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PwC's Australian tax leak scandal spreads to the UK

PwC's Australian tax leak scandal spreads to the UK

PWC’s London headquarters have been dragged deeper into a tax avoidance scandal that began in Sydney, following the launch of an investigation by Australian police.

Dozens of partners around the world have been caught up in a brazen scheme in which confidential Australian government information has apparently been exploited to help US tech companies avoid tax.

Their names are erased in a cache of heavily redacted emails, but they include employees of the British accounting giant’s offices in London, New York and Dublin.

PwC is now under increasing pressure to reveal its identity as the scandal sparked a national outcry in Australia and threatens to engulf its global operations.

A senator told the Mail it had “global implications” for PwC as it was clearly not about “a few bad apples in Sydney”.

‘Global implications’: PWC has been caught up in a scandal that saw confidential Australian government information used to help US tech companies dodge tax

The Treasury has asked the Australian Federal Police to investigate PwC, including its former Sydney-based senior partner Peter-John Collins.

In a separate blow, he ordered PwC to resign staff who knew about work-related leaks on existing and future government contracts, pending the results of a separate investigation.

Appearing before the Senate yesterday, Treasury Secretary Jenny Wilkinson described the debacle as a ‘breach of trust’, saying she had ‘serious concerns about the broader culture within the company’.

The scandal even prompted bosses at rival KPMG, which has also sparked its fair share of controversy, to tell staff in an email that they could ‘no longer sit and watch our profession be tarnished by the actions to the contrary. to the ethics of a few”.

Collins advised the Treasury on measures to combat international tax evasion. As head of international tax, he is accused of leaking officials’ briefings to at least 53 PwC colleagues over several years.

This information was then used to build business relationships with US tech giants and help them circumvent new laws under an initiative called Project North America.

The ruse has saved companies millions of dollars in tax, while generating at least $2.5m (£1.3m) in fees in 2016 alone for PwC.

Dr Jim Chalmers, the Treasurer of Australia, called PwC’s behavior “inexcusable” and an “appalling breach of trust”.

This week he said “further action” would be taken, amid calls to launch a criminal investigation.

The scandal surfaced in January when it emerged that Collins had been banned by the Australian Tax Council for two years for disclosing confidential information from PwC’s biggest client in Australia – the federal government.

Under investigation: Peter-John Collin, former Sydney-based senior partner

Under investigation: Peter-John Collin, former Sydney-based senior partner

Since then, the story has grown from business sections to front pages – even featuring in a special feature on the Australian Broadcasting Corporation’s flagship youth radio station, Triple J, last week.

Earlier this month, several senior executives from the UK and US flew to Australia in a desperate bid to contain the crisis.

Among them is Carol Stubbings, head of global legal and tax operations at PwC, based in London. But their task has been made more difficult with the police investigation and the recent release of 148 pages of damning emails sent between Collins and PwC colleagues around the world.

The names of the individuals, with the exception of Collins himself, are all blacked out.

They include addresses for PwC’s global headquarters in London, as well as New York, Singapore and Dublin.

Some of the emails begin with phrases such as “for your eyes only”, making it clear that the information is classified.

In one, a PwC employee described the information as “brilliant for our MAAL defense work”, referring to the Multinational Anti-Avoidance Act, introduced in the 2015 budget.

One of the partners included in the email exchange was Tom Seymour, the managing director of PwC Australia, who ran the firm’s tax operations. He took early retirement, but insisted he was unaware the information was confidential.

Only two other members of Australia’s board – the head of its financial advisory division and its director of reputation and risk – have stepped down but remain partners.

Labor Senator Deborah O’Neill, who forced the tax regulator to hand over the emails he uncovered, is now leading the campaign to name everyone involved.

“The emails document not only Collins’ building of the program, but the celebration of the program by his colleagues at PwC,” she said.

“The partners were not just a few bad apples in the Sydney office. They included international PwC Global participants from around the world, including the UK, US, Netherlands, Singapore and Ireland So it has global implications.

“We are talking here about an undeniable scheme of theft and deception, designed to cost the Australian people dearly and benefit Pricewaterhouse Coopers.”

The senator said she would also push for the identities of US tech companies targeted by PwC.

During a 2015 Senate investigation into tax evasion, senior executives of US tech companies said their companies had not engaged in aggressive tax schemes in Australia.

A month later, a number of US technology companies were reportedly contacted by PwC Australia.

Just hours after former Australian treasurer Joe Hockey announced the MAAL in the 2015 budget, PwC told them it had drawn up a plan to circumvent the crackdown.

An investigation into the scandal was announced last week by PwC, led by former telecoms giant Telstra boss Dr Ziggy Switkowski.

PwC’s US and UK operations have confirmed their cooperation.

However, the investigation will not report until September.

Even then, the firm only committed to publishing a summary of the findings.

O’Neill and his fellow senators described this as part of a “cover-up” and dismissed the credibility of the review.

The Australian government has been urged to boycott PwC, which has secured nearly £300million in federal government contracts over the past two years.

PwC said it “would not hesitate” to take action recommended by the review it commissioned, including “removing other people and partners from the business.”

Kristin Stubbins, who is acting chief executive of PwC Australia, said the company was “committed to learning from our mistakes”.

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