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SYDNEY, May 29 2009 (Reuters) – PricewaterhouseCoopers (PwC) Australia on Monday ordered nine partners to take leave and revamped its board of directors, as it grapples with a national scandal over the abuse of secret government tax schemes.
A former tax partner of a “Big Four” firm is said to have consulted on new anti-tax avoidance laws after sharing confidential drafts with colleagues to boost the business.
In an open letter, acting chief executive Christine Stubbins said she wanted to apologize on behalf of the firm for “sharing confidential government tax policy information” and that nine partners had been put on leave.
“We know enough about what went wrong to admit that this situation is completely unacceptable. No amount of words can fix it,” she said.
The Australian Treasury last week referred the matter to police for a criminal investigation. PwC agrees to withdraw from government work.
Ahead of parliamentary hearings expected to focus on the scandal this week, the firm said the chairman of its board of directors and the head of its risk committee would step down and two independent directors would join the board.
The firm has announced plans to divest its lucrative government contracting business from other parts of the company as it tries to fend off calls for a blanket ban on government contracts. The business will have a separate board.
“Now that we are aware of the privacy breach and related issues, it is clear that we failed to conduct an appropriate root cause investigation,” Stubbins said in a statement.
“This was the result of a failure of leadership and management.”
At the heart of the problem was a partner at PwC Tax who shared confidential information with colleagues when he was advising the government on new rules to curb tax cuts.
In the year Hundreds of partially redacted emails between dozens of PwC employees between 2014 and 2017 reveal how secretive a draft of the new rules, introduced in parliament this month, would be for dealing with US tech companies and others.
Prime Minister Anthony Albanese was asked on Monday whether to release the names of those who should have access to classified information, and called for more transparency pending a police investigation.
“I think all this should be made public at the appropriate time… but what was done there is absolutely unacceptable,” he said.
PwC said on Monday it had received confidential information from employees in Australia and overseas, but would not name all employees involved in the emails because most were not knowingly involved in any breach of confidentiality.
No client was involved in any wrongdoing and no confidential information was used to help clients pay less tax, the firm said.
In her letter, Stubbins said leaders failed to recognize a culture of “aggressive marketing” in the tax business, putting profit over purpose.
Reporting by Louis Jackson; Editing by Christopher Cushing and Sonali Paul
Our Standards: The Thomson Reuters Trust Principles.
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