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A group of around 20 PwC partners angered by a lack of accountability by those responsible for the tax leaks scandal are allegedly preparing to campaign the firm on the issue.
The group, “The Committee to Restore Trust in PwC through Transparency and Accountability”, is comprised “around 20 partners” with “a vast amount of additional supporters from all areas of the business and various stages of our careers”, The Klaxon is told.
A source, who said they represented the group, said the “mutual feeling is that the firm is not doing enough” and that “the past leaders of the firm (from 2013 to now) are not being held appropriately responsible”.
“This includes the past CEO, executive members, markets leaders, government leader, chairs, board members, and legal/risk leaders,” the source said.
“Each of these parties is claiming zero responsibility whilst continuing to benefit significantly from the firm.
“Each of these parties is claiming zero responsibility whilst continuing to benefit significantly from the firm”
“We also feel that there are many other issues lurking under the surface waiting to be uncovered”.
The group was preparing “comprehensive recommendations” it would put to PwC Australia and to PwC’s Global CEO, the source said.
“We are going to release a letter to the Acting CEO, Acting Chairman and Global CEO next week, with comprehensive recommendations,” the source said on Sunday evening.
That was after PwC Australia earlier in the day announced plans to offload its government advisory business for $1 to “turnaround” private equity company Allegra Funds, in Sydney.
It was reported that PwC partners were to be briefed on the proposal yesterday afternoon.
“We…feel that there are many other issues lurking under the surface waiting to be uncovered”
PwC hiding “terms of reference” of internal inquiry. How The Klaxon broke the story Friday. Source: The Klaxon
PwC also announced it planned to bring in a PwC global executive from Singapore to become the new PwC Australia CEO.
The announcements follow a Senate inquiry — comprised of politicians from all major parties — on Wednesday finding PwC had engaged in a multi-year cover-up of the tax leaks scandal.
PwC took top-secret Australian Government data and sold it for millions of dollars to multinationals seeking to evade Australian tax, in a scam it internally called “Project North America”.
PwC staffers gleaned the confidential data when, from 2013, they were engaged to provide the government “advice” on creating new tax laws aimed at preventing multinationals avoiding Australian tax.
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The scandal emerged in January and exploded on May 2 with the publication of a 144-page cache of internal PwC Australia emails discussing the scam.
In an interim report released Wednesday, the Senate inquiry found PwC spent years covering up the scam, including by refusing to give Australian authorities tens of thousands of documents, falsely claiming they were protected by legal client privilege.
It found PwC had engaged in a “calculated breach of trust” and that the firm was continuing to obfuscate, with its actions indicating “poor corporate culture” and a lack of “governance and accountability”.
In its statement yesterday, PwC Australia said it hoped to sign a deal with Allegro Funds “by the end of July”.
That would be well before PWC’s internal investigation into the tax leaks scandal, which PwC said would report in September.
More on the PwC tax scandal:
June 23: PwC refuses to disclose “terms of reference” to its secret inquiry
June 19: PwC tax boss turned ATO teacher ousted after Klaxon expose
June 9: “Network of tentacles”: Tax board forced to come clean on PwC ties
June 7: “Vanished” Tax Board boss was exec at pre-PwC
June 6: A world of Payne: Tax Ombudsman schooled by PwC emails partner
May 30: AFP refused to take action on PwC: ATO boss
May 30: PwC scores new $164,000 Fed Gov’t contract
May 24: You don’t Sayers? PwC Mini-Me in $6m Gov’t bonanza
As revealed by The Klaxon Friday, PwC Australia is refusing to disclose the “terms of reference” of that probe — the instructions it has set — which experts say proves concerns of it being a sham.
“We have taken this step because it is the right thing to do for our public sector clients and to protect the jobs of the [approximate] 1,750 talented people in our government business,” said yesterday’s statement from PwC.
“For PwC Australia, the transaction will result in an exit from all government advisory work, at both the state and federal levels”.
The move would “ensure stability for the rest of PwC’s clients in other parts of the business”.
Yet how the deal would work remains murky.
It was reported by The Australian Financial Review, that under the project, “code-named Bell”, around 130 existing PwC Australia partners, as well as the 1750-odd staff, would be invited to move to the new entity.
Central to the deal is what those partners are being offered as an incentive to move and whether they will take an ownership stake in the new entity.
“Central is what those partners are being offered and whether they will take an ownership stake in the new entity”
PwC Australia has over 900 partners (it reported 937 in January), who each own a stake in the entity and as auch are paid large sums of money from its annual profits.
If the 130-odd partners are not being offered an ownership stake in the new entity then it raises questions as to why they would move.
Yet if they are being given a stake, in any form, then the proposed deal is different from that presented: as Allegro would not have acquired the whole business.
Rather, it would be a business owned and run by the 130-odd PwC partners and Allegro.
The Klaxon has approached PwC for comment.
PwC’s government contracts business has been savaged in recent weeks.
The Federal Government has launched what’s been reported as an effective ban on giving PwC contracts; NSW has banned new PwC contracts for three months as it undertakes an inquiry; and there are widespread calls for PwC to be banned permanently from public contracts.
“This transaction will result in the first pure play, at scale, government business in the market,” yesterday’s PwC statement says.
The move would “ensure stability for the rest of PwC’s clients in other parts of the business”.
Under the proposed deal PwC would still retain its tax business, which is the heart of where the illegality occurred.
“Under the proposed deal PwC would still retain its tax business, which is the heart of where the illegality occurred”
Former PwC tax partner Michael Berston ousted as ATO tax teacher this month after an expose by The Klaxon. Source: The Klaxon
In its statement yesterday PwC said PwC’s “Global Clients & Industries leader” Kevin Burrowes, currently based in Singapore, would be appointed CEO of PwC Australia.
He would replace PwC Australia interim CEO Kelly Stubbins, who was appointed seven weeks ago when Tom Seymour resigned as CEO amid the scandal.
Seymour had been PwC Australia CEO from May 2020.
His predecessor, Luke Sayers, was PwC Australia CEO for eight years – and in charge of the group throughout the tax leaks affair.
Sayers, who also headed PwC Australia’s tax operations before becoming CEO, has been criticised for not fronting to address the scandal.
He is currently holidaying in Europe.
A spokesman for Sayers has said the businessman will cooperate with any investigations.
Last month The Klaxon revealed Sayers Group, the PwC-style company Sayers set up when he left PwC, had been given over $6m in Federal Government contracts in the past 24 months.
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Anthony Klan
Editor, The Klaxon
Do you know more? anthonyklan@protonmail.com
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