PwC Australia Restructures Board Amid Tax Leak Scandal

PricewaterhouseCoopers (PwC) Australia has ordered nine partners to take leave and restructured its governance board amidst a national scandal surrounding the misuse of confidential government tax plans.  

The scandal involved a former tax partner who shared confidential drafts of new anti-tax avoidance laws with colleagues, leading to the exploitation of the information for business purposes. 

Acting CEO Kristin Stubbins expressed her apology on behalf of the firm in an open letter, acknowledging the act of "sharing confidential government tax policy information" and confirming that nine partners have been instructed to take leave.  

Stubbins stated, "We know enough about what went wrong to acknowledge that this situation was completely unacceptable. No amount of words can make it right." 

Following the referral of the matter to the police for a criminal investigation by the Australian Treasury, PwC agreed to suspend any implicated staff from government work. This decision came one day after the referral.  

In preparation for upcoming parliamentary hearings focused on the scandal, the firm announced the departure of the chair of its Governance Board and the head of its risk committee, as well as the appointment of two independent directors to the board. 

PwC also revealed its intentions to separate its lucrative government contracting business from other areas of the firm in an effort to prevent a complete ban on government contracts. The separated division will have its own board. 

Stubbins commented, "It is now clear that when we learned of the confidentiality breach and related issues, we failed to conduct an appropriate root cause investigation. That was the result of a failure of leadership and governance." 

The central issue revolves around a former partner who, while providing advice to the government on new rules to combat tax avoidance by multinational companies, shared confidential information with colleagues.  

Parliament was presented with hundreds of partially redacted emails from 2014 to 2017, revealing how the confidential drafts of the new rules were utilised to secure contracts with US technology companies and others. 

When asked about releasing the names of individuals who had access to the confidential information, Prime Minister Anthony Albanese called for more transparency. He stated, "I think all of this should become public at the appropriate time... But quite clearly what went on there is completely unacceptable." 

According to PwC, confidential information was received by both Australian and international staff, but the firm declined to disclose the names of all staff mentioned in the emails since the majority of them were unaware participants in the breach of confidentiality. 

The firm affirmed that no clients were involved in any wrongdoing and that confidential information was not used to facilitate tax evasion for clients.  

Stubbins' letter highlighted a failure to identify and address a culture of "aggressive marketing" within the tax business that prioritised profit over purpose.