It is the days-long party now described as the last hurrah before the storm of the tax leaks. Within six months, the scandal would change the firm forever.
“Nerds gone wild,” is how one partner remembered it. It was November 2022, and most of PwC’s 950 partners had gathered in Hobart for a lavish three-day conference. The firm was powering along, thanks to a sharp post-COVID rebound in demand, and
Former PwC Australia CEO Tom Seymour on stage at the firm’s Ignite partner conference in November 2022. If there was one man instrumental in unleashing the public scandal about to hit PwC, it was Michael O’Neill. A soft-spoken bureaucrat, the chief executive of the Tax Practitioners Board, which regulates Australia’s tax agents, is a veteran of complicated investigations, including the legendary Project Wickenby. That long-running operation raised $2.29 billion in tax liabilities during a decade of chasing the offshore accounts of wealthy Australians.
The firm’s own legal report states that PwC defended itself “as would a party to litigation”, producing documents and information responsive to requests and challenging certain allegations. For more than two years, PwC’s lawyers tussled with the board until October 21, 2022, when the board made its findings.
“I will say that I fundamentally underestimated the effect that publishing a finding of the TPB would have … if I were in that same situation again, it would be to move more quickly through the phases of AFP interaction, promoter penalty, then TPB referral. So it would get to the TPB earlier,” he told a parliamentary inquiry in April this year.
The great error here, many now concede, which ended up hurting the firm the most once the tax leaks matter became public, was not investigating the Collins matter in the same depth as was eventually done, by KWM again, after the extent of the tax leaks scandal became apparent in May last year with the release of the cache of internal PwC emails.Collins retired that month from PwC with a one-off “termination payment” and approval to receive ongoing retirement payments.
Finance, which determines the rules of how the federal government buys goods and services, was given a similar explanation after it asked PwC for an explanation of the matter. PwC’s legal report is scathing of the initial response: “After the TPB’s January 2023 press release of its findings, PwC publicly acknowledged the findings and its failings. Faced with subsequent media questioning and public scrutiny, however, former senior leadership downplayed the significance of the matter and severity of the findings, and did not adequately represent the key issues.
Michael O’Neill: “There were partners and staff both in Australia and internationally who were involved in these discussions, from the evidence we have available to us.”Deborah O’Neill: “Twenty or 30 people?”
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