PwC Should Face Consequences For Brazen Breach Of Trust

Who better to comment on PwC’s current woes than Mark Forbes (lead image), a director at Icon Reputation. In this guest post, Forbes gives his expert tips on dealing with any reputational crisis…
Let’s call it. PwC, personnel directly implicated in misusing confidential government tax plans and those involved in its cover-up, should be banned from working with any government for at least seven years.
The brazen breach of trust, ethics and potentially law involved in advising Canberra on how to crack down on tax fraud by multinationals, then using that information to market avoiding the crackdown on those same companies, is breath taking. Worse still is how PwC, from the top down, blocked and obfuscated to hide its transgressions.
Why a seven-year ban? In 2016, the firm had its first opportunity to come clean when the taxation office asked what staff and clients were told. PwC avoided accountability for at least seven years. Its corporate penalty should continue at least that long.
In a reputational crisis, the response can have more impact than the initial incident, and PwC broke every reputational rule. In our crisis ebook, I spell out the four R’s of crisis: recognise, respond, regret and remediate. The second-largest professional services network in the world failed on all counts.
The scandal dates back to 2014, when a taxation partner at PwC, Peter Collins, signed a confidentiality agreement in order to advise Treasury on measures to crack down on multinationals circumventing Australian taxes.
On May 11, 2015, Treasurer Joe Hockey announced the new legislation to tackle tax avoidance, naming 30 global companies that paid no tax in Australia as targets of what was dubbed the ‘Google tax’. “This is about the integrity of the Australian tax system,” he said.
Within minutes, PwC’s tax partners began emailing and calling customers with plans to circumvent the tax. Collins had shared details with colleagues – an internal email from Collins, recently uncovered, described it as a both controversial and“treasure trove”.
In 2016, the ATO, alarmed at proliferating schemes to avoid its new taxes, began requesting information from its consultants, including emails sent between advisers within their firms and to their external clients.
In 2017, the tax office ramped up inquiries into the big four consulting firms, PwC, KPMG, EY and Deloitte, who were peddling schemes to avoid the tax on multinationals, demanding documents and emails. Only PwC refused.
Tax Commissioner Chris Jordan told a Senate Estimates hearing last week, “it appeared our investigation was being frustrated through false legal professional privilege claims…Despite our best efforts, due to the obstacles placed in our path, it took a long time to obtain the information requested (from PwC).”
What it did learn raised significant concerns about schemes being marketed by PwC, and Collins’s inside knowledge. “As the confidentiality breach was not a tax offence, we were unable to investigate the matter further,” Jordan said.
The case was handed to the Federal Police, who were also stymied in obtaining information, and in July 2020, the ATO informed the Tax Practitioners Board. Last December, the board announced that it had deregistered Collins as a tax agent for two years and ordered PwC to run conflicts of interest training.
When the Australian Financial Review pressed PwC for details, it downplayed the issue, denying its leadership was aware of what happened. But a couple of determined Senators were more than curious, and when the Practitioners Board’s CEO appeared before Senate Estimates in February, he revealed that between 20 and 30 PwC partners and staff had been involved in sharing the confidential information.
PwC CEO, Tom Seymour, who had headed the firm’s tax practice during these years, claimed it was a “perception issue”, and there had been “no finding” that 30 staff were involved in sharing the information.
Unfortunately for PwC, Labor Senator Deborah O’Neill lodged a Question on Notice asking the Board to table the report of its investigation, as well as all PwC emails. Its investigation report was suppressed, but 144 pages of heavily redacted emails painted a devastating picture of how deeply involved many PwC partners were in sharing the confidential information from Treasury and Taxation.
Seymour confirmed he was a recipient of the damning emails and stepped down. PwC subsequently announced that nine senior partners were “sent on leave” and chairs of the governance board and its risk committee were stepping down.
The new acting CEO, Kristin Stubbins, then issued an apology in an open letter, another example of what she concedes was the firm’s “too little, too late approach”. She apologised for “betraying the trust” of the public and vowed to “ring-fence” its Federal Government work.
Labour senator Deborah O’Neill called the apology “too late and not complete” and demanded the firm “name the names” – the list of 53 names in the cache of redacted emails”. Many question how PwC can continue to receive any government work. This week PwC handed over names – the four partners nominated are no longer at the firm.
Police have launched a new investigation and there could be a wider parliamentary inquiry. Legal sources suggested the case could even be one of the first referrals to the new National Anti-Corruption Commission, when it commences on 1 July.
A cloud hangs over PwC’s future government work, with the Finance Department ordering officials to consider confidentiality breaches when evaluating bids. The fallout won’t be contained to the public sector; our biggest superannuation fund, AustralianSuper, which paid PwC $2.3 million last year, has paused any new contracts due to the scandal.
The essence of crisis management is simple: do the right thing – something lacking at PwC’s every turn. Potential conflicts and confidentiality should have been front of mind for a company attempting to work both sides of the fence, designing tougher tax laws to stamp out avoidance while marketing tax minimisation to corporates.
For PwC, any concept of Chinese walls was quickly breached by a funnel of confidential information. Its leadership either approved or turned a wilful blind eye.
Too right it’s been ‘too little, too late’. From the start, PwC has missed every opportunity to come clean and remediate. Back in April 2015, as the breach was beginning, Seymour and Collins appeared together before a Senate tax avoidance inquiry, when Seymour stated no one at PwC was breaching tax laws. “I think we have a great contribution to making Australia’s tax laws work better,” he said.
It is difficult to see a clear path for PwC’s reputational recovery, possibly dismissal of implicated staff and a split up of the firm – separating government advisory from corporate services – but the delay in coming clean and making good means the reputational stain, to some degree, will remain indelible.
Latest News

