PwC staff implicated in Australian tax leak told to step back from government work

The Australian government said on Thursday that all staff implicated by accountancy firm PwC in a tax leak scandal should step back from government work.

The call came a day after it had referred the affair — in which a PwC Australia partner allegedly shared confidential Treasury information about tax laws with his colleagues — to the federal police, sending shockwaves through the consulting industry.

The effect was evident when Big Four rival KPMG issued a warning to staff on Thursday that the PwC scandal had “tarnished” the profession and stressed that its consultants needed to work “lawfully, ethically and in the public interest”.

The Australian government, PwC Australia’s largest customer, has not banned it from public contracts, but it has implemented what one politician called a “shadow ban” by asking staff implicated in the scandal to step back from public sector contracts. Senators were also told by officials on Thursday that the “ethical behaviour of a supplier” would be factored into any new contracts being awarded.

Andrew Jaggers, finance deputy secretary, told a Senate inquiry that a request for PwC staff to step back from government work extended beyond the list of 53 staff that were included in emails released by the Senate this month. They showed PwC partners within Australia and internationally discussing the benefit the Treasury information provided in winning new business.

Jaggers said the request applied to anyone who was aware of the leaks or handled the fallout of the scandal.

However, the government has not requested PwC divulge the names of those implicated in the scandal beyond the handful who have been publicly named, arguing it could prejudice any criminal investigations.

Senators pressed ministers on how PwC could be trusted to act in good faith and comply with the requests to step back, given that a full list of partners that should not be working on public sector contracts had not been provided. “We have serious concerns as a public now and as a parliament about the honesty of this organisation,” said Barbara Pocock, a Greens senator.

Kirsty Gallagher, Australia’s finance minister, said the onus was on PwC to convince the government that its internal review — due to be completed by September — had sufficiently dealt with the cultural problems highlighted by the leak scandal. “The ball is in PwC’s court to assure us,” she said.

The decision by the government to refer the situation to the police has triggered a reaction from the wider consulting industry.

Alison Kitchen and Andrew Yates, respectively the chair and chief executive of KPMG’s Australian operations, wrote to staff on Thursday urging them to re-read the company’s code of conduct.

Their email, first reported by The Australian and seen by the Financial Times, said KPMG had taken steps to reinforce its confidentiality obligations after the tax watchdog revealed the PwC situation in February and had conducted a third-party review of its processes in that area.

“When working with government, professional services firms have a duty to operate with the highest level of integrity, confidentiality and trust. When government engages with us, we do not take this trust for granted and we must, and do, take the responsibilities placed upon us seriously and ethically,” the email said.