Torture by a thousand cuts: Why the PwC scandal won’t die

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When the hitherto previously largely unknown regulatory agency the Tax Practitioners Board quietly placed a two-year ban on PwC’s rainmaking tax partner, Peter Collins, in November for leaking government tax secrets, the giant accounting firm must have held its breath and hoped no one would notice.

PwC’s luck ran out in January. It’s since been the scandal that keeps on giving and PwC Australia is feeling the extreme discomfort of consequence creep.

Ziggy Switkowski will head the independent PwC review.

Back in those early days before the media got its hands on the exploding story, the reverberations seemed contained. Collins left the firm without public fanfare. And a few others also quietly packed their framed pictures and pot plants and pressed the down button in the lift for the last time.

But if PwC public communications are any indication, no one in the firm has actually faced its professional firing squad.

This is despite the recent release of a damaging cache of internal documents that show circa 40 PwC operatives were in receipt of emails about information that had come from Treasury, to which Collins had been privy. The wellspring was the government was planning to combat corporate schemes (particularly multinationals) set up to avoid tax.

And we know that armed with this secret data, PwC set about drumming up new clients by devising clever workarounds.

The most staggering aspect to this scandal is that it appears no one inside PwC who was aware of what was going on stopped to consider the risks.

But living without consequences was never going to be sustainable – even if one includes the demotion of chief executive Tom Seymour.

The PwC big guns have now arrived from the US head office for the clean-up, so it’s no surprise that the other shoe has dropped for Seymour, who on Monday was announced as being set to retire from the firm in September.

And the firm has parachuted in PwC’s global legal business solutions leader, Tony O’Malley, to a role of chief risk and ethics leader for PwC Australia. And that’s to take effect immediately.

The global business will be desperate the Australian scandal doesn’t bleed into the international business.

One of his jobs will be to implement any recommendations made by former Telstra chief Ziggy Switkowski, who has been named to head an independent review into the scandal.

If Switkowski recommends that partners or other PwC professionals should face the firing squad, O’Malley is in charge of the bullets.

There must be a number of internal tax experts sweating on the outcome. Heads should roll.

PwC’s behaviour was breathtaking, with suggestions that the firm marketed to firms including Google, Microsoft and Apple using its ill-gotten intelligence wares.

Fallout: Former Australia PwC chief executive Tom Seymour will retire from the partnership.Credit: Michael Quelch

But the most staggering aspect to this scandal is that it appears no one inside PwC who was aware of what was going on stopped to consider the risks.

In attempting to profiteer from breaching confidentiality of the government, PwC chose the wrong institution to double-cross.

In the first instance, the big four accounting/advisory firms are huge government clients, so abusing trust and ensuring that they won’t get work again any time soon – or possibly ever – is strategically ludicrous.

Second, betraying an institution with the loudest microphone in the country is excessively risky. The Labor government can keep this scandal live for as long as it likes and the Greens and crossbenchers can easily raise their profile by piling on.

To the extent the government has an agenda to ease off on using external advisory consultants, the PwC misconduct is manna from heaven.

Sure the government (current and former) has also sustained a bit of a black eye for being naive about whom it lets into the tent. The good news for the government (but the bad news for PwC) is that there are ample means for public torture, including a Senate estimates flogging, which led to the disclosure of all kinds of PwC internal emails uncovering how broadly the information had been disseminated through the firm, and how it was being used to drum up new business.

And now we have another Senate probe into the big four consultants by the Finance and Public Administration Committee, which is set to run until September 26.

This is a scandal that refuses to die.

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