Barbara Pocock (SA, Australian Greens) Share this | Hansard source

COCK () (): I associate my comments with those of my fellow committee members Senator Colbeck and Senator O'Neill. The Australian public are horrified at what they have learned about PwC in recent months, and the Senate, as this report shows, shares that horror across parties. I've had hundreds of emails and calls, none in support of PwC—not one. If my mailbox is any indication, this organisation has few friends and Australians are angry. They want action, accountability and honesty. And, as this report shows, we're very long way from any of that. I want to address three issues in my comments: what has happened, how PwC has responded and what needs to happen next.

Firstly, what happened? PwC partners signed confidentiality agreements as they advised government, and then went to work to aggressively and unlawfully sell information they harvested, earning $2.5 million in fees and growing their client list internationally. Far from helpful advisers to government, they were voracious, greedy lying scoundrels, and they thought they could get away with it. And they probably would have, without alert journalists and an alert Senate. PwC were consulted by a government which wanted to reform tax law to collect more revenue from multinationals evading tax. The government thought that if you want to catch a fox, ask a fox—an experienced fox who knows how tax minimisation works. Treasury required that fox to sign confidentiality agreements, with potential criminal sanctions if betrayed.

Well, the fox has shown itself to be without scruple. The fox shared the confidential information widely with fellow foxes within PwC and, together, they harvested its profit—to date, without serious penalty for the partnership as a whole. I remember the day in estimates when I asked the Minister for Finance about the consequences for this corruption. She told me that they would suffer reputational damage. I was shocked; a bank robber suffers reputational damage when they're convicted but we do not withhold other consequences, like jail. White-collar crime by consultants cannot give people a get-out-of-jail-free card when most of us—most of Australia—have no such access. Reputational damage is a weak penalty. As long as we stop there we let crimes like this get off free, and we say to PwC, and to the big four, 'Don't worry, you've got friends in high places who will not call you to account.' Our report repudiates that. This Senate report calls wrongdoers to account. This report calls PwC to account, and says to anyone else shirking the conflicts of interest that litter the ground of tax and consultancy: 'Pay attention! You are on notice.

The second issue I want to go to is the way in which PwC has responded—how it has handled this egregious set of dishonest acts and how it has attempted to obscure events and even use this Senate, as we heard Senator O'Neill reflect on. At first, Mr Tom Seymour, the then CEO, optimistically believed he could outride the revelations of a conflict of interest and monetisation of government information when he publicly characterised them as a 'perception' problem. He failed to take responsibility, and this has proved to be a consistent pattern throughout this scandal. Again and again, PwC has failed to take responsibility. It must have known for years the names, the communications and the specific acts of those responsible, as well as those who are not responsible. PwC frustrated government efforts by hiding behind tens of thousands of claims of professional legal privilege. The leadership of PwC have failed to deal transparently with this scandal. Instead, according to insiders who have put this to me, they adopted a fall-guy strategy, seeing one of the partners, Mr Peter Collins, off as a sacrificial problem player, when we know that a sizeable number of PwC partners and personnel shared confidential information and monetised it in Australia and globally.

PwC has adopted a strategy of resist, deny and diminish—stay opaque and don't publish the names and actions of those who are responsible. In the process they have potentially hung out to dry all those who received emails or who are on various lists, without care as to their innocence or their guilt. Where is PwC's duty of care, as Senator Colbeck asked? Where is their duty of care to the whole 9,000 workers and employees within PwC who potentially will suffer reputational contamination? It is not in evidence. I predict that PwC's unravelling will be a Harvard Business School case study on how not to deal with massive organisational ethical failure.

The rule book says: 'Be honest. Face up and act, or trash your brand and your future work stream.' Whoever is advising PwC on critical-incident management needs to go back to PR school. The average parent trying to teach their kids simple honesty could have given you better advice. The way in which PwC has responded tells us a lot about the internal culture, management and leadership in that organisation. They have yet to name who did what within their ranks. And past leaders, like Luke Sayers, CEO through this scandal, have taken no responsibility. PwC leaders have instead tried to pass the parcel to the Senate. They've yet to recognise an internal cultural leadership failure for what it is. No-one, it would seem, within PwC publicly called out this egregious ethical failure at the time or over the years since it occurred.

And we have read the emails which Senator O'Neill has held up. PwC tax offices are falling over themselves, throughout this set of emails, to harvest a profitable opportunity. It's a double fail. As history tells us, it's not the initial crime, often, that brings organisations undone, but, so often, the subsequent concealment. This chapter raises serious concerns about the aggressive pursuit of money. What is the business model at work here, and with what consequences for the people who work there, for ethical partners or staff, or for the larger public interest for ordinary taxpayers?

I get phone calls almost daily from people in PwC, past or present, or in the other big four consulting firms, who say to me: 'Keep going. Please call out bad behaviour, conflicts of interest and straightforward, untrammelled greed.' People who call say that they are distressed by the internal culture and partnership model, which several of them have described as 'cult-like', where, they say, senior partners are protected and more junior people are bullied, in their words, 'to protect the bosses and the partnership'; where whistleblowers are cast out and aggressively pursued, making calling out unethical behaviour literally a dangerous thing to do. As a current PwC partner wrote to me anonymously, 'It is almost impossible to act against the leadership of the firm,' given the partnership model. Others have contacted me on burner phones—I kid you not—or from fake email addresses, because their big-four-firm employer has access to all of their communications, and monitors them, and they are fearful. Several have told me that the PwC case is the tip of the iceberg—that conflicts of interest, poor value for money and aggressive pursuit of profit where ethics fall at the first hurdle are common practice.

This concerns me. It needs to stop. That kind of culture leads to organisational failure, to unsafe organisations, to big rip-offs and to the kind of scandal we've seen unfold. This model fails staff. It also fails the Senate. And, most importantly, it shows contempt for the Australian people. It also reveals contempt for Australia's tax machinery: for Treasury; for the ATO; for the Tax Practitioners Board. PwC has failed to manage its affairs and it deserves serious consequences for its lazy and cowardly failure to manage these events. Well, the Senate says 'no' to that cowardice in the pages of this report.

My third point is: what needs to happen next? This appalling, unlawful chapter must have consequences. Our tax regulatory system has shown itself inadequate in the face of wily, unethical players who chase money at any cost. This is a matter for our Senate committee and its larger deliberations, and we will bring forward proposals for change, I have no doubt. But now it's the time for logical consequences. Anyone who has raised kids knows the power of logical consequences. These are the actions that the adults in the room take to guide others to take responsibility for harm caused or damage done. We need some of that now, in the face of serious and contemptuous actions by PwC over years. I call for three immediate consequences: a two-year removal of PwC's registration as a tax practitioner, a ban on government contracts—and, as we stand here, we see states around the country moving to exactly that ban—and, finally, a referral to the National Anti-Corruption Commission should be top of the list come 1 July.

Our Senate committee on consultancies has important work ahead of it. We will be looking beyond the tip of the iceberg. Our country deserves better.