Embattled consultancy firm PwC Australia reached a settlement with the Australian Taxation Office months before the true scale of a scandal involving the misuse of confidential tax policy was publicly revealed.
Details of the settlement and the events that triggered it are not known and would not be divulged by PwC, but the timing of the deal has led the New South Wales Greens to warn the firm may have “secured some kind of a sweetheart deal before the full picture of wrongdoing had been exposed”.
The March settlement occurred two months before the government referred the firm’s conduct to the Australian Federal Police. It was also signed before PwC was forced to divest its entire government services division for just $1, due to the scale of reputation damage caused by the scandal.
The settlement was secured months before PwC announced it had removed another eight partners from the firm in the wake of the scandal. PwC subsequently admitted it breached conflict of interest obligations on a separate occasion.
PwC’s chief risk and ethics leader, Jan McCahey, confirmed the settlement in response to questions on notice from Greens MLC Abigail Boyd, who is a member of the committee examining consultants.
“There was a settlement between PwC and the ATO in March 2023. We are legally unable to disclose the details of this settlement,” McCahey wrote.
Boyd told Guardian Australia that PwC’s “disclosure raises more questions than it answers”.
“If it does relate to the tax advice leak scandal, it would appear that PwC have secured some kind of a sweetheart deal before the full picture of wrongdoing had been exposed,” Boyd said.
“There has already been far too much secrecy surrounding this investigation and its repercussions. If we are to have any confidence in this process, those involved had better start coming clean.”
The settlement was not disclosed by PwC’s acting chief executive, Kristin Stubbins, during a hearing of the NSW parliamentary inquiry last month, although she was not directly asked about any deals.
It was also not disclosed by senior ATO officials at senate estimates hearings in May, although second commissioner Jeremy Hirschhorn acknowledged the agreements.
“Our ability to do confidential settlements is a really important part of the conduct of the tax system,” Hirschhorn told the May hearing.
The ATO has been contacted for comment.
PwC’s latest communication with the NSW inquiry reveals an internal investigation, conducted by former Telstra chief executive Ziggy Switkowski, may be delayed.
“Dr Switkowski is targeting providing his report to us by 18 August,” McCahey wrote. “However, there is a prospect Dr Switkowski will require additional time to complete the report and we will not receive it until a later date.
“PwC will release the report in September once we have had an opportunity to consider it and formulate our initial response to Dr Switkowski’s recommendations.”
PwC has also revealed private equity investor, Allegro Funds, which acquired PwC’s government services division, is also investigating the conduct of PwC staff who may be transferred to a new entity. .
“PwC Australia has committed to Allegro that it will stand up a fully functioning business on day one with a full complement of staff to service the government engagements moving forward,” McCahey wrote.
“If staff have been selected to be part of the new independent business given the nature of the work they undertake, there is no option to remain with PwC Australia.”
