PwC orders nine partners to take leave

PwC Australia has directed nine partners to go on leave, effective immediately, but has resisted calls from the prime minister to name all staff involved in its tax scandal.

The firm said the nine partners would be stood down pending the outcome of its internal investigation.

In addition, the firm’s Australian chair Tracey Kennair and the chair of its governance and risk committee Paddy Carney have stepped down from their respective roles.

Perth partner Justin Carroll, who was already on the firm's national board, has been named as interim chair.

As an audit partner based in Perth, Mr Carroll is at some length from the scandal, which centres around the firm's tax practice on the east coast.

The firm apologised unreservedly today for its actions but stood firm against calls to release the names of all partners and staff who received emails relating to the tax scandal.

The emails were released by the Senate on 2 May but the names were redacted.

“There has been an assumption by some that all those whose names have been redacted must necessarily be involved in wrongdoing,” acting chief executive Kristin Stubbins said in an open letter released today.

“That is incorrect.

“Based on our ongoing investigation, we believe that the vast majority of the recipients of these emails are neither responsible for, nor were knowingly involved in any confidentiality breach.

“We have and will continue to take appropriate action against anyone who is found to have breached confidentiality or failed in their leadership duties.

“In addition, in relation to the breach of confidentiality, our clients were not involved in any wrongdoing and no confidential information was used to enable clients to pay less tax.”

Prime minister Anthony Albanese today described the PwC tax advice scandal as a “terrible indictment” and called for total transparency.

"All of this should become public at the appropriate time, of course there are investigations under way and I don't want to say anything to interfere with those processes," he told Sydney radio station 2SM on Monday.

"Quite clearly, what went on there is completely unacceptable."

Ms Stubbins outlined multiple steps the firm is taking in response to the unfolding scandal, starting with a profuse apology.

“We understand that we betrayed the trust of our stakeholders and we apologise unreservedly,” she said.

“We know that action is critical to restore confidence in our firm and rebuild trust with our stakeholders and I am committed to taking all necessary steps to make this happen.”

The tax scandal blew up after revelations the firm’s former head of international tax Peter Collins improperly used confidential Commonwealth government information.

His actions are the subject of a criminal inquiry by the Australian Federal Police.

The firm has appointed former Telstra boss Ziggy Switkowski to lead a review of its culture, governance and accountability, after it emerged Mr Collins shared information with about 50 other partners and staff.

PwC said today it would publish the report and recommendations, in full, at the conclusion of the review in September.

That is a change from its previous plan to share a summary of the key recommendations.

PwC Australia also announced today it has commenced a process to ringfence the provision of services to federal government departments and agencies.

It plans to establish separate governance and oversight arrangements for that part of its business by the end of September.

This will include a standalone executive and governance board.

“This will establish independence and enhance controls relating to confidentiality and conflicts,” the firm said.

The federal government is considered PwC’s single largest client.

Ms Stubbins also disclosed today that two independent, non-executive directors will be appointed to PwC Australia’s governance board.

“External board members will bring independent, outside-in perspective and objectivity to the firm’s governance,” she said.

She acknowledged today it had failed to act fast enough.

“It is now clear that when we learned of the confidentiality breach and related issues we failed to conduct an appropriate root cause investigation and thorough assessment of accountability for both the conduct at issue and the culture that allowed the underlying conduct to occur,” Ms Stubbins said.

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