PwC Australia puts nine partners on leave, overhauls board amid tax leak scandal

By Lewis Jackson

SYDNEY (Reuters) – PricewaterhouseCoopers (PwC) Australia on Monday ordered nine partners to take leave and overhauled its governance board, as it battles a national scandal over the misuse of confidential government tax plans.

The “big four” firm is reeling after a former tax partner consulting on new anti-tax avoidance laws shared confidential drafts with colleagues that were then used to drum up business.

In an open letter, acting chief executive Kristin Stubbins said she wanted to apologise on behalf of the firm for “sharing confidential government tax policy information”, and said nine partners had been directed to take leave.

“We know enough about what went wrong to acknowledge that this situation was completely unacceptable. No amount of words can make it right,” she said.

The Australian Treasury referred the matter to police for a criminal investigation last week. PwC agreed to stand down from government work any implicated staff a day later.

Ahead of parliamentary hearings this week expected to focus on the scandal, the firm said the chair of its Governance Board and the head of its risk committee will also step down, and two independent directors were set to join the board.

The firm also announced plans to ring-fence its lucrative government contracting business from other parts of the firm as it tries to head off calls for a total ban on government contracts. The business will have a separate board.

“It is now clear that when we learned of the confidentiality breach and related issues we failed to conduct an appropriate root cause investigation,” Stubbins said in the statement.

“That was the result of a failure of leadership and governance.”

The heart of the issue is that a then-partner on tax at PwC shared confidential information with colleagues while advising the government on new rules to crack down on tax minimisation by multinational companies.

Hundreds of partially redacted emails between dozens of unnamed PwC staff from 2014 to 2017 presented in parliament this month showed how confidential drafts of the new rules were used to win work with U.S. technology companies, among others.

Asked on Monday whether the firm should release the names of those with access to confidential information, Prime Minister Anthony Albanese called for more transparency pending the police investigation.

“I think all of this should become public at the appropriate time … But quite clearly what went on there is completely unacceptable,” he said.

PwC on Monday said staff in Australia and overseas had received confidential information, but it would not release the names of all staff included in the emails because the vast majority were not knowingly involved in any confidentiality breach.

No clients were involved in any wrongdoing and no confidential information had been used to help clients pay less tax, the firm said.

In her letter, Stubbins said leaders failed to identify and keep in check a culture of “aggressive marketing” in the tax business that prioritised profit over purpose.