Jim Chalmers has said he is “absolutely furious” at findings a former PwC tax adviser breached the confidentiality of multinational tax consultations by disclosing them to other staff at the firm without authorisation.
On Wednesday, the treasurer promised to “throw the book” at people responsible for what he labelled a “shocking breach of trust, an appalling breach of trust”.
On Sunday, the Australian Financial Review first reported that the former head of international tax for PwC Australia Peter-John Collins had been deregistered by the tax practitioners board for failing to act with integrity and for sharing confidential government briefings.
The board confirmed on Monday that it had found Collins “made unauthorised disclosures” to partners and staff at PwC of confidential information, obtained in consultations, about new rules to stop multinationals avoiding tax by shifting profits from Australia to tax and secrecy havens.
“In addition, the [board] investigation determined that PwC had failed to properly manage conflicts of interest when this confidential law reform information was shared with partners and staff in their tax practice,” it said in a statement.
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The board deregistered Collins, with a two-year ban on him becoming a registered tax practitioner, and ordered PwC to put in place training and procedures to ensure conflicts of interest are adequately managed.
Chalmers said he was “absolutely furious and absolutely ropeable about the revelations”.
“There is no consultation without trust,” he told reporters in Canberra. “We want to be able to consult in a meaningful way when changes to the tax system are in prospect.
“And the actions that we’ve seen alleged and reported cut across that … this puts that sort of consultation at risk.
And so it puts the quality of economic decision-making and policymaking at risk.”
Chalmers revealed he had met the assistant treasurer, Stephen Jones, and asked Treasury, the Australian Tax Office and the tax board to advise on “any additional steps that we should be taking to protect the integrity of these important processes”.
Chalmers described the incident as a “wake-up call”, warning that consultations were “not possible without integrity and trust in the system”.
“We need to find where this has happened and throw the book at people … to make sure it doesn’t happen again.”
A PwC spokesperson reportedly told the Australian Financial Review: “We acknowledge the [tax board] found that a partner of the firm did not comply with confidentiality agreements in relation to a consultation process with Treasury, which occurred in 2014.
“We also acknowledge that PwC should have had specific conflict management procedures and policies operating at the time to prevent this occurring. In each case this failed the standards we set for PwC and we deeply regret this occurred.
A PwC spokesperson told Guardian Australia it is “deeply disappointed that in this government consultation process we failed the high standards we set for ourselves as a firm”.
“We recognise and understand the need for our tax system to operate with integrity and deeply regret confidentiality in this matter was not maintained.”
The spokesperson said PwC had taken action to prevent this happening again including a central confidentiality agreement register, a single non-client facing contact for similar consultations and an education program.
On Tuesday, the Liberal MP Michael Sukkar, who worked for PwC in 2005 to 2006, described the deregistration of the tax practitioner as serious but dismissed suggestions that PwC should be sanctioned beyond the tax board’s order.
“Sanctions administered by the [board] are rightly imposed against individual tax practitioners, as has occurred here,” Sukkar reportedly told the Australian Financial Review.
“I am pleased that the former Coalition government took steps to strengthen the independence and role of the [tax board], which has helped facilitate this action.”
The shadow treasurer, Angus Taylor, told reporters it was “not acceptable behaviour” but backed Sukkar’s stance that “there should be consequences for the individual” but no further punishment of PwC.