PwC global executive to take over supervision of scandal-hit Australian team

PwC will forfeit long-term oversight of its Australian business after the local team was embroiled in a tax leak scandal.

International executives – some of whom were flown to Sydney by a Big Four accounting firm to assess the immediate damage to their brands – are set to remain for an extended period, according to two insiders with knowledge of the decision.

While PwC’s national businesses have autonomy over their operations, its global headquarters is using its rights under international network rules to exert influence over Australian business in response to the misuse of government information, said one of the people. who spoke on the condition of anonymity. PwC’s global office declined to comment.

The response follows the publication of emails showing how PwC used information gained during its work with the Australian government to win business by advising corporate clients on new tax-avoidance rules.

The chief executive of PwC’s Australian business and two other leaders have already stepped down over the scandal, while a former partner has been banned from practicing as a tax agent for two years.

The scandal came to light after insiders said the firm was preparing to publicly launch the next phase of a plan to increase the independence of its auditors and “build trust” in its business, which will be part of its global branding from 2021. is a central issue of

The person said the international executives were likely to remain on Australian business for several months or longer. Another person at the firm said the establishment of a new management team in Australia was likely to increase the need for international “support”.

The move reflects the response of rival Big Four firm EY after it was hit by the collapse of financial services company Wirecard following fraud in Germany in 2021 and Toshiba’s accounting scandal in Japan in 2015. Both the companies were EY audit clients.

EY’s global legal, audit quality and communications teams were among the roles assigned in the response to the Wirecard crisis, which led to a two-year ban on new audit work for EY Germany, people familiar with the matter said. International audit quality teams spent several months in Japan following the accounting scandal at Toshiba.

KPMG adopted a similar strategy in 2018, embedding senior international partners into its South African firm after the local business was at the center of a corruption scandal.

PwC said law firm Linkletters, which is to review personnel involvement outside Australia in the leak scandal, “will have the unrestricted access necessary to enable them to investigate and inform their recommendations for change.” “.

People with knowledge of the matter said Linkletters would be given access to internal investigations previously conducted by PwC and these would be used in the review. But PwC Global said the law firm would “make its own independent assessment of what happened in our network”.

Linklater would be free to do additional work and interviews if he so desired, said one of the people with knowledge of the matter. The review is also expected to consider whether PwC’s culture and policies were up to scratch, the person said.

PwC has not said whether it will publish the full findings or how long the process will take. Ziggy Switkowski, an Australian corporate magnate who privatized Telstra, the telecom company that ran his reputation, has been appointed by PwC to lead a separate independent inquiry into the operations of its Australian business.

Linkletters and PwC Australia did not respond to requests for comment.

Australian Senator Deborah O’Neill, who triggered the publication of the emails, accused PwC of a “cover-up attempt”.

“It’s like passing information by signal to the people who are requesting it,” he said. “It’s hardly transparent.”

PwC Global said the sharing of confidential information by its Australian business was “unacceptable”.

PwC’s US and UK businesses, some of whose partners were involved in emails about confidential information, declined to answer multiple questions about the progress of their investigations or those involved.