Global consultancy PriceWaterhouseCoopers (PwC) has defied a request from the Australian parliament for a copy of its investigation into a tax leak scandal that occurred in 2015. This defiance has led one senator to characterise the company’s global chairman, Bob Moritz, as “Dr. No.”
Mr. Collins had signed confidentiality agreements with the Australian government, agreeing to keep the information secret.
One PwC partner realised this could lead to accusations of insider trading with potential legal consequences, and sent an email warning colleagues not to circulate the information outside the firm, saying “it would really put PwC Australia and me in a real bind.”
Leaker Was Praised in Emails
Once the new laws were introduced in January 2016, PwC partners praised the work of Mr. Collins and the advantage his leaks gave the firm.“We were aggressive in telling these relationships they needed to act early, heavily helped by [the] accuracy of the intelligence that Peter Collins was able to supply us and our analysis of the politics,” one executive wrote in an email.
The Australian senator, Deborah O'Neill, who ordered the PwC emails be released at the subsequent parliamentary inquiry called PwC’s actions “a disgraceful breach of trust, a sickening example of a lack of integrity, and reveals a toxic culture of unprofessional practice at PwC that stretches across the globe.”
Senator O'Neill also likened PwC to a cancer, warning other governments that the advisory firm could be committing acts of “deception and betrayal” in their countries too, reported The Guardian.International law firm brought in
PwC hired Linklaters—a British multinational law firm headquartered in London—to investigate the incident and provide a report. That has now been completed.But Mr. Moritz has denied the Australian parliament a copy of the report, citing legal professional privilege; instead, it prepared its own document assuring Australian senators and regulators that the Linklaters investigation was thorough and independent.
That’s unlikely to be enough for the Australian politicians who have strongly criticised the firm, nor for government departments that believe it should be shared. PwC told a Senate inquiry into the consultancy industry that the investigation spanned multiple jurisdictions and included forensic searches for documents as well as interviews. “Linklaters [then] analysed the evidence across territories, made additional inquiries where necessary and provided legal advice to PwC International,” it said.
Contradictory Explanations
In September last year, PwC International issued a statement on the Linklaters report. It admitted that six employees who received confidential Australian government information “should have raised questions as to whether the information was confidential.”But it told parliament that those employees “did not have reason to believe that the information should not have been shared with them.”
“Many of the recipients of emails relating to the initiative were international tax practitioners who routinely received updates on OECD developments at the time. It is not surprising, therefore, that the receipt of OECD updates by tax professionals outside Australia ... did not raise alarm among recipients or cause them to conclude a breach of confidentiality had occurred ... While these individuals may have fallen short of PwC’s high expectations that its people raise their hands in such a situation, this is not the same as having breached professional standards.”
Nor can the Australian Tax Office, despite its broad powers, compel PwC to produce the Linklaters’ report. ATO second commissioner, Jeremy Hirschhorn, told the Senate inquiry in February that “[i]t’s fair to say that it would be hard for PwC International or PwC Australia to argue that they are unaware of the interest of the Australian people in that document.
Senators Continue Investigation
Senator O’Neill said PwC International’s refusal to share the report was “deeply disappointing.”
“If the involvement by international partners in this scandal is minimal, then there would seem to be little justification for hiding behind legal privilege,” she pointed out.
Greens senator Barbara Pocock said Mr. Moritz’s refusal “flies in the face of PwC’s claims to good governance. Bob Moritz is happy to take unilateral control of the Australian firm, yet he refuses to cooperate with Australian authorities investigating how the leaked information was used.”“He is behaving like Dr. No in the James Bond movies, coordinating a shadowy global network of power from an island hideout somewhere in the North Atlantic, accountable to no one and manipulating his puppets around the globe,” she said.
Liberal senator Richard Colbeck, now the inquiry chairman, said PwC global was withholding the Linklaters report to prevent the tax leaks matter from being investigated by overseas authorities.
The inquiry now intends to call PwC International executives before Parliament to personally explain why the company is withholding the report. The Senate can compel individuals living in Australia to attend hearings but has no power over those based outside the country.