Australian tax office explores possible offences abroad in PwC scandal

Australian tax officials have said they are working with international peers to explore any potential offences outside the country related to the PwC tax leaks scandal.

Jeremy Hirschhorn, second commissioner of the Australian Taxation Office, told a new Senate hearing on the consulting industry that the regulator has the power to share information and concerns to overseas counterparts regarding “potential offences in other jurisdictions that might have been triggered by some of this behaviour”.

The public inquiry follows the revelations that a PwC partner involved in developing laws designed to crack down on multinational tax avoidance shared confidential information with colleagues, who won business on the back of his guidance.

The Senate released internal PwC emails last month that showed partners within Australia and internationally discussing the use of the confidential information. 

PwC executives were expected to speak at the current hearing but senators opted against calling on them in case any of their answers prejudiced potential criminal action, after police were asked to open a new investigation into the leaks scandal.

KPMG, a rival ‘Big Four’ firm, appeared instead and said that the industry needed to rebuild trust with the government and the public. Andrew Yates, chief executive of KPMG Australia, told the hearing that he supported a strengthening of the powers of regulators, as proposed by the Australian government, including extending the role of the corporate regulator — the Australian Securities & Investments Commission — to cover the consulting industry.

Hirschhorn responded to questions from MPs about the impact of the PwC confidentiality breach on Australia’s “cutting-edge” role in tailoring laws to stop multinational companies avoiding tax by using complex structures stretching across various countries.

“Those emails clearly show the international tax network within PwC was operating internationally to subvert the Australian law development or the application of the law,” he said.

Despite being grilled by senators over two recent conflict of interest issues involving his own consultancy, KPMG’s Yates made the case for the continued use of consultants and auditors from the Big Four in the public sector. However, he conceded the PwC breach was particularly “disturbing” and “the conduct of PwC was clearly unethical and unacceptable”.

PwC has been under pressure to release a full list of partners who were included in the emails and of the clients that potentially benefited from its advice.

The firm provided a list of 63 names to senators at the start of the week, as well as naming four former partners whom it said were involved in the sharing of information and nine partners who have been stood down by the consultant pending the outcome of a review. 

“It is important for us to respect the ongoing investigations and legal processes to ensure this matter is investigated appropriately, and that is what we are doing,” a spokesman for PwC said.