Under-fire consulting firm PwC has ordered nine of its partners to take leave with immediate effect, as it deals with the cascading fallout from a tax leak scandal.
The controversy was sparked by the discovery that PwC’s international tax chief Peter Collins had been leaking confidential information about changes to federal tax laws to partners, staff and clients that would be impacted by them.
PwC, which employs 10,000 Australians and around 900 partners, has been rocked by the controversy, with faith in the firm’s trustworthiness and ethics seriously dented.
The government, who are PwC’s biggest and most lucrative client, are furious and have essentially shadow-banned the company from winning any new contracts.
In an open letter penned by acting chief executive Kristin Stubbins, she apologised for the “completely unacceptable” act of sharing confidential government tax policy information and “for betraying the trust placed in us”.
“Although investigations are still underway, we know enough about what went wrong to acknowledge that this situation was completely unacceptable,” she wrote.
“No amount of words can make it right.”
For years, the leaked information from Collins allowed PwC to reverse-engineer tax advice to clients, earning them millions of dollars.
The company is refusing to name which nine partners had been put on leave.
Stubbins said the company had failed in three ways.
There was a clear lack of respect for confidentiality, the company did not have adequate processes and governance in place and, she said, the culture in its tax business at that time “allowed inappropriate behaviour” and “has not, until now, always properly held our leaders and those involved to account”.
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Stubbins said the company will now ring-fence its government advisory business to minimise conflicts of interest.
She described “a culture of aggressive marketing in our tax business” at the time of the Collins leaks.
“Over a period, this aggressive behavior and drive for growth permeated certain parts of our leadership and allowed for profit to be placed over purpose,” Stubbins wrote.
The company’s governance process “failed to identify and keep this in check”.
On top of the nine partners forced on leave, the chairs of the governance board and its designated risk committee have also stepped down.
Two independent, non-executive directors will be appointed to its governance board.
The company will also publish a report in full, including its recommendations, when an independent review concludes in September.
Earlier this month chief executive Tom Seymour stepped down after confirming he was linked to the tax leak scandal, leading to Stubbins’ elevation.
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