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The Guardian - AU
The Guardian - AU
Business
Henry Belot

EY chief blasts PwC Australia for ‘disturbing and disappointing’ tax leak scandal

EY Oceania CEO David Larocca
EY Oceania CEO David Larocca told a Senate inquiry that the tax leak scandal at PwC was damaging to public trust. Photograph: Mick Tsikas/AAP

The consultancy firm EY has blasted its rival PwC for a “disturbing and disappointing” misuse of confidential government information, while arguing it upholds a higher standard of professional ethics and conduct.

That claim, made during a Senate inquiry, was questioned by senators who criticised EY for not providing basic information about how its partnership is structured, how much partners earn and what percentage of revenue comes from taxpayers.

In his opening statement at the inquiry, EY’s Oceania chief executive, David Larocca, sought to distance his firm from the scandal that has engulfed PwC and led to a police referral and the divestment of its government services division for just $1.

“We don’t deliberately breach confidentiality,” Larocca said. “We don’t market tax minimisation schemes. We don’t use blanket legal professional privilege claims to frustrate regulators and our business model is not built on condoning rewarding or covering up this kind of behaviour.”

Larocca said it was appropriate that intense scrutiny was applied to the sector, describing the scandal at PwC as damaging to public trust.

“The actions of a group of partners and leaders of one firm have impacted the reputation of tens of thousands of professionals across Australia, who do the right thing every day, continuously setting the high standard that Australia can and should expect from us,” Larocca said.

But Greens senator Barbara Pocock questioned whether EY could claim to be better than its competitor while failing to provide as much information about its business structure as PwC has.

“You distinguish yourself from PwC and you’re telling us that you are different and that you are better,” Pocock said. “It is deeds, not words that people are looking for.

“We asked for earnings data for partners. You have decided not to supply that to us. We’ve asked for information about breaches of confidentiality generally and in relation to government work. You have not supplied those to us. And you haven’t given us the proportion of your revenue that comes from government work.”

EY has not provided the committee with details about how its partnership is structured, which PwC has provided on the condition it is not published. PwC has also provided a breakdown of how much partners are paid.

Larocca declined to provide much of the above information to senators, arguing it would damage the partnership’s commercial interests.

“I am not comfortable with our competitors having the information you’re asking us to disclose,” Larocca said.

“There are very sensitive elements in our partnership deed that I do not want our competitors to see. It puts us in a position that is anti-competitive and I’ve given some explanations. I accept that we won’t reach an agreement on this.”

EY did provide more information about an independent review into its culture, which was launched after substantiated cases of bullying and harassment. In the past financial year, 17 formal workplace investigations were launched into staff behaviour.

Former sex discrimination commissioner Elizabeth Broderick is conducting a review of EY’s culture and Larocca committed to publicly sharing the report’s findings and recommendations.

“Our focus first and foremost, when we receive the finalised report, will be to communicate the findings of the review to our own people, those who have given us the gift of their story, no matter how uncomfortable that task may be,” Larocca said.

“We will then immediately release it publicly including to this committee.”

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