Embattled consulting firm PwC Australia has named and booted eight senior partners linked to the use of confidential Treasury briefings.
Key points:
- PwC Australia’s internal investigation found a “failure of leadership” led to the scandal
- Former CEO Tom Seymour was ousted alongside seven others, including the former risk officer
- There are ongoing federal criminal investigations into the scandal
The scandal involved a senior partner using secret information about government plans to tax multinational companies, working out a way to get around them and selling the plan to those companies, making millions of dollars in fees.
But the fallout has been severe. Last week the firm revealed it would sell off the part of the business that deals with state and federal government contracts to a private equity firm for $1.
With the federal government — the firm’s biggest client — furious about the double-dealing, it was unlikely to land more of the contracts that have seen it net more than $500 million in fees in just the past two years.
Internal investigation finds ‘failure of leadership’
The action comes as PwC Australia concludes an internal investigation into what it calls the “handling of confidential Treasury information and past failures in professional, ethical or leadership responsibilities”.
The assessment of former management, in a media release from the firm, is scathing.
“The investigation identified a failure of leadership and governance to adequately address the matters, either at the time or whilst the matters were under investigation by the Tax Practitioners Board or Australian Taxation Office,” it says.
“This enabled poor behaviours to persist with no accountability.”
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Former chief executive Tom Seymour had already already stood down, but is named with seven others who are leaving the firm including the former chief risk officer Sean Gregory.
Seymour was set to leave in September. The release notes “Tom Seymour’s recommended exit is earlier than his previously announced retirement date”.
Dozens more names involved
Also going, Peter Konidaris and tax partner Eddy Moussa whose actions “failed to meet their professional responsibilities”. Richard Gregg has been given notice of of the findings against him and a process has started to remove him from the partnership.
Unlike most businesses, the consulting firms are partnerships that share in the revenue of the company and vote on key decisions. Even partners that have retired can enjoy a solid income due to their generous pension scheme.
Some of the partners have left the partnership. For others, a process has begun to remove them from the partnership agreement.
There are around 50 more names, noted in emails released by the Senate, who had contact with the confidential information but may not have known how it was obtained.
‘Extraordinary circumstances’ of scandal aftermath
Columnist and author Tom Ravlic, who has followed the fortunes of the firms for decades says it’s a substantial announcement.
“Partnerships such as PwC will exit partners from time to time but with no public fanfare. They understandably tend to keep these issues within the closed environment of the firm, and as such we don’t get to see when and how they clean house in less controversial times.”
“These are extraordinary circumstances, however, in which an accounting practice is having to not only hold their people — many of them having held senior leadership roles within the firm — accountable but also to perform this disciplinary process in the full glare of political and media attention.”
More investigations still pending
The release from the company implies that its internal investigations — and the likelihood of any more bootings over the scandal — have ended.
“Whilst further work in some areas remains ongoing, these conclusions are an important milestone. The firm is fully committed to working cooperatively with all relevant regulatory bodies,” it says.
PwC Australia will need that commitment.
There are ongoing criminal investigations by the Australian Federal Police into former senior tax partner Peter-John Collins, the Senate and state bodies continue to grill the firm and agencies about potential conflicts of interest and the whole scandal has been referred to the brand-new National Anti-Corruption Commission.