The Department of Finance has told Senate estimates that it will not be permitting PwC Australia to engage with the government under the procurement framework until it’s satisfied the firm has changed its culture.
PwC Australia and Finance had agreed earlier this year that the firm would not tender for government work until December 1 but ongoing investigations by both the Tax Practitioners Board and the Australian Federal Police have concluded.
The AFP is conducting further investigations into the firm on its premises this week as a part of Project Alesia, which was established last year to look into the tax leaks saga.
The TPB still has five investigations relevant to the tax leaks saga to conclude and Finance has a review of the firm’s ethical soundness that is ongoing.
Finance deputy secretary Richard Windeyer said that the department remains concerned that there are ongoing investigations into the firm. It has decided to extend the period of review by six months.
Windeyer said that the department continues to liaise with PwC Australia to ensure the firm is progressing with its internal changes to improve its culture.
Those changes would include the firm’s commitments to change that arise from the Switkowski report that recommended significant changes to firm governance.
One of the most prominent changes the firm has implemented from the report was the introduction of an independent chair and two other independent directors to help provide external oversight of the firm.
Windeyer said the firm would not be engaging under the Commonwealth procurement framework until Finance is satisfied it has changed.
“We absolutely appreciate the seriousness of the investigations under way, and that there remain a number in train,” he said.
Windeyer also said that Finance had recently met with representatives of the current PwC Australia governance board to better understand the board’s role in managing the organisation.
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AFP drops in on PwC as part of tax leaks probe
The AFP has warned its investigations into the PwC tax scandal are being frustrated by legal professional privilege claims on documents seized from the firm.
Appearing at late night Senate Estimates on Tuesday, AFP assistant commissioner Stephen Nutt said the agency was examining four ex-PwC partners connected to the tax leaks, including some who are overseas.
However, Mr Nutt declined to name the PwC partners, only confirming the firm’s former head of international tax Peter Collins was central to the probe.
The Australian does not suggest Mr Collins is guilty of any crime.
AFP plainclothes detectives attended PwC’s Sydney headquarters in Barangaroo on Monday as part of a multi-day search of the firm’s records.
Assistant Commissioner Nutt said the firm had been notified of the raids on Tuesday last week, however he noted the residents of two homes in Victoria raided in August were not given forewarning.
Mr Nutt said it was “tactically beneficial” to have PwC notified of the upcoming search, noting the AFP was looking to access electronic records.
“Our view was it is a low prospect of loss of destruction of evidence, knowing that to our analysis of any material seized, we would be able to determine whether a material had been altered or destroyed as part of the collection,” he said.
Speaking earlier in the hearing, AFP acting commissioner Ian McCartney said the investigation into the firm was “complex” and hampered by the historical nature of the alleged offending as well as “the existence of derivative use immunity connected to other investigations, and legal privilege”.
However AFP declined to comment on attempts to claim legal professional privilege over documents, noting that police had engaged with PwC’s senior counsel “to work through what are the established guidelines for claiming legal professional privilege”.
“This is a common practice in complicated search warrants where legal professional privilege is expected to be claimed,” he said.
Greens Senator Barbara Pocock called out the issue, noting PwC attempted to stymie an earlier investigation into Mr Collins and the firm’s misuse of confidential government information through professional privilege claims.
“I have real concerns about its use, and clearly it is in use,” she said.
Mr Nutt told the hearing the AFP’s warrant presented when the firm raided several properties detailed police were investigating seven alleged offences in relation to the tax leaks.
These included breaches of section 70 and section 90 of the crimes act as well as a number of matters related to “general dishonesty” and “conspiracy to defraud”.
These offences could see PwC partners face up to 10 years in jail, if convicted.
Five PwC partners are also under investigation by the Tax Practitioners Board, which could see them banned as tax accountants.
Mr Collins was banned by the TPB in October 2022 in relation to the misuse of confidential information.
The TPB and the ATO are slated to appear later on Wednesday before the Treasury portfolio.
AFP says its ‘complex’ investigation into tax scandal faces legal roadblocks
Though making progress, the AFP has told Senate Estimates that its investigations into PwC’s misuse of tax information is being stymied by legal professional privilege claims.
Appearing before Senate Estimates on Tuesday, the AFP revealed the PwC investigation, examining the firm’s misuse of confidential government tax information, was proving to be “complex” as officers delved into the scandal.
AFP acting commissioner Ian McCartney told the Senate the police were grappling with the historical nature of the alleged offending as well as “the existence of derivative use immunity connected to other investigations, and legal privilege”.
The AFP launched its investigation in May last year, after Treasury referred allegations that PwC’s former head of international tax Peter Collins breached government confidentiality deeds, sharing details of a yet-to-be-introduced tax reform with others in the firm.
This saw PwC implement new tax structures for clients ahead of the 2016 introduction of the Multinational Anti-Avoidance Law, aimed at stopping major corporations offshoring profits while paying little tax. .
Mr McCartney told the Senate AFP officers had executed two search warrants in August, including a search of Mr Collins’ house in Sandringham and a property in Sorrento believed to be connected to the former PwC partner.
Mr Collins did not respond to requests for comment.
AFP officers also entered PwC’s Sydney offices on Monday in an attempt to delve through internal firm records, sparking an email to partners from chief executive Kevin Burrowes warning police were reviewing “the historical tax matter and individuals who have left our firm”.
The AFP search came after PwC firm agreed to facilitate the entrance of investigators.
Sources in the firm told The Australian PwC had been handing over documents for some months to AFP officers.
They indicated the search of internal systems was an escalation of AFP investigations, with others pointing to the deep dive as a sign of the complexity of the documentary evidence.
A previous Australian Taxation Office investigation into the confidentiality breaches saw the ATO and PwC locked in legal combat over tens of thousands of documents, amid claims by members of the firm they were legally protected.
The AFP has previously said its investigation into PwC, which has been dubbed internally Operation Alesia, was a “priority”, noting they were treating it as a “sensitive” investigation.
AFP are investigating whether PwC partners breached Section 70 or 90 of the Crimes Act, which relate to the disclosure of information and official secrets.
Section 70 imposes a duty not to disclose confidential information and allows for a two-year prison sentence for those found to have shared official secrets without authorisation.
Section 90 deals with false statements in documents filed or lodged with the Commonwealth or intentionally making statements known to be false, also subject to a two-year penalty.
The furore surrounding PwC has seen the firm banished from government contracts, with the audit and consulting giant dramatically moving to sever its government services arm last year in a $1 deal with private equity player Allegro Funds.
This business, rebranded Scyne Advisory, is now responsible for much of the former government consulting work performed by PwC.
The firm was awarded 51 contracts, worth a combined $37.6m, in the 2023-2024 financial year.
However, PwC has said it will not seek to bid for government work while under a cloud in the wake of the tax leaks.
Senate Estimates heard the firm was now unlikely to return to bidding for government work until at least mid-2025.
PwC had said it would stay in the wilderness until December this year, but Finance deputy secretary Richard Windeyer said the deadline had been delayed after discussions between the government and the firm.
Mr Windeyer said Finance had spoken with a number of PwC senior figures, including its head of risk Jan McCahey and the firm’s board over the potential return to bidding.
Mr Windeyer said if PwC were to face criminal charges flowing from an AFP investigation into the firm’s breaches of confidentiality, the government may look to extend any return date again.
