PwC’s Australian tax leak scandal spreads to the UK

PWC’s London headquarters are deeply involved in a tax-leak scandal that began in Sydney following the launch of an investigation by Australian police.

Dozens of partners around the world have been entangled in a brutal scheme that seemingly exploited confidential Australian government briefings to help US tech companies evade tax.

Their names have been erased from a cache of heavily redacted emails, but they include employees from the British accounting giant’s London, New York and Dublin offices.

PwC is now under increasing pressure to reveal their identities as the scandal has sparked national outrage in Australia and threatens to engulf its global operations.

A senator told the Mail it has “global implications” for PwC, as it was clearly not just a “few bad apples in Sydney.”

The Treasury Department has asked the Australian Federal Police to investigate PwC, including its former senior partner in Sydney, Peter-John Collins.

In another blow, PwC has ordered staff to be fired who learned of the leaks from working on existing government and future contracts, pending the results of a separate investigation.

Appearing before the Senate yesterday, Treasury Secretary Jenny Wilkinson described the debacle as an “abuse of trust” and said she had “serious concerns about the broader culture within the company.”

The scandal has even led bosses at rival KPMG, which has also sparked much controversy, to tell staff in an email that they “could no longer stand by and watch our profession be tarnished by the unethical actions of a few.”

Collins advised the Treasury on measures to combat international tax avoidance. As head of the international tax office, he is accused of leaking briefings from officials to at least 53 PwC colleagues over several years.

This information was then used to do business with US tech giants and help them get around the new laws as part of an initiative codenamed Project North America.

The ruse saved companies millions of dollars in tax while netting PwC at least $2.5m (£1.3m) in fees in 2016 alone.

Dr. Jim Chalmers, Australia’s treasurer, has labeled PwC’s behavior as ‘inexcusable’ and a ‘appalling breach of trust’.

This week he said “further steps” will be taken, amid calls to launch a criminal investigation.

The scandal came to light in January when it came to light that Collins was banned from practicing for two years by the Australian Board of Tax Advisers for leaking confidential information from PwC’s largest client in Australia – the federal government.

Since then, the story has gained momentum and made it from the corporate headlines to the front pages – even last week in a special report on Triple J, the Australian Broadcasting Corporation’s flagship youth program.

Earlier this month, several senior executives from the UK and US flew to Australia in a desperate attempt to contain the crisis.

Among them was Carol Stubbings, head of PwC’s global legal and tax operation in London. But their task has been complicated by the police investigation and the recent publication of 148 pages of damning emails between Collins and PwC colleagues around the world.

The names of the persons, except for Collins himself, have all been blacked out.

They include the addresses of PwC’s global headquarters in London, as well as New York, Singapore and Dublin.

Some emails begin with phrases like “for your eyes only,” making it clear that the information is classified.

In one, a PwC employee describes the information as “Great for our MAAL defense work,” referring to the multinational anti-abuse law introduced in the 2015 budget.

One of the partners involved in the exchange of emails was Tom Seymour, the CEO of PwC Australia, who ran the company’s tax operation. He took early retirement, but insisted he did not know the information was confidential.

Only two other Australian board members – the head of the financial advisory division and the chief reputation and risk officer – have stepped down, but remain partners.

Labor Senator Deborah O’Neill, who forced the tax regulator to hand over the emails it discovered, is now leading the push to name all those involved.

“The emails document not only Collins’ construction of the plan, but also his colleagues’ celebration of the plan at PwC,” she said.

“The partners weren’t just a few bad apples in the Sydney office. They included international participants from PwC Global around the world, including the United Kingdom, the United States, the Netherlands, Singapore and Ireland. So this has global implications.

“We are talking about an undeniable scheme of theft and deceit designed to harm the Australian people and give Pricewaterhouse Coopers a profit.”

The senator said she would also push for the identities of the US tech companies targeted by PwC.

During a 2015 Senate tax evasion inquiry, senior executives of US technology companies testified that their companies did not engage in aggressive tax schemes in Australia.

A month later, PwC Australia allegedly contacted a number of US technology companies.

Just hours after former Australian treasurer Joe Hockey announced the MAAL in the 2015 budget, PwC told them it had developed a plan to circumvent the crackdown.

An investigation into the scandal was announced last week by PwC, led by former telecom giant Telstra boss Dr. Ziggy Switkowski.

PwC’s US and UK operations have confirmed they will work together.

However, the study will not report until September.

Even then, the company has only committed to publishing a summary of the findings.

O’Neill and fellow senators have described this as part of a “cover-up” and have dismissed the review’s credibility.

The Australian government has been urged to boycott PwC, which has won nearly £300 million in federal government contracts over the past two years.

PwC has said it “will not hesitate” to take measures recommended by the review it commissioned, including “removing even more people and partners from the company.”

Kristin Stubbins, PwC Australia’s interim CEO, has said the company is ‘determined to learn from our mistakes’.