Sayers wanted to sell PwC’s consulting business for $1b

The Liberