While PwC tax divisions was mired in a paper war with the ATO, it transformed from a conservative accounting firm to hard-charging, hard-drinking company.
“I even got on the pitch and went out and visited clients, which was almost bloody unheard of for a CEO,” Luke Sayers admitted.
“And the client needed to give permission. And so there was a massive exercise to go and talk to clients, which you can imagine how difficult that was.” This document war started immediately after the then-senior tax officer Mark Konza found out in August 2016 that PwC had helped ride-share giantLong frustrated with PwC’s tax advisers, it was the final straw for the ATO. It responded by firing off dozens of formal document production notices to the firm; more than 46 between 2016 and 2021, each one requiring that thousands of documents be found and handed over.
“And they were very broad notices in the sense that instead of being referable to particular clients, as many notices would, they were referable to tax alerts. The Tax Office responded to the legal privilege claims by issuing even more 353s, this time about internal PwC correspondence and documentations, including performance appraisals. As of mid-2023, the ATO was still seeking documents from the firm using these powers.
When the legal privilege claims were tested in court, the firm didn’t fare well. In 2022, the Federal Court ruled PwC incorrectly claimed privilege over the majority of the relevant documents related to its JBS tax advice. Those who interacted with her at the firm describe her as fearsome and very serious, seen as being as powerful as the then-CEO Sayers.Beattie told parliament last week she was at first confused about why the tax officials were displaying such a “level of agitation about legal professional privilege”.
This led to the “very difficult period in which there were discussions with clients, there were discussions with the ATO, about the fact that documents where clients had understood ... they were getting a legal engagement, they were not getting a legal engagement. And so the production was redone.”“I was the one who made sure these protocols were put in place. I was the person who spoke to Tom Seymour and said to him: these protocols are here, and they have to be followed.
Sayers had pushed the firm hard into consulting just as public and private sector organisations ramped up their use of external advisers.He was voted in unopposed for a second four-year term as CEO in 2016. PwC was dominant; it was almost $400 million ahead of its nearest competitor, and Sayers’ income had risen in lockstep, from $2.9 million in 2013, his first full year as leader, to $3.6 million in 2016. “His CEO performance was off the chart,” saysSayers’ ambitions had only grown over time.
PwC staff fostered relationships with politicians, clients and potential clients. In August 2018, PwC hosted a full-day, $12,500 a head fundraising event for the Liberal Party at its Sydney offices where guests could “nominate up to five meetings with ministers” before attending a private dinner with prime minister Malcolm Turnbull and the cabinet.
The firm’s spokeswoman responded that the letters “did not raise any specific allegations of sexual harassment”. Not helping matters was that one of the potential investors in AVP was a PwC US audit client, which indicated it was quite happy to dump the firm as auditor to get in on the ground floor of what could be a massive payday if it came off.
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