets.

At least nine partners have exited PwC in connection to the tax scandal, with four currently subject to the AFP probe.

The TPB is also investigating four former PwC partners in relation to the tax scandal.

The AFP said its PwC investigations, dubbed Operation Alesia, was examining “an allegation involving the disclosure of confidential information by a former partner of PricewaterhouseCoopers”.

Operation Alesia is examining whether former PwC partners breached Section 70 or Section 90 of the Crimes Act, which relate to the disclosure of information and official secrets.

At the time, the AFP said it had designated the matter a “priority” and a “sensitive” investigation. The AFP will appear at Senate estimates on Tuesday next week.

On Monday, a spokeswoman said the AFP was aware of the media interest in the story and would provide an update at an appropriate time.

In addition to the recent raids, the AFP also visited Mr Collins’ Melbourne home in August.

Mr Collins has been contacted for comment.

Senator Pocock said the AFP raid was a long time coming and called on political parties to consider their relationships with the “big end of town”.

She said that, according to previous estimates hearings, the AFP had been working with overseas law enforcement agencies on the investigation. She said she understood that they had examined information that some international operatives, other than those already identified locally, may have been involved.

“I hope the raid will shed further light on this scandal which has been shrouded in secrecy,” she said.

PwC International has refused to release a report into the scandal, which identified six current and former partners at the firm who received confidential information linked to Mr Collins’s breaches.

Senator Pocock said it was heartening to see the AFP make further progress on the long-running PwC saga.

“This is a very serious matter and the public deserves to know who was involved and to what extent,” she said.

Senator Pocock said the Senate had been asking the AFP “for some time” about its investigation into the scandal “only to be told that it’s a complex matter and will take some time to get to the bottom of it”.

A bombshell document dump on Friday revealed PwC International attempted to stymie information releases by the local arm of the firm in the face of the scandal, warning the audit and consulting giant’s partners risked expulsion from the global partnership.

PwC International also blasted the local arm of the firm for exposing clients and the global network “to potential risk and reputational harm”.

Letters tabled by the parliament reveal PwC’s global general counsel, Diana Weiss – one of several key figures at the firm who seized control of the Australian partnership in the wake of the tax scandal – warned the firm it had to run all communications through its global arms.

Mr Burrowes, who revealed the raids to partners on Monday, was tasked with bringing the local firm to heel in response to the scandal, being placed in the CEO role in July last year.

A parliamentary committee heard Mr Burrowes played a role in overseeing a list of partners who would be expelled from the partnership or retirement program in the wake of the tax scandal, alleging they were linked to the confidentiality breaches.

However, a recent document handed over by the firm reveals the details of his formerly secret consulting agreement with PwC International, alongside his role as CEO of the firm’s local arm.

Under this deal, Mr Burrowes was required to advise the PwC network leadership on the tax scandal and “assist with any requirement imposed on the network to demonstrate the effectiveness of remedial and other actions taken by PwC AU”.

Mr Burrowes, formerly a member of PwC International, has told parliament he could not disclose the findings of an Allens review into the international partners linked to the tax scandal.

His service agreement with PwC International also requires him to “keep confidential and not use, copy or disclose to any person any confidential information, except with PwC’s permission”.