Air New Zealand & Bastion Shine Save Christmas With Their Latest Campaign
When it comes to New Zealanders, are they really just glorified Tasmanians who are much better at sport?

Google To Pay $111m To News Publishers In Canada
Google lumped with latest $100 million-plus fine. Which, when it's all said & done, is like 50 cents to the rest of us.

Thursday TV Ratings: The Chase Takes The Crown For Entertainment
Much like navigating the single-malt whiskey menu at Rockpool, Thursday night TV proves a tricky one for network bosses.

Before Adland: Luke Spano’s High-Stakes Switch
The Avid Collective MD reveals his life pre-adland. As exciting as it is, it's not international playboy spy & Lothario.

New Study Busts Aussie Advertisers Over False “Clean, Green & Sustainable” Claims
Aussie adland in strife over some of its 'green' claims. By that we mean environmental claims, NOT fibrous vegetables.

Network 10’s Rod Prosser On TV Ratings: “One Measurement System Is Better For The Industry”
The only thing B&T would love more than a chat with Rod Prosser would be a game of squash. Yes, he's a 'yellow dot' man.

It’s Friday Quiz Time Again!
Take B&T's trivia quiz for your chance to win a $100 booze voucher and possible cirrhosis of a major internal organ.

Innocent Bystander Wines Challenge The Boring With New Campaign
As the Latins famously say "in vino veritas" or "in wine, there is truth". And, truthfully speaking, B&T hated this ad.

Apple Enlists Taika Waititi For Gorgeous (& Not Christmas) New Work!
Think the month leading into Christmas is all Curtis Stone's Christmas prawns? It's Apple to the rescue today, readers.

Clean Up Australia Unveils Brand Refresh Via uberbrand
Do you have "litterbug" on either your resume or LinkedIn profile? Change your trashy ways immediately on this news.

Musk: Advertisers “Go Fuck Yourselves”
B&T warns this article contains language readers may find offensive. And by that we don't mean Elon Musk.

Triple M Puts The Gold Back In The Gold Coast
The Gold Coast is Australia's "glitter strip". That is if you think bogans, bikies & personal trainers are "glitter".

SenateSHJ Launches New Trans-Tasman Practices
SenateSHJ has launched a new digital, data and insights capability designed to help clients tackle the growing complexity of communication challenges. SenateSHJ Digital, Data and Insights (DDI) will combine the firm’s existing Digital and Insights functions to create a Trans-Tasman capability focused on digital communication, and the generation and use of data to improve communication. […]

Nova Shakes Off Swift Mania With Dedicated Station
Want to make yourself the most despised person in the office? Read on with the launch of Taylor Swift radio.

QMS CEO John O’Neill On His Plans To Get OOH Spend Up To 20% (Watchout TV!)
B&T's chatting with outdoor supremo, QMS' John O’Neill. Eerily the outdoors never got mentioned in any small talk.

AANA’s New Code Means Stricter Rules Apply To Advertising To Children
There are now stricter ad rules applying to kids. Yet, nothing a bottle of Fanta & a box of Froot Loops can't fix.

New BrandStory Format From Bonzai Allows 3x More Ad Space on Mobile
Creative technology platform Bonzai has announced the launch of BrandStory – a new premium mobile ad format. BrandStory offers triple the ad space and 2.8 times greater time in view than single scroll ad formats, addressing the surging demand from brands worldwide for more real estate to drive real results by seamlessly intertwining awareness, exploration […]

“Cut The Crap!” Piers Morgan Sensationally Outs “Royal Racists” On His TV Show
The corgis, anyone in the Palace with a funny hat & even Camilla off the hook, as Piers delivers royal racist dirt.

