Senator: PwC tax leak might have been used to 'influence' multinational tax system

Senator Richard Colbeck, chair of the Senate inquiry into consulting services, told Accounting Times the "inference" from the ongoing TPB investigation is that PwC wanted to influence multinational tax regulation negotiations.

The investigation suggests the PwC tax scandal was about "more than just the use of confidential data to build a business product" to help avoid paying Australian taxes, he said.

"It was actually to influence the multinational negotiations on reforming the tax system to ensure that companies pay tax in the country where they earned the revenue," Senator Colbeck said.

Since The Australian Financial Review shared that PwC Australia had been classed as a “defaulting firm” and effectively placed under the control of PwC International, lawmakers have been raising questions about accountability.

This was not simply an issue of a global body stepping in to clean up a local mess, said Senator Colbeck, "There's more to it than this."

"My view is that PwC International is trying to cauterise the pain from [the tax leaks scandal] and limit it to Australia rather than it infecting other parts of the business, globally," he said.

"I don't understand why all of the people involved in this process in Australia should wear the opprobrium and not the people who are actively involved in 'Project North America'."

Project North America involved the firm's use of confidential Australian government information in winning US-based clients.

Senator Colbeck said Parliament is "jurisdictionally limited" in dealing with PwC International, though he has shared the Inquiry's initial report with "committee counterparts in the US and UK."

"I've spoken to the secretariats of the committees in the US, and we will send some further information to them," he added.

Senator Barbara Pocock said PwC International has sought to “quarantine” the scandal to Australia.

“They are desperately trying to avoid any official inquiries into the Peter John Collins affair taking off in other jurisdictions including the US and UK,” she added.

This much is evidenced by its ongoing refusal to share the Linklaters report which local leadership has been repeatedly grilled over.

The report was held up by PwC’s global executive as proof the multinational tax leak information was not shared beyond the since-named “dirty six” international partners.

That report has yet to be released, barring a brief summary.

“The Linklaters review found that six PwC operatives located outside Australia should have raised questions about whether the information was confidential and intimates that appropriate action has been taken against those individuals,” said Senator Pocock.

“But they won’t tell us who they were and what repercussions they faced.”

By bringing the Australian firm under the control of PwC International, questions have been raised around who is to be held to account.

PwC Australia chair Justin Carroll defended the move, saying it was “entirely appropriate” that the local firm should work with the global network to “rebuild trust.”

Indeed, PwC International is a global network. Each firm is a separate legal entity, yet all agree to be bound by a set of standards and policies. The move to class PwC Australia was made subject to PwC international regulations.

However, the firm has been subjected to multiple national inquiries and senators have claimed they have a right to know who is effectively pulling the levers.

In other words, by taking control of the Australian firm, Senators are claiming PwC International has effectively made itself fair game for Parliament.

On Tuesday morning, Senator Deborah O’Neill, chair of the consulting inquiry told ABC Radio National the Parliamentary Joint Committee will consider delaying its report considering the revelations.

“What we’re finding we’re really dealing with is not PwC Australia, but rather a very amorphous international conglomerate,” she said.

“Who’s in charge, who gets a say, and who gets to manage in the interests of the Australian nation is unclear.”

Senator O’Neill added the “dark and uncertain” structure has presented a “very big problem for us Australian legislators.”

Similarly, Senator Pocock has called upon global leadership to present at the Inquiry to “explain how this intervention serves the interests of the Australian people.”

“It’s unbelievable … we find out only now that control of the local organisation has been usurped by a shadowy cabal of international players who have absolutely no accountability to anyone in Australia.”

Senator Colbeck, who chairs the concurrent inquiry, said PwC International’s refusal to share the report is “exacerbating the problems of PwC Australia and hindering any repair of reputation that they might be attempting.”