How the PwC tax scandal started

Here’s everything you need to know about what happened, who did what and how the fallout will impact the business and those involved.

PricewaterhouseCoopers is a global multinational providing professional services such as auditing, accounting, taxation and strategy management. They conduct work for governments and some of the biggest businesses on the planet.

Viewed as one of the “Big Four” accounting firms, PwC Australia employs 10,000 Australians and around 900 partners.

So what is this tax scandal all about?

In 2015, PwC Australia’s international tax chief Peter Collins was working with the Treasury, consulting the government with its tough new multinational tax laws.

Despite signing confidentiality agreements, Collins is alleged to have leaked secret information to PwC colleagues so they could help prepare clients for what was coming.

What was the secret tax information?

The Treasury was working on a proposed law designed to mitigate, and crackdown on, multinational corporate tax avoidance.

The Multinational Anti Avoidance Law was set to come into effect in January 2016 and would cover multinationals operating in Australia with global revenues above $1 billion, of which it was estimated there were around 1000 businesses.

“With the introduction of this legislation, we are sending a clear message that Australia has no tolerance for tax avoiders. If you are avoiding tax, the Australian Taxation Office will catch you,” then-Treasurer Joe Hockey said at the time.

What did PwC do with that information?

Knowing in advance the inner-workings of that law, information was disseminated internally in an email to around 50 people with a view to helping PwC clients.

But, given the determination from some politicians to remove that name protection, that could change – a move so far successfully resisted by PwC.

Some PwC employees in other international jurisdictions, including the US, UK, Singapore, Ireland and Europe, also had access to the Treasury information.

It is not known if international partners used that knowledge inappropriately in client interactions.

What do we know about PwC clients who benefited?

Those tech firms did not know the tax information had been obtained unethically or in a potentially unlawful manner.

Hockey’s announcement should have been the first time anyone outside the Treasury’s guarded inner-circle knew about the incoming change.

Did PwC make money from this information?

Read Related Also: Residents feel ripped off after council asphalts road around parked cars

So far, it’s believed PwC earned about $2.5 million.

What happened to Peter Collins?

The PwC board has banned Collins from acting as a tax practitioner until next year, but things could get worse for him.

The matter has been referred to the Australian Federal Police and Collins faces the prospect of criminal charges.

Have heads rolled at PwC?

Since the scandal went public, chief executive Tom Seymour has quit.

Seymour departed after confirming he’d been included in emails containing the confidential tax information.

On May 29, nine unidentified partners have been ordered to take leave, pending the outcome of an internal investigation.

Former Telstra CEO Ziggy Switkowski is leading a review into the scandal.

His report and recommendations will be completed by September, and PwC will release the full findings – something it initially did not want to do.

It had intended to only release a summary of key findings, but soon changed tack after growing political and media pressure.

Labor senator Deborah O’Neill, a key figure in revealing the leak, has been critical of the review, arguing it should be fully independent of PwC and not an internal exercise.

Will there be an impact on PwC globally?

With other global offices linked by email to the crisis in Australia, PwC Global has appointed international law firm Linklaters to carry out a transnational investigation.

The Linklaters probe will be separate to the Switkowski report.

And the impact on PwC Australia?

The government has effectively shadow banned PwC from picking up any new contracts, and from a reputation perspective this is as bad as it gets.

PwC wins work, often highly sensitive corporate contracts, because of its supposed trustworthiness and ethics.

This is a snowballing nightmare for the company.