This week in The Fin podcast, investigative reporter Neil Chenoweth and professional services editor Edmund Tadros on the secrets that have eaten Australia’s largest accounting firm.
For those who haven’t been following this scandal closely. Can you just give us a brief recap how did the scandal unfold?The story began back in January when the punchiest little regulator you’ve never heard of called the Tax Practitioners Board, announced that it had sanctioned the biggest accounting firm in the country PWC and its Star International tax chief Peter Collins.
And he says I haven’t done anything wrong. So, that’s pretty extraordinary. And later in the week, Michael Bersten, he’s a barrister, former PwC tax partner also says worse have the same effect. And overlaying all of this. I’ve described it as a civil war, that there’s no actual bayonets involved. But there were just large groups of partners now angry with the executive, everyone’s angry with the executive.
Behind the scenes, they’re trying to work out what to do, they’re quite limited, they can’t fine PwC, they don’t want to do an outright ban, there’s all these legal limitations. So, they come up with this sort of workaround, which is, from now on, if you are a supplier, and you get pinged by an official body or agency or even a professional body, you have to tell the agency that’s employing you. So, that’s part of it.
The saga begins on September 6, 2016 when the ATO begins to issue notices to all big four accounting firms to produce all their correspondence with clients about the multinational anti avoidance law [MAAL]. In response, PwC claimed that all their documents were covered by legal professional privilege. So, the ATO changed tactics. Instead, it asked for all internal communications between PwC partners which weren’t covered by legal privilege.
And after a frustrating year, the AFP handed the matter back to the ATO. But just how hard to the ATO tried to find ways to investigate? I mean, this is an agency that never takes a backward step. They’re the toughest kid in the playground. Lisa: So Ed, there was secrecy among the regulators but let’s talk about the secrecy over at PWC. Many partners were also left in the dark about the investigation. How has the new CEO Kristin Stubbins handled the ongoing fallout? And what’s morale like within the firm?From what we understand, until January [this year] most of the partners and I think quite a few of the executives are told that it just involves one, ex partner in 2014. And they accept that at face value. Then emails come out.
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