PwC Australia overhauls governance board following the tax leak scandal

Nine PricewaterhouseCoopers (PwC) Australia governance board members were ordered to take leave as the company seeks to overhaul the entire board. The move comes following a national scandal that occurred after the misuse of confidential government tax plans came to light, severely affecting the company’s reputation.

The company is reeling following a former tax partner consulting involving the new anti-tax-avoidance laws, which resulted in sharing of confidential drafts with colleagues. Once in their possession, the drafts were used for drumming up business.

The company is taking steps to overhaul the governance board

The company’s CEO, Kristin Stubbins, published an open letter following the incident, publicly apologizing on behalf of the company she runs. The apology for sharing confidential government tax policy information was followed by the announcement that nine partners were instructed to take leave.

Stubbins said, “We know enough about what went wrong to acknowledge that this situation was completely unacceptable. No amount of words can make it right.”

The matter was brought to the attention of Australian police by the country’s Treasury last week. Following the scandal, PwC agreed to stop implicated staff from engaging in government work. Now, the company is waiting for the parliamentary hearings, which will take place later this week.

In the meantime, the company said that the Governance Board’s chair and its head of risk committee will step down. Meanwhile, two independent directors will join the board and help in getting the company back on track.

Apart from that, the company said that it already has plans to ring-fence its government contracting business from other parts of the company. Its main goal is to head off calls for a total ban on government contracts. The business will also have a new, separate board as part of its strategy.

Stubbins further noted that it has become clear that the company failed to conduct an appropriate root cause investigation after learning of the confidentiality breach. This was the result of a failure of the firm’s leadership and governance.

Who was involved?

The company stated that the heart of the problem lies in a former partner on tax at PwC, who shared classified information with colleagues while also advising the government on new rules for cracking down on tax minimization by multinational firms. There are dozens of partially redacted emails shared between dozens of the firm’s staff members.

All of this occurred between 2014 and 2017 and was presented in parliament earlier this month. It revealed that confidential drafts were used to win work with US-based tech firms and other companies.

The country’s PM Anthony Albanese was asked earlier today whether the firm should release the names of those with access to confidential information. He responded by calling for more transparency, pending the police investigation of the matter.

Albanese noted that all of the details should be public but at the appropriate time. PwC, on the other hand, said that it would not release the names of staff members involved in the controversy since the majority of them were not knowingly involved in any confidentiality breach.

Releasing such information could reflect negatively on employees who did not intend to be involved at all.