PwC is under attack on multiple fronts with the federal government ordering consultants to stand down and tightening procurement rules after police launched a criminal probe.
PwC is under attack on multiple fronts with the federal government ordering consultants to stand down and tightening procurement rules after the Australian Federal Police launched a criminal probe.
The unfolding scandal prompted major competitor KPMG to declare that “we can no longer sit by and watch our profession be tarnished by the unethical actions of a few”.
Home Affairs minister Clare O'Neil joined other senior ministers in condemning PwC, saying its actions were “a grotesque betrayal of trust”.
The Finance department outlined concrete steps that will affect not just PwC but all other consulting firms working for the federal government.
The department has directed PwC to stand down all personnel directly involved in, or who had knowledge of, the confidentiality breaches at the heart of the tax advice scandal from all government contracts.
This could affect more than 50 partners and staff.
Finance minister Katy Gallagher told a Senate inquiry “the onus is now upon PwC” to meet the government’s directions.
Her department also plans to vary its head agreement for 413 suppliers on the Management Advisory Services Panel to provide greater flexibility for contract termination.
“This would allow Finance to remove a supplier from the panel and cancel all existing and future contracts, including in respect of behaviour that is outside the specific scope of the services delivered under the panel,” it said in a staff email.
This change is being made because the PwC issue stemmed from advisory work by former PwC tax partner Peter Collins that was outside the panel contracts.
The new rules will particularly affect the ‘big 4’ consulting firms, namely Deloitte, EY, KPMG and PwC.
They won $1.4 billion of work from the federal government last financial year, according to the Centre for Public Integrity, with PwC winning more than a third of the total.
The WA government believes it already has “robust contractual conditions to mitigate the risk of confidential information being shared publicly”.
A spokesperson said WA’s finance department has a set of standard terms and conditions to engage contractors that include provisions to protect the State’s interests.
“Importantly, this includes protection of the State’s confidential information,” the spokesperson said.
“If a confidentiality breach was to occur in WA the State has clearly stated contractual remedies to manage the issue.”
Today’s updates come after the Australian Treasury announced late yesterday it has referred the issue to the Australian Federal Police to consider a criminal investigation.
"PwC Australia’s former head of international tax, Mr Peter Collins, improperly used confidential Commonwealth information," Treasury secretary Steven Kennedy said in a brief statement.
"The emails that the Tax Practitioners Board tabled in parliament on 2 May 2023 highlighted the significant extent of the unauthorised disclosure of confidential Commonwealth information and the wide range of individuals within PwC who were directly and indirectly privy to the confidential information.
"In light of these recent revelations and the seriousness of this misconduct, the Treasury has referred the matter to the Australian Federal Police to consider commencement of a criminal investigation."
Mr Collins had been engaged over several years to provide advice on tax policy, including on rules designed to prevent multinationals from lowering taxes by shifting profits internationally.
He shared the information extensively with others at PwC and the firm subsequently used the confidential information to help clients minimise their Australian tax in 2016.
The issue came to light early this year after the TPB terminated Mr Collins’ registration as a tax agent and ordered the firm to run additional training about managing conflicts of interest.
It escalated in May, when a Senate committee published internal PwC emails showing the confidential information had been shared extensively.
The names of people who received this information, believed to number 53, were redacted from the published emails.
Since then, PwC’s Australian chief executive Tom Seymour has stepped down and plans to retire early from the partnership.
Former Telstra CEO Ziggy Switkowski has been engaged by PwC to review the firm’s governance, accountability and culture and report back by September.
In addition, PwC’s Global Legal Business Solutions Leader Tony O’Malley has been appointed as Chief Risk and Ethics Leader for PwC Australia, with responsibility for all aspects of ethics and compliance.
Meanwhile, KPMG’s Australian chair Alison Kitchen and CEO Andrew Yates have sent an email to all staff explicitly referring to the situation involving PwC.
They said Treasury’s decision to refer the matter to the AFP underlined its gravity.
“We can no longer sit by and watch our profession be tarnished by the unethical actions of a few,” they said.
Their email said KPMG was often trusted by clients with confidential information.
“An appointment supporting the governments and the public service is a particular privilege that carries additional responsibilities,” they said.
“By extension, we are serving the Australian people and committing to put the national interest before any other commercial consideration.”
Their email also “acknowledged that as a firm we have not got everything right”.
They referred specifically to two matters.
One was the revelation of widespread cheating by KPMG partners and staff on an internal ethics and integrity test.
The second involved KPMG facing conflicts of interest after it accepted work with two NSW government agencies relating to Transport Asset Holding Entity.
“These issues have challenged our internal and public stance of always acting ethically,” they said.
“They have given us pause to consider the way in which we operate internally, and externally with clients.
“In these cases, we got it wrong.
“But when we do get it wrong, we work to put it right.
“All these events are critical reminders for us to do the right thing - not just some of the time, but all of the time.”
KPMG’s leaders told staff that “now is a good time to re-familiarise yourself with our global code of conduct.
They also defended the firm’s training regime.
“We understand the time commitment that our new internal training regime and guidelines can impose on you,” they said.
“But the TPB integrity issue should be a reminder of why we should not compromise on training and constantly improving our culture and ensuring that at all times we have an environment when upward feedback is not only encouraged but rewarded.”
