AFP refused to take action on PwC: ATO boss

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ANTHONY KLAN

The Australian Federal Police refused to take action against PwC over the tax advice scandal despite being repeatedly pushed by the tax office over two years, it is alleged.

In explosive revelations, Australian Taxation Office (ATO) boss Chris Jordan tonight told a senate hearing his agency had received information from “late 2017” regarding PwC that “raised a range of significant concerns” but despite pushing the AFP no action was taken.

Instead, the ATO was forced to refer the matter to agency the Tax Practioners Board – which cannot launch criminal proceedings – in mid-2020, almost three years later.

“After sharing the information with the Australian Federal Police (AFP) over the period 2018 and 2019, and providing a number of documents upon their request after our initial sample of the emails, we had to ultimately formally refer the matter to the Tax Practitioners Board in July 2020,” Commissioner Jordan said.

“After sharing the information with the Australian Federal Police over the period 2018 and 2019…we had to ultimately formally refer the matter to the Tax Practitioners Board in July 2020″ – ATO Commissioner Chris Jordan

The ATO was unable to take action itself “because unlike many other revenue authorities in other countries we do not have criminal investigative powers”.

PwC has been caught selling top-secret government data to multinationals seeking to rip-off Australians by avoiding corporate tax, with revelations this month that dozens of PwC bosses and staff worldwide were aware of the illegal activity, spanning back to 2014.

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ATO boss Chris Jordan fronts senate hearing on Tuesday night. Source: Australian Government

After months of reports, and intense media and political scrutiny, the AFP on Wednesday last week said it had launched an “investigation” into the tax advice scandal.

That was after the Department of Treasury officially “referred” the matter to the AFP.

The AFP’s ability and willingness to properly investigate the scandal has been brought into question by some experts.

Shortly after the investigation was announced last week it was revealed PwC is the “internal auditor” of the AFP.

Greens Senator David Shoebridge said the situation presented an “unaceptable conflict of interest”.

Also in a senate estimates hearing yesterday, on questioning by Greens Senator Nick McKim, it was revealed that PwC is also the “internal auditor” of the Department of Treasury.

“We’re through the looking glass here aren’t we?” McKim said.

Treasury Secretary Steven Kennedy responded that PwC “have a contract with us till the end of this year”.

“PwC is the ‘internal auditor’ of both Treasury and the AFP”

David Shoebridge last week after learning PwC was AFP’s “internal auditor”. Source: Twitter

In a statement to The Klaxon last night, the AFP said the ATO in 2018 “sought advice on whether there was sufficient evidence” to “make a formal referral of the matter to the AFP for investigation”.

“A set of representative sample documents were provided to the AFP,” says the AFP statement.

“The AFP assessed, based on the material that the ATO provided, was that there was insufficient information in the material, to support a formal referral”.

“The matter was closed in 2019,” the statement says.

The AFP statement continues:

“On Wednesday 24 May 2023, a report of crime was provided to the AFP relating to this matter for the first time. An investigation is underway and no further comment will be made”.

“On Wednesday 24 May 2023, a report of crime was provided to the AFP relating to this matter for the first time” – AFP

The scheme of selling the top-secret government data as “advice” to PwC clients across the globe was run by former PwC Australian tax executive PwC’s Peter-John Collins, from 2014 to 2017.

In Canberra this evening, Jordan told the Senate Economics Legislation Committee the “Collins matter” had been just one area of “significant concern” regarding PwC.

EXCLUSIVE: PwC in new $164,000 Federal Government contract, disclosed on Friday. Source: The Klaxon

“The content received from late 2017 raised a range of significant concerns about artificial schemes being marketed by PwC, a significant concern also uncovered was the Collins matter, a potential breach of confidentiality in a Treasury consultation process,” Jordan said.

“A significant concern also uncovered was the Collins matter” – ATO Commissioner Chris Jordan

“Unlike many other revenue authorities in other countries we do not have criminal investigative powers.

“As the confidentiality breach was not a tax offence, we were unable to investigate the matter further and from 2018 we sought to refer this matter to the correct authority.

“After sharing the information with the Australian Federal Police over the period 2018 and 2019 and providing a number of documents upon their request after our initial sample of the emails we had to ultimately formally refer the matter to the tax practitioners board in July 2020,” Jordan said.

Greens Senator David Shoebridge responds to the ATO’s revelations. Source: Twitter

The matter only became public after the Tax Practitioners Board on January 23 this year released a press statement on the matter, including that Collins had been banned for two years.

Since then, Labor senator Deborah O’Neill has pushed for more details, and on May 2 the Tax Practitioners Board released a 144-page cache of internal PwC Australian emails regarding the scandal.

The emails show dozens of PwC partners and staff around the world had been copied into emails regarding the Collin’s scheme.

Yet every name – except that of Collins – has been redacted from the emails.

PwC is refusing to disclose the names, despite heavy pressure, including from O’Neill, who yesterday accused the consultancy of an ongoing “cover-up”.

Greens Senator David Shoebridge, who has also been pursuing the matter, said Jordan’s statements were “damning”.

“This information in (the ATO’s) opening statement is extraordinary and damning,” Shoebridge posted to Twitter.

“Distinct sense of frustration about how hard it has been to get action on PwC until now”.

Serious concerns have been raised over a “shadow public service” of private consultants having been created in recent years.

Earlier this month the Federal Government released a bombshell audit which found that in 2021-22 — the final year of the Morrison Coalition Government – private businesses were paid a massive $20.8 billion to deliver public services.

This “shadow public service” was equivalent to almost 54,000 full-time workers, compared to the about 144,000 in the Australian Public Sector workforce.

The “Big Four” consultancies – PwC, Ernst & Young (EY), Deloitte and KPMG – are all major “donors” to both major political parties.

From NSW Police Commissioner to PwC Partner, Mike Fuller. Source: LinkedIn

The Centre for Public Integrity, an anti-corruption think tank founded by former top judges, last week released a report showing government contracts to the “Big Four” consultancies had exploded by over 400 per cent over the past decade, to $1.4bn in 2021-22.

It found the four private consultancies had “donated” $4,289,253 to the ALP and Coalition over the past decade, with those payments surging from $388,200 in 2012-13 to $520,081 in 2021-22.

“While business has boomed for the Big Four, the Australian Public Service – one of the pillars upon which our Westminster democracy depends – has been left with static staff numbers and a diminished policy capability,” the report says.

Further concerns have been raised about a “revolving door” between politicians, senior public servants and the Big Four consultancies.

In August last year, after a “35-year career working for the NSW Police Force”, former NSW Police Commissioner Mick Fuller joined PwC as “a partner in the Government Consulting Practice”.

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Anthony Klan

Editor, The Klaxon