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PwC has reached a multimillion-dollar settlement with a former partner it accused of being involved in the use of confidential information leaked by a colleague, the fourth person it named to receive a payout.
Paul McNab, a tax partner for more than two decades, had sued for the reinstatement of a retirement payment plan that was cut off after he was named as one of the senior people who appeared in emails associated with the leaked government information circulated by others at the firm.
Former PwC partner Paul McNab. Michaela Pollock
The Australian Financial Review first revealed that the firm’s former head of international tax had been deregistered for sharing confidential government briefings with PwC partners and clients more than two years ago. Since then, PwC has hived off several businesses and been forced to pay out former partners it had initially accused of being involved in the leak.
A spokesman for McNab said the proceedings had been resolved. In November, PwC had countersued McNab, who has since started his own practice, accusing him of failing to report misconduct by the partner who leaked the information, Peter Collins, to more senior managers.
McNab had appeared in emails praising the “accuracy of the intelligence” provided by Collins, and lauded his division’s proactive work in courting the American technology giants that were likely to be affected by the information gleaned from confidential government briefings.
PWC which faces an ongoing Australian Federal Police investigation into the misuse of the government information, declined to comment.
McNab had alleged PwC suspended his access to retirement payments – which could total more than $140,000 a year for life – when he left to join DLA Piper by invalidly deeming the law firm as a “major competitor”.
He claimed PwC completely cancelled his access to the plan when he resigned from DLA Piper after PwC said he was involved in the scandal. McNab had repeatedly denied any wrongdoing and was arguing that it was “implausible” that his conduct caused the losses from the tax leak.
The settlement will avoid a trial that would have aired elements of PwC’s internal systems, including its lucrative retirement scheme for partners, and the opaque system by which it deems businesses to be major competitors.
It also avoids senior members of the firm’s local and global management being forced to provide evidence in court, and defers a potential test case about the validity of its restraints on working for competitors.
If successful, the lawsuit could have led to other former partners pursuing lost repayments, potentially costing the firm millions of dollars per year.
Earlier estimates had put PwC’s loss from the tax leak scandal at about $1 billion. In 2023, it sold its public sector consulting arm, now known as Scyne Advisory, to private equity firm Allegro Funds for just $1.
In the fall-out from the scandal, PwC named a string of partners that it alleged had been involved in the sharing of confidential information or because they had failed to take any action despite knowing of the leak.
In the statement, the firm said: “These departures are in addition to the four former partners: Michael Bersten, Peter Collins, Neil Fuller and Paul McNab, who were previously named as being involved in confidentiality breaches.”
Since then, it has been forced to settle with three of those former partners, costing the firm millions of dollars. McNab is the fourth.
Last year, PwC agreed to settle with former partners Wayne Plummer and Richard Gregg. Plummer was the former head of the firm’s tax risk and quality team, and received a payout of about $2 million after he was removed from the partnership over unspecified adverse findings.
A Chartered Accountants Australia and New Zealand investigation into Plummer’s conduct was also dropped with no adverse findings.
Gregg, a research and development incentive tax specialist, was named as one of eight partners who had left or were in the process of being removed from the firm’s partnership after the tax leak scandal broke.
In 2023, the Supreme Court in NSW ruled that PwC had not properly detailed the allegations used to force Gregg out and that he was not given a fair opportunity to deal with a complaint against him. Last year, PwC settled with Gregg in a separate defamation dispute for an undisclosed sum.
Fuller, who was removed from the firm, has also settled with PwC.
Despite the settlements, various investigations into the conduct of other partners are ongoing. In January, Chartered Accountants Australia and New Zealand confirmed it was conducting inquiries into several other former PwC partners linked to the tax leaks scandal.