Wednesday TV Ratings: 365,000 Sign Up To Watch The Last EVER Hot Seat on Nine
Mrs McGuire reportedly unhappy about Eddie loafing about the house after Nine cans Hot Seat.

B&T’s Search For Australia’s Greatest Ad Heads To Channel 7
B&T went through the looking glass this morning, with editor-in-chief David Hovenden (above) appearing on Channel 7’s The Morning Show to get the general public involved in our search for Australia’s Greatest Ad. Hovenden chatted with Kylie Gillies and stand-in host Matt Doran about what makes a great ad and showcasing some of our favourites […]

It’s The Best Of The Best – Directors Of First Impressions, Presented By Finecast, Part Of GroupM Nexus
They're the ones with the best hair and the whitest teeth! Yes, it's adland's top 10 directors of first impressions.

Opinion: The Tall Planner’s Kate Smither On The DBA Dilemma
The science is not in question – smarter people than I, with far more data, have codified it. The logic is not up for grabs…it makes sense that creating mental shortcuts to your brand keeps you at the top of your mind. Lead image: Kate Smither – Owner, The Tall Planner I wouldn’t even take […]

Ortto & Tall Bob Partner To Deliver Better SMS & MMS For Australian & NZ Businesses
Two Australian-born technology providers have joined forces to bring more power and choice to marketers in Australia and New Zealand with mobile messaging that is more local, cost-effective, and integrated. It’s a partnership that sees two Australian software companies come together to deliver a world-class mobile-first solution for marketers building data-driven, personalised, omnichannel campaigns. While […]

PubMatic Nabs Luke Smith From Seven West Media
Seven's Luke Smith quits for PubMatic. However, he's still in line for one of James Warburton's annual Christmas hams.

Slew Of New Hires At Snap Inc.
Snap Inc. has announced a number of new recruits. B&T unaware if it positively impacted SEEK's share price.

Michael McLacren Confirmed As Deb Knight Replacement For 2GB Afternoons
Think AM radio has a bit of an angry boys' club feel? It's not improving things with this news.

Reddit Gets Playful Brand Refresh
This will be of interest to any Reddit fans, graphic designers or lovers of an orange so bright it burns the retinas.

World Square Counts Down To Christmas With Sydney’s Biggest Advent Calendar
Hopefully this news will get you in the Christmas spirit. Either that or go and stand in Westfields for nine hours.

Zitcha & Broadsign Partner To Drive Global In-Store Retail Media Market
Zitcha and Broadsign have teamed up to integrate the Broadsign out-of-home (OOH) advertising platform with Zitcha’s retail media platform. The collaboration empowers retailers to maximise and monetise in-store digital display networks and enables advertising partners to easily view and book available in-store inventory and review campaign performance alongside the retailer’s other media channels. With the […]

B&T’s Search For Australia’s Greatest Ad Part 5!
B&T's vote for Australia's greatest-ever ad is much like the recent referendum sans the mudslinging and Kamahl.

Ignite the Thrill: National Drag Racing Championship Unleashes Media Campaign Via Murmur Group
If there's one sport in the world that's thumbing its nose at global emissions, it's probably drag racing.

Rethink Ink: Is It About Time You Reconsidered Print?
Print's not merely an excellent vehicle for brands, it's also perfect for getting the barbecue alight for the sausages.

Double Rainbouu & 7-Eleven Launch Exclusive Summer Fashion Label
Today, 7-Eleven has announced a one-of-a-kind collaboration with the popular Sydney-based anti-resort wear label Double Rainbouu. Dropping tomorrow, December 1, just in time for summer, this limited-edition capsule will infuse the fashion brand’s rebellious spirit with a distinctly iconic 7-Eleven flavour. The unisex collection features five must-have styles comprising two signature Hawaiian shirts, a peaked cap, a bucket hat […]

Cannes In Cairns Media Accreditation Open Now!
Work in media? Want to cover next year's Cannes In Cairns? There'll be no free piña coladas without this form.

In-House Agency Council Research Report: 78% Of Marketers Now Work With An In-House Agency
In-housing is definitely an industry hot button topic. Admittedly still a long way behind office affairs.

OMA Announces Winners Of The Q3 Creative Collection Competition
Who doesn't love the out of home medium? Apart from the very real chance of being shat on by a bird.