PwC is racing to contain the global fallout of an Australian leak scandal on its business after it emerged that the firm used confidential government tax plans to advise tech clients.
Emails released by an Australian senate committee last week showed that PwC had used information received during its work with the government to win business by advising corporate clients on new anti-tax-avoidance rules. Australian politicians have called for the partners who received the emails, as well as the clients that benefited from the information, to be named.
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The Big Four firm has flown some of its top global executives to Sydney as it attempts to prevent the scandal from spiralling into a global crisis. The team includes global general counsel Diana Weiss and global head of tax Carol Stubbings, according to a person close to the firm with knowledge of the details.
The firm is also preparing to contact the affected clients given the likelihood that their names could be released in the coming weeks.
The potential “spillover effect” on PwC’s reputation internationally was “slightly terrifying” for the firm, the person said. The firm has placed the concept of “trust” at the heart of its image since a 2021 rebrand.
Deborah O’Neill, the Australian senator who triggered the publication of the emails, told the Financial Times that PwC’s internal messages had shown a “moral and ethical failure”.
“This is not a couple of bad apples. It is a widespread cultural problem and has reached far beyond Australia,” she said. “It is clear this is an issue with global implications.”
The Labor senator said she would continue to push for the release of the list of clients and PwC partners involved in sharing the confidential information.
PwC’s global leaders are trying to understand the full extent of the involvement of partners outside Australia and whether there was a wider cultural problem at the firm, two people familiar with the situation also said.
Global chair Bob Moritz said the firm would support partners whose clients were affected, according to an internal note seen by the Financial Times.
The version of the internal emails published last week redacted the identities of the clients discussed, as well as the names of PwC staff and partners sending and receiving the information, which included people in the firm’s US, UK and Irish businesses. There is no suggestion the corporate clients have broken the law.
The published emails, sent between 2014 and 2017, detail millions of dollars of business won by targeting the US tech sector and include references to companies based in San Francisco.
One refers to assistance given to 14 companies, including “some ‘brand-defining’ clients”. Another email chain refers to a “US tech company project” and mentions a meeting with a client’s tax team in Seattle.
PwC’s Australia chief executive Tom Seymour stepped down on Monday after admitting he had been copied on emails “about the marketing strategy and financial success of the tax advice”. He said he had not known that the tax advice PwC had tailored was based on confidential government information provided by one of its consultants.
PwC Australia’s financial advisory managing partner Pete Calleja and chief strategy, risk and reputation officer Sean Gregory also stepped down from their leadership roles this week.
Law firm Linklaters has been hired to carry out the international portion of a PwC review into the scandal, said people familiar with the matter. The Australian business is carrying out a separate review.
In January, Peter-John Collins, the partner in Australia who shared the confidential information was banned from practising as a tax agent for two years.
PwC Global said: “PwC’s leadership has taken swift action in response to the email disclosures in Australia – with new leadership, initiating independently-supervised reviews of the events and re-emphasising that the unauthorised sharing of and/or utilisation of confidential information is unacceptable and goes against our culture, values and professional standards. We will continue to take all appropriate steps to deal with this thoroughly and effectively.” – Copyright The Financial Times Limited 2023
