PwC chairman refuses to share tax leaks scandal investigation with Australian parliament | PwC

PwC’s global chairman, Bob Moritz, has refused to comply with a request from the Australian parliament to share a copy of an investigation used to contain the tax leaks scandal to Australia.

The international firm has cited legal professional privilege over a report by law firm Linklaters, but provided more information about the scope of the investigation and the conduct of those it mentions.

The decision will likely set up another showdown with Australian politicians who have strongly criticised the firm for not sharing the report, and frustrate government departments that have believe it should be shared.

A document prepared by the international firm sought to assure Australian senators and regulators that the Linklaters investigation was thorough and independent.

The international firm has still not provided a copy of the report to the Australian firm, despite repeated requests to do so from its chief executive, Kevin Burrowes.

“The investigation by Linklaters and counsel in multiple jurisdictions included forensic searches for documents as well as interviews,” PwC told a Senate inquiry into the consultancy industry. “Linklaters analysed the evidence across territories, made additional inquiries where necessary and provided legal advice to PwC International.”

In September, when PwC International made the findings of the Linklaters report public, the firm said it found six employees who received confidential Australian government information “should have raised questions as to whether the information was confidential”.

The international firm has now told the Australian parliament the six employees mentioned in the Linklaters report “did not have reason to believe that the information should not have been shared with them”.

“Many of the recipients of emails relating to the [base erosion and profit shifting] initiative were international tax practitioners who routinely received updates on OECD developments at the time,” the document prepared by PwC International said.

“It is not surprising, therefore, that the receipt of OECD updates by tax professionals outside Australia, in and of itself, did not raise alarm among recipients or cause them to conclude a breach of confidentiality had occurred, absent any indications to the contrary.

“While these individuals may have fallen short of PwC’s high expectations that its people raise their hands in such a situation, this is not the same as having breached professional standards.”

Labor senator Deborah O’Neill, a member of the senate inquiry, said PwC International’s refusal to share the report was “deeply disappointing”.

“If the involvement by international partners in this scandal is minimal, then there would seem to be little justification for hiding behind legal privilege,” O’Neill said.

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“Australian partners of the firm have already paid a substantial penalty for their involvement in this issue. I see no reason why their international peers should be spared that scrutiny, just because we are told by PwC that there is ‘nothing to see’ here.”

PwC Australia has also rejected claims it is not cooperating with parliamentary inquiries and multiple investigations into the conduct of former partners.

“While we note the desire for the Senate to have access to legal advice received by others in the PwC network, we are mindful of the basic legal right of legal professional privilege that operates in many jurisdictions including in Australia,” PwC Australia told the Senate inquiry.

“PwC has cooperated with regulators investigating these matters and produced materials in response to those investigations.”

In February, officials from the Australian Taxation Office told the Senate inquiry that PwC International was likely to claim legal professional privilege over the Linklaters report. The ATO’s second commissioner, Jeremy Hirschhorn, said it had no power to compel the document despite the public interest in doing so.

“It’s fair to say that it would be hard for PwC International or PwC Australia to argue that they are unaware of the interest of the Australian people in that document,” Hirschhorn said.

“We have not been provided with a copy of the Linklaters report. It would be preferable, in the spirit of true cooperation, if that document was provided to this committee.”

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