Opinion: PwC tax leaks scandal raises difficult industry questions
International Tax Review is part of the Delinian Group, Delinian Limited, 4 Bouverie Street, London, EC4Y 8AX, Registered in England & Wales, Company number 00954730
Copyright © Delinian Limited and its affiliated companies 2024

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Opinion: PwC tax leaks scandal raises difficult industry questions

Hannover, Lower Saxony, Germany - September 26, 2021: Logo of pw

PwC Australia is facing investigations over leaked information on tax policy, but this scandal could reach far beyond one country.

‘Big four’ firm PwC is grappling with the fallout of the Australian tax leaks scandal over 144 pages of internal emails revealed by the Australian Senate. These message show confidential information flowing from partner to partner and eventually to clients.

PwC Australia announced on Monday, May 15, that an independent investigation into the firm’s culture and operations had begun. Australian businessman Ziggy Switkowski, chairman of banking group Suncorp, is conducting the review and a final report will be published in September 2023.

So far there has been a series of high-profile resignations and an independent inquiry has been launched, but the story is far from over. This scandal has implications for how tax advisers work with governments all over the world.

We know that the emails included details from high-level meetings with Australian policymakers. It is unclear how many people have received confidential information, or acted on it, at this point.

But the leaked messages go beyond Australia’s shores as far as Ireland and the US. It’s possible that the leaks will have consequences outside the country, especially if the names of all the email recipients – partners and clients – are revealed.

This is why PwC Global has flown some of its top executives to Sydney to help address the leaks. The last thing any firm wants is for such a scandal to become a global crisis – least of all a firm that has rebranded to put trust at the core of its public image.

Out the door

This month alone, PwC Australia has seen three resignations over claims the firm used information from high-level meetings to win new business.

Two partners, Pete Calleja and Sean Gregory, stepped down from the Australian firm’s executive board, reported the Australian Financial Review on May 10. Calleja was head of financial advisory services, while Gregory was responsible for risk management.

The biggest name to go was Tom Seymour, the CEO of PwC Australia, who resigned on May 8 after admitting that he received emails containing confidential government information.

Kristin Stubbins, head of assurance, has taken over as acting CEO at PwC Australia. Seymour is still a partner at PwC Australia but is set to retire in September when the report is published.

Seymour admitted receiving information from Peter-John Collins, former head of international tax at the firm, who was banned by Australia’s tax industry watchdog the Tax Practitioners Board (TPB) in January.

Collins was a member of an advisory group involved in confidential policy discussions with the Australian Treasury. He was found to have broken confidentiality agreements on Treasury talks in 2013, 2016 and 2018.

Collins had shared details of upcoming policy changes as “rumour” after having meetings with Treasury officials. He received a two-year ban from serving as a tax agent for failing to act with integrity.

When Collins was banned, PwC acknowledged it had “failed the high standards we set for ourselves as a firm”. It should be noted that Collins left PwC Australia in October 2022.

Further afield

Nevertheless, the TPB ordered PwC to improve its standards and training on potential conflicts of interest, but this raises the question: is this a problem for the entire tax advice industry?

It would be reassuring for PwC if this story ended in Australia, but the chain of emails reached PwC professionals in Ireland, the UK and the US. What has begun with the Australian leaks may spread as regulators and tax authorities elsewhere seek to further scrutinise tax advisers and their clients.

It’s possible that the Australian government will take the leaks as a pretext for wrapping tax advisers in more red tape, but it won’t necessarily stop in one country. Advisers are already facing more regulatory pressure in many EU countries.

A lot of senior tax professionals outside PwC who have worked with governments will be searching their minds for any possible indiscretion either in speech or in writing. WhatsApp messages and emails are not to be written hastily.

We know what often begins as a tax scandal rarely ends with a few headlines. Many reforms have been implemented over the last decade in reaction to public outrage over tax avoidance and evasion. This could be another catalyst for stricter rules.

more across site & bottom lb ros

More from across our site

Sanjay Sanghvi and Raghav Bajaj of Khaitan & Co provide a practical guide for foreign investors looking to capitalise on Indian’s investment potential
The newly launched Tax Responsibility and Transparency Index will assess the ethicality of companies’ tax practices against global standards and regulations
The reported warning follows EY accumulating extra debt to deal with the costs of its failed Project Everest
Law firms that pay close attention to their client relationships are more likely to win repeat work, according to a survey of nearly 29,000 in-house counsel
Paul Griggs, the firm’s inbound US senior partner, will reverse a move by the incumbent leader; in other news, RSM has announced its new CEO
The EMEA research period is open until May 31
Luis Coronado suggests companies should embrace technology to assist with TP data reporting, as the ‘big four’ firm unveils a TP survey of over 1,000 professionals
The proposed matrix will help revenue officers track intra-company transactions from multinationals
The full list of finalists has been revealed and the winners will be presented on June 20 at the Metropolitan Club in New York
The ‘big four’ firm has threatened to legally pursue those behind the letter, which has been circulating on social media
Gift this article