‘Dr. No’ Refuses to Give PwC Report to Senate Inquiry

The global consulting firm is claiming legal professional privilege, and hasn’t even allowed its Australian operation to review the report into insider trading.
‘Dr. No’ Refuses to Give PwC Report to Senate Inquiry
PWC Global Chair, Bob Moritz speaks during the "The Global Economy and the State of the World" conversation at the Asia-Pacific Economic Cooperation (APEC) Leaders' Week in San Francisco, California, on November 15, 2023. The APEC Summit takes place through November 17. (Photo by ANDREW CABALLERO-REYNOLDS / AFP) Photo by ANDREW CABALLERO-REYNOLDS/AFP via Getty Images
Updated:
0:00

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.”

At the time, PwC adviser Peter Collins was helping the Australian government design tougher multinational tax laws, while at the same time using the information he gained through the work to email secret information to colleagues, who would later use it to help clients in Australia and the United States avoid tax, and make millions of dollars for themselves.

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.”

PwC partners had no such qualms, however, and formed a “global team” to consider how it could be used for commercial gain around the world, but particularly in the United States.

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.

Helping U.S. clients prepare for the changes brought in about $2.5 million (US$1.632 million) in revenue. The project involved PwC staff in Singapore, the Netherlands, the U.S., and the UK.

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.
While Treasurer Jim Chalmers said he was “absolutely furious” and would “throw the book” at those responsible for “a shocking breach of trust,” 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.

Australian Senator Deborah O'Neill (supplied https://senatoroneill.com.au/)
Australian Senator Deborah O'Neill supplied https://senatoroneill.com.au/

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.

Parliament isn’t the only body denied access; PwC has still not provided a copy of the report to its Australian arm, despite repeated requests to do so from its chief executive, Kevin Burrowes.

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.

“We have not been provided with a copy of the Linklaters report. It would be preferable, in the spirit of true cooperation, if that document was provided to this committee.”

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.”
Greens Senator Barbara Pocock and Greens leader Adam Bandt arrive at a press conference at Parliament House in Canberra, Wednesday, November 9, 2022. (AAP Image/Mick Tsikas)
Greens Senator Barbara Pocock and Greens leader Adam Bandt arrive at a press conference at Parliament House in Canberra, Wednesday, November 9, 2022. AAP Image/Mick Tsikas

“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.

Rex Widerstrom
Rex Widerstrom
Author
Rex Widerstrom is a New Zealand-based reporter with over 40 years of experience in media, including radio and print. He is currently a presenter for Hutt Radio.