PwC Australia Faces Further Scrutiny Over Tax Leaks Scandal in Parliamentary Inquiry

PwC Australia has responded to over a dozen questions posed by a parliamentary committee concerning its involvement in a tax leaks scandal, but these answers have only raised more questions, according to journalist Tom Ravlic. The firm provided 17 sets of responses to the Parliamentary Joint Committee on Corporations and Financial Services, which grilled PwC Australia on August 2 about its governance processes and the tax leaks controversy.

Senator Deborah O’Neill, who chairs the committee, along with her colleagues, submitted a series of questions to PwC Australia’s CEO, Kevin Burrowes, and other members of the firm. However, those hoping for clarity, especially concerning the six individuals identified by PwC as having mishandled confidential information, will find the responses lacking.

One key issue was the firm's refusal to supply a copy of the services agreement signed by Burrowes with the international network, which Senator Paul Scarr had requested. This agreement was crucial because it included an additional payment of A$1.2 million to Burrowes, revealed only after O’Neill pressed for more details about his remuneration. PwC Australia’s response stated that “the services arrangement which was the subject of Senator Scarr’s request is subject to confidentiality arrangements which would preclude them being provided to the committee on a voluntary basis.” The firm instead referred the committee to a summary included in its earlier responses.

Scarr’s other inquiries into PwC’s governance and remuneration structures yielded little new information, as the firm directed the committee to its website for details on its global operations. PwC Australia also provided the committee with a PDF file containing 226 pages of embedded links, documents, and web pages, outlining the firm’s international structure and defending the global network model as necessary due to legal and regulatory requirements in many parts of the world.

Despite this extensive submission, the committee was still left in the dark on several key issues. For instance, PwC Australia revealed that while it informed PwC International about receiving a notice from the Tax Practitioners Board (TPB) in May 2021, it did not share detailed information with the global network due to concerns over tax secrecy laws. PwC International only learned more specifics after the scandal became public in January 2023.

One of the most controversial issues involved the UK’s Financial Reporting Council (FRC) and the elusive Linklaters report, which allegedly names six PwC staff members who mishandled confidential information. When asked if PwC Global had handed over the report to the FRC, PwC Australia responded, “PwC Australia has made inquiries and understands that PwC International has not provided the UK FRC with a copy of the Linklaters legal advice to PwC International.” The firm did, however, share that the global network had determined these six individuals should have raised concerns about the confidentiality of certain information but clarified that “none of them further shared the information outside PwC or used the information to obtain a commercial benefit.”

Another issue of interest to the committee was the tension between PwC Australia and the Australian Taxation Office (ATO). The firm was asked to provide notes from a critical August 2019 meeting between former PwC Australia CEO Luke Sayers and ATO Second Commissioner Jeremy Hirschhorn. PwC responded that it had not identified any notes taken by Sayers but confirmed that Sayers had communicated the meeting's contents to Meredith Beattie, the firm’s former general counsel, shortly after. The firm stated that what Sayers conveyed to Beattie was consistent with Hirschhorn’s internal summary circulated within the ATO, which included discussions on breach of confidentiality, false statements in client information requests, and cultural issues within PwC’s tax practice.

As the parliamentary committee reviews PwC’s responses, it remains uncertain what conclusions will be drawn in the final report, which is expected to be presented to parliament later this year. The firm’s conduct, and its handling of the scandal, will likely continue to be scrutinized as the investigation progresses.

By fLEXI tEAM