PwC is racing to contain the escalating Australian tax leak issue

Top executives from the Big Four firms are being flown to Sydney in a bid to stem the crisis.

PwC is scrambling to limit the global impact of an Australian leak disaster on its company after it was revealed that the firm used classified government tax plans to advise tech customers.

According to emails disclosed last week by an Australian Senate committee, PwC used information obtained while working with the government to seek business by counselling corporate clients on new anti-tax-avoidance legislation. Politicians in Australia have demanded that the partners who received the emails, as well as the clients who profited from the material, be identified.

The Big Four firm has flown some of its top worldwide executives to Sydney in an attempt to avert a global catastrophe from erupting. According to a person close to the firm with knowledge of the facts, the team includes global general counsel Diana Weiss and global head of tax Carol Stubbings.

Given the possibility that their names would be disclosed in the coming weeks, the firm is also prepared to contact the affected clients.

The possible "spillover effect" on PwC's international reputation was "slightly terrifying" for the firm, according to the source. Since a 2021 revamp, the company has put the concept of "trust" at the centre of its image.

Deborah O'Neill, the Australian senator who prompted the release of the emails, told the Financial Times that PwC's internal communications demonstrated a "moral and ethical failure."

“This is not a couple of bad apples. It is a widespread cultural problem and has reached far beyond Australia,” she said. “It is clear this is an issue with global implications.”

The Labour senator stated that she will continue to press for the release of the names of clients and PwC partners involved in the private information sharing.

According to two people familiar with the incident, PwC's global leaders are attempting to uncover the entire degree of the involvement of partners outside of Australia, as well as whether there was a broader culture problem at the firm.

Global chairman Bob Moritz stated that the firm will assist colleagues whose clients were impacted.

The identities of the customers discussed were obscured, as were the names of PwC personnel and partners who sent and received the information, which included people from the firm's US, UK, and Irish operations. There is no evidence that the business clients broke the law.

The emails, which were written between 2014 and 2017, describe millions of dollars in business won by targeting the US tech sector and include allusions to San Francisco-based companies.

One mentions aid provided to 14 businesses, including "some 'brand-defining' clients." Another email chain cites a "US tech company project" and a meeting in Seattle with a client's tax team.

Tom Seymour, the chief executive of PwC Australia, resigned on Monday after admitting to being copied on emails "about the marketing strategy and financial success of the tax advice." He said he had no idea PwC's tax advice was based on confidential government material provided by one of its consultants.

This week, PwC Australia's financial advisory managing partner Pete Calleja and chief strategy, risk, and reputation officer Sean Gregory resigned from their positions.

According to persons familiar with the situation, the law firm Linklaters has been engaged to conduct the foreign element of a PwC investigation into the incident. The Australian company is conducting its own investigation.

Peter-John Collins, the Australian partner who disclosed the private information, was barred from practising as a tax agent for two years in January.

PwC Global said: “PwC’s leadership has taken swift action in response to the email disclosures in Australia — with new leadership, initiating independently-supervised reviews of the events and re-emphasising that the unauthorised sharing of and/or utilisation of confidential information is unacceptable and goes against our culture, values and professional standards. We will continue to take all appropriate steps to deal with this thoroughly and effectively.”

By fLEXI tEAM