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Australian Lawmakers Start Probe into Tax Scandal at Consulting Giant

The Australian parliament has begun an investigation into the local arm of the global consulting firm, PricewaterhouseCoopers (PwC), over the leak of confidential government tax plans. The company has ordered nine directors to take leave with immediate effect. The heads of PwC’s Governance Board and its risk committee are stepping down.

For years, confidential information about planned Australian federal tax changes allowed PricewaterhouseCoopers Australia to tailor its advice to clients, earning the company millions of dollars.

PwC has insisted that none of its clients were involved in any wrongdoing and that no sensitive data had been used to help them pay less tax.

But the company’s reputation for integrity is under the spotlight.

Tuesday, the head of Australia’s federal Treasury, Steven Kennedy, told a Senate committee in Canberra that PwC Australia’s conduct was “clearly disturbing.” He said the public release of a tranche of emails from the consulting firm prompted him to call on the Australian Federal Police to investigate a significant leak.

PwC Australia has acknowledged an overly aggressive pursuit of profit. The Australian government is the consulting firm’s biggest customer.

The firm’s acting chief executive Kristin Stubbins has apologized for “betraying the trust placed in us.”

Deborah O'Neill, a Labor Senator, told the Australian Broadcasting Corp. Tuesday that the consulting company’s behavior has been unethical.

“This is about cover-up,” she emphasized. “This is about PwC trying to stem the flow of an artery that’s well and truly open now. The reality is, that this is a company that has not been open and honest with the Australian people, indeed 53 people within PwC Australia and PwC Global had access to confidential information that belonged rightly to the Australian people.”

Greens Senator Barbara Pocock has strongly criticized the Treasury’s delayed response to the tax leaks. She said officials first became aware of the breach of confidentiality five years ago.

The Sydney Morning Herald newspaper wrote that the company is “trapped in a reputational nightmare of its own making.”

Australian minister for finance Katy Gallagher told the senate committee Tuesday that the government’s use of consultants was a “massive problem.”

The industry has faced increased scrutiny recently.

Earlier this month, China began a crackdown on consulting firms after Beijing extended its anti-espionage laws around information sharing and alleged threats to national security.