PWC’s London headquarters has been dragged deeper into a tax leaks scandal that began in Sydney, following the launch of an investigation by Australian police.
Dozens of partners around the world have been caught up in a brazen scheme in which confidential briefings from the Australian government were seemingly exploited to help US tech companies avoid tax.
Their names are blanked out in a cache of heavily redacted emails but they include employees from the British accounting giant’s offices in London, New York and Dublin.
PwC is now under growing pressure to reveal their identities, as the scandal has sparked a national outcry in Australia and threatens to engulf its global operations.
One senator told the Mail it has ‘global implications’ for PwC as it was clearly not just a ‘few bad apples in Sydney’.
‘Global implications’: PWC has been caught up in a scandal which saw confidential briefings from the Australian government exploited to help US tech firms dodge tax
The Treasury has asked the Australian Federal Police to investigate PwC, including its former Sydney-based senior partner Peter-John Collins.
In another blow, it has ordered PwC to stand down staff who knew about the leaks from working on existing government and future contracts, pending the results of a separate inquiry.
Appearing before the senate yesterday, Department of Finance secretary Jenny Wilkinson described the debacle as an ‘abuse of confidence and trust’, saying she had ‘serious concerns about the broader culture within the firm’.
The scandal has even prompted bosses at rival KPMG, which has also attracted its fair share of controversy, to tell staff in an email that they could ‘no longer sit 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 the head of international tax, he is accused of leaking briefings from officials to at least 53 PwC colleagues over several years.
This information was then used to drum up business with US tech behemoths and help them sidestep the new laws as part of an initiative codenamed Project North America.
The ruse saved companies millions of dollars in tax, while generating at least $2.5million (£1.3million) in fees in 2016 alone for PwC.
Dr Jim Chalmers, the Treasurer of Australia, has branded PwC’s behaviour as ‘inexcusable’ and an ‘appalling breach of trust’.
This week he said ‘further steps’ will be taken, amid calls to launch a criminal investigation.
The scandal surfaced in January when it emerged that Collins had been banned by Australia’s tax practitioner’s board from practising for two years for leaking confidential information from PwC’s biggest client in Australia – the federal government.
Under investigation: former Sydney-based senior partner Peter-John Collin
Since then, the story has gathered momentum, gravitating from the business sections to the front pages – even featuring in a special report on the Australian Broadcasting Corporation’s flagship youth radio station Triple J last week.
Earlier this month, several senior executives from the UK and the US flew to Australia in a desperate attempt to contain the crisis.
They included London-based head of PwC’s global legal and tax operation Carol Stubbings. But their task has been made more difficult with the police investigation and the recent publication of 148 pages of damning emails sent between Collins and PwC colleagues around the world.
The names of the individuals, bar Collins himself, are all blacked out.
They include the addresses of PwC’s global headquarters in London, as well as New York, Singapore, and Dublin.
Some of the emails begin with phrases such as ‘for your eyes only’, making it clear the information is classified.
In one of them, a PwC employee describes the information as ‘Awesome for our MAAL defence work’, referring to the Multinational Anti-Avoidance Law, introduced in the 2015 budget.
One of the partners included in the exchange of emails was Tom Seymour, the chief executive of PwC Australia, who led the company’s tax operation. He has taken early retirement, but insisted that he did not know that the information was confidential.
Just two other Australian board members – the head of its financial advisory division and its chief reputation and risk officer – have stepped down but remain partners.
Labour senator Deborah O’Neill, who forced the tax regulator to hand over the emails that it uncovered, is now leading the push to name all the individuals involved.
‘The emails not only document Collins’ construction of the scheme but the celebration of the scheme by his co-workers in PwC,’ she said.
‘The partners were not just a couple of bad apples in the Sydney office. They included international participants from PwC Global all around the world, including the United Kingdom, the United States, the Netherlands, Singapore and Ireland. So this has global implications.
‘We are talking here about an undeniable scheme of theft and deception, designed to cost the Australian people and profit Pricewaterhouse Coopers.’
The senator said she would also be pushing for the identities of the US tech companies targeted by PwC.
During a senate inquiry into tax avoidance in 2015, senior executives from US tech companies testified that their companies did not engage in aggressive tax schemes in Australia.
A month later, a number of US tech firms were alleged to have been contacted by PwC Australia.
Just a few hours after former Australian Treasurer Joe Hockey announced the MAAL in the 2015 budget, PwC told them it had developed a plan to get around the crackdown.
An inquiry into the scandal was announced last week by PwC, headed by the former boss of telecoms giant Telstra Dr Ziggy Switkowski.
PwC’s US and UK operations have confirmed that they will co-operate.
However, the inquiry will not report back until September.
Even then, the firm has only committed to publish a summary of the findings.
O’Neill and fellow senators have described this as part a ‘cover-up’ and dismissed the credibility of the review.
The Australian government has been urged to boycott PwC, which has secured almost £300million in federal government contracts during the past two years.
PwC has said it will ‘not hesitate’ to take actions recommended by the review it commissioned, including ‘exiting further people and partners from the firm’.
Kristin Stubbins, who is the interim chief executive of PwC Australia, has said that the company is ‘committed to learning from our mistakes’.
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