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The jury is still out as to which part of the PwC tax advice scandal is the most egregious: the original, admittedly appalling, offence, or the firm’s subsequent attempts to stall, deny, downplay and obfuscate the extent to which its partners had exploited confidential government briefings to drum up new business.
A damning tranche of emails released by the Tax Practitioners Board this month and subsequent inquiries have made it clear that unethical behaviour was not limited to one or two rogue individuals within PwC as it initially tried to claim. On the contrary, a 2016 scheme to help the firm’s clients sidestep multinational tax avoidance laws, aided by leaked confidential information, was common knowledge among dozens of partners.
The firm continues its increasingly infuriating rearguard action.Credit: Eamon Gallagher
The firm may have had an opportunity to at least partially remedy what was clearly looming as a huge reputational risk back in January when it emerged its former head of international tax, Peter Collins, had been temporarily banned from acting as a tax practitioner following an investigation into allegations he had broken confidentiality agreements while advising the government on tax reform.
Had PwC acted quickly and decisively to discipline or remove those partners implicated in the breach and come clean to its client it might have salvaged a little credit and better protected its government contracts, worth $537 million over the past two years alone.
Instead, it has doggedly refused to admit to anything that is not already in the public domain: a strategy that, as more implications come to light, only serves to show up a workplace culture where accountability is clearly anathema. “Devoid of an ethical backbone”, is how Senator Deborah O’Neill, who chairs the parliamentary corporations and financial services committee, described the firm’s business model.
PwC only cut loose its CEO, Tom Seymour, after it became clear he had been included in the email chain. In March, he had minimised the affair as a “perception issue” and said there were no findings that any staff had been involved other than Collins.
The firm continues its increasingly infuriating rearguard action. It is refusing to reveal the names of the other 50-odd partners – redacted in the email tranche – who also received incriminating emails despite the federal Finance Department directing it to stand down any personnel currently working on government contracts who knew about the leaks.
And while it has commissioned its own internal investigation, headed by former Telstra boss Ziggy Switkowski, that will not report back until September. The firm has not committed to publicly releasing more than a summary of its recommendations.
To its credit, the government has already pledged to crack down on the leaking of confidential government information by consultancies. It has introduced “notification of significant event clauses” which force contractors such as PwC to disclose any breaches or conflict of interest. It has also referred the confidentiality breach to the Australian Federal Police, which on Wednesday night confirmed it had commenced a criminal investigation into PwC and Peter Collins.
More broadly, there is the question of what this episode says about the culture of all the consultancies who ply their trade in Canberra. Said Greens senator Barbara Pocock: “Are we looking at just the tip of the iceberg?”
Certainly this must not be the end of the matter. The federal government must not wait for the outcome of PwC’s own internal investigation to take further action. It already has enough evidence not only of the original wrongdoing but of the more recent attempt at a cover-up. This grubby episode suggests extreme caution is warranted when considering granting the firm future contracts.
Indeed, all would-be tenderers should have to pass through an ethics gate that can be slammed shut against those who treat taxpayers with such contempt.
Patrick Elligett sends an exclusive newsletter to subscribers each week. Sign up to receive his Note from the Editor.
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