PricewaterhouseCoopers (PwC) Australia told nine partners to go on leave and changed its governance board on Monday. This is because the company is dealing with a national scandal over the misuse of confidential government tax plans. The “big four” firm is in a lot of trouble because a former tax partner who was working on new laws to stop people from avoiding taxes gave confidential drafts to colleagues, who then used them to get more business.
Kristin Stubbins, the firm’s acting chief executive, said in an open letter that the company was sorry for “sharing confidential government tax policy information” and that nine partners had been told to take time off. “We know enough about what went wrong to agree that this was a terrible situation. “No matter what I say, it can’t be fixed,” she said. Last week, the Australian Treasury asked the police to look into the matter as a possible crime. A day later, PwC agreed that any employees who were involved would stop working for the government.
Before this week’s hearings in parliament, which are likely to be about the scandal, the company said that the chair of its Governance Board and the head of its risk committee will also leave, and that two independent directors will join the board.
The company also said it would separate its lucrative government contracting business from the rest of the company. This is to stop people from calling for a complete ban on government contracts. There will be a separate board for the business. “It is now clear that when we found out about the breach of confidentiality and other problems, we didn’t do a proper investigation into the root cause,” Stubbins said in the statement.
“That happened because the people in charge didn’t do their jobs well.” At the heart of the problem is the fact that a tax partner at PwC at the time shared private information with colleagues while advising the government on new rules to stop multinational companies from avoiding paying taxes.
This month, hundreds of partially redacted emails between dozens of unnamed PwC employees from 2014 to 2017 were shown in parliament. These emails showed how confidential drafts of the new rules were used, among other things, to get work with U.S. tech companies. When asked on Monday if the company should release the names of the people who had access to private information, Prime Minister Anthony Albanese called for more openness while the police investigation is going on.
“I think this should all be made public at the right time… But it’s clear that what happened there is not okay at all,” he said. Monday, PwC said that staff in Australia and other countries had received confidential information. However, the company said it would not release the names of all staff members whose names were in the emails because the vast majority of them were not aware of any breach of confidentiality.
The firm said that none of its clients had done anything wrong, and no secret information had been used to help clients pay less tax.
In her letter, Stubbins said that leaders in the tax business failed to find and stop a culture of “aggressive marketing” that put making money ahead of doing good.
