26/06/23

TAX AVOIDANCE: Acting PwC boss tells inquiry anyone involved in tax leaks will be named

As published on: new.com.au, Monday 26 June, 2023.

The acting boss of a major consultancy firm gripped by a tax leaks scandal says the company intends to publicly name everyone involved.

PwC has been in crisis mode following revelations former taxation partner Peter Collins leaked sensitive and confidential government information to fellow partners and clients.

Kristin Stubbins, who has been in the role for just six weeks, began her evidence to the inquiry on Monday by apologising as the company attempts to repair its reputational damage caused by the scandal.

“It is important to acknowledge that we don’t always get things right,” Ms Stubbins said.

“We deeply regret the breach of confidential federal tax policy information that happened around eight years ago and I deeply apologise for that. We failed the standards we set for ourselves as an organisation.”

Questions focused on why PwC had not provided the names of all nine staff who were stood down in the scandal.

Ms Stubbins said an internal investigation was under way and expected to be completed soon, with the intention of revealing the names of people involved in any wrongdoing.

She said the firm had already identified four people “who were directly involved with the confidentiality breach”, while other people involved were directed to go on leave.

“We’ve engaged two external law firms to help us with this investigation,” Ms Stubbins told the inquiry.

“We will name anyone who has done anything wrong.”

PwC revealed on Sunday that all of its federal and state government business would be divested exclusively to private equity investor Allegro Funds for a mere $1.

She repeatedly assured the inquiry that anyone who would be found to have acted wrongly would not be transferred to the new company.

However, she revealed PwC did not begin to investigate the tax leaks until six weeks ago when emails were released revealing the extent of the scandal.

She told the inquiry the firm was not aware Mr Collins had signed a confidentiality agreement regarding the multinational tax avoidance laws until March 2021.

“The issues with respect to the confidentiality agreements haven’t been known for way back to 2015,” she said.

“However, the deep root cause analysis and deep investigation into this really started looking at all the aspects that I’ve talked about in my open letter, including the cultural aspects, really only started six weeks ago.”

Ms Stubbins told the inquiry the decision to divest was not an admission the company could not meet ethical and legal requirements.

“We started to look at the ring fencing of this business to address the perceived conflicts … we decided that did not go far enough,” she said.

“We made the difficult decision to divest our government business completely.”

Ms Stubbins said PwC was not expected to make a profit from the divestment and the new company was not expected to share an office with the existing business.

More than 1500 staff are expected to be moved to the new company.

“This whole transaction is designed to protect a significant number of jobs,” she said.

“We believe the best opportunity for those people is to go across to a new entitate with absolutely no risk or perception of a conflict of interest because it will be completely separate from here.”

The acting chief executive assured the panel that anyone who might have been involved in the tax leak was not working with the state government.

She continued to “deeply apologise” for the confidentiality breaches and the “lack of an effective response”.

“It occurred in a small part in our tax practice and we have no reason to believe that any of these issues relate to the NSW government at all,” she said.

“But obviously, if we did have specific instances, we would deal with those instances.”

PwC Australia operates on a partnership model, meaning it is not incorporated and is not subject to corporate governance oversight. Instead, it has voluntarily adopted a code of conduct.

The company’s global leaders will parachute Kevin Burrowes into the top job after they seized control of the troubled Australian arm of the business.

Mr Burrowes will take over from Ms Stubbins, who has been acting in the top job for almost seven weeks after former chief executive Tom Seymour resigned in early May.

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