PwC leak leads to grumpy government warning to tax advisors

The suspension of a former PwC Australia international tax lead for sharing confidential tax reform details has the government potentially rethinking how it engages consultants on such policy matters.

The Australian federal government has warned that the consulting sector could be frozen out of high-level tax policy discussions following the termination of Peter-John Collins’ practicing license due to having breached confidentiality agreements while head of international tax at PwC.

Collins departed the Big Four firm in October, with an investigation the following month finding that the senior tax professional had spilled confidential information to colleagues.

A 30-year industry veteran and onetime Tax Institute adviser of the year winner, Collins was in 2013 invited by the government to advise on its efforts to combat multinational tax avoidance, including as to proposed legislation. According to a ruling from industry watchdog the Tax Practitioners Board, he later knowingly shared privileged information with unauthorised PwC personnel and overseas partners, who in turn revealed details to both existing and potential clients.

Speaking with the AFR, Assistant Treasurer Stephen Jones said the department might now need to reconsider its approach. “The government wants effective consultation with the industry – our policies are better for it. This sometimes needs to be done on a confidential basis to allow effective collaboration on issues as they arise. When the integrity of that process is breached, we may need to rethink our approach. The tax advice profession is now on notice.”

In addition to terminating Collins’ registration to act as a tax agent and imposing a two-year suspension from reapplying, the Tax Practitioners Board also sanctioned PwC for failing to properly manage conflicts of interest, with the firm ordered to ensure better processes and regular training are put in place.

It’s unclear if investigations are ongoing, but a Tax Practitioners Board media release suggested that other senior members of PwC’s tax practice were aware of the misuse of privileged information.

Specifically, internal PwC communications are said to indicate an awareness among recipients including tax partners that the confidential knowledge gained from the Treasury consultations would be leveraged for marketing purposes as well as to “influence the structures of existing clients in a manner that may be perceived to circumvent the intent of the proposed legislation” – although no specific allegations as to the latter occurring were leveled by the Tax Practitioners Board.

Still, Tax Practitioners Board chair Ian Klug had some choice words over the breach. “We are very concerned when tax practitioners abuse their positions of trust. Some tax practitioners are involved in confidential law reform discussions, to share their wisdom and experience and to support the public interest.”

“Leaking confidential information in these circumstances might be seen to elevate personal and commercial profit, and tax practitioners who breach this confidence will not be tolerated.”

For PwC’s part, CEO Tom Seymour said the firm had since put in fresh measures to address the failure of its standards, including now maintaining a central register for any such confidentiality agreements. “We proactively reviewed and strengthened our controls and policies and introduced a comprehensive education program to help all our people identify and avoid any conflict risks,” Seymour stated. “These actions were undertaken in consultation with the relevant agencies.”