PwC partners step up calls for reform and leadership purge

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An anonymous group of PwC Australia partners has stepped up calls for radical reforms at the firm and raised doubts about the independence of the internal investigations designed to identify those directly involved in the tax scandal.

The group, who call themselves “the Committee to Restore Trust in PwC through Transparency and Accountability”, said the primary beneficiaries of the scandal have “derived substantial financial, social and reputational” benefits from their association with PwC, while the newer, and less senior, partners, bear the brunt of the scandal.

PwC partners are rebelling against acting CEO Kirstin Stubbins’ plans to rescue the firm, saying they don’t go far enough. Credit: Sydney Morning Herald

PwC has been embroiled in a crisis after it emerged that a number of senior partners at the firm had used confidential government advice to drum up work from multinational companies and help them pay less tax.

The scandal has forced the firm to issue a public apology and stand down nine partners pending the results of its investigation, however, the group has questioned the independence of the examinations being conducted by two law firms on behalf of PwC.

“We hold a strong conviction that the law firms may have previously maintained a relationship with our firm’s General Counsel and Office of the General Counsel, making it exceedingly challenging to scrutinise the involvement of these entities, which, in our view, should bear significant responsibility,” the group said in a letter to senior leadership on Wednesday.

“We firmly believe that the emphasis placed on those mentioned in the emails has overshadowed the accountability of those who were tasked with running the firm,” it said in an address to senior partner, Tony O’Malley.

O’Malley – PwC’s global legal business solutions leader – was parachuted into the role of chief risk and ethics leader for PwC Australia after the scandal broke in May. That was when Senate estimates released a document detailing the extent to which some PwC tax partners marketed confidential government plans to companies targeted by planned tax laws.

The group’s latest riposte was in response to assurances made by O’Malley about the way in which the internal investigations were being conducted.

In the original letter sent by the group on Monday, and first reported in The Guardian, the partners addressed their concerns to senior PwC managers including global chairman Robert Moritz and US chairman Tim Ryan.

PwC declined to comment about the group, which has been contacting the media – including this publication – and politicians about the scandal, under the condition of anonymity due to fears of repercussions from the firm.

The group of partners said that two former PwC chief executives – Tom Seymour, who is retiring from the firm, and Luke Sayers, who now runs his own consulting group and is president of the Carlton Football Club – should be held accountable for the scandal.

Sayers’ associates say he had no knowledge of the scandal.

Seymour stood down as chief executive in May and was replaced by Kristin Stubbins, who is now being replaced by Singapore-based Kevin Burrowes after the global firm effectively took over the troubled local operations last week.

Stubbins told a NSW parliament inquiry on Monday that the firm will soon complete the investigation by the two law firms looking into the scandal.

Former PwC Australia CEO Tom Seymour.Credit: Michael Quelch

“We have been doing a very, very thorough investigation involving help from two external law firms. And so we will expect to announce consequences, you will see that publicly, and they will be severe,” she said in her first public appearance since taking the top job last month.

However, the group of PwC partners said more radical reforms are needed to save PwC. The group said in their letter on Monday that senior staff who have presided over the scandal should be fired and forfeit lucrative retirement payments.

They are also pushing the firm to install an independent board, remove all current partners from external company boards, and not do business with clients that have former PwC staff on their boards. They also want PwC to explore selling off, or dissolving its tax business.

So far, PwC has revealed the names of four partners mentioned in the cache of emails sharing the confidential information on government plans to combat tax avoidance.

PwC announced plans on Sunday to offload its entire government business to a private equity group Allegro, after its plans to ringfence the business as part of a plan to avoid conflicts with its private sector business proved inadequate.

This week, the Department of Health and Aged Care confirmed that they have suspended a contract with PwC while it allays concerns about potential conflicts. It is the first time that a government department has suspended current work with PwC, as opposed to freezing the firm out of future contracts.

“PwC was conducting an audit of the aged care workforce bonus grant … The audit was suspended in early June 2023, to obtain additional information and assurances from PwC,” said a spokesman for the department.

“The grant program itself did not involve PwC and was already complete, so workers are not affected.”

In a sign of just how financially damaging the scandal has already become, PwC told its partners this week that it is forecasting that their income pool will drop by roughly 20 per cent for the 2024 financial year starting July 1.

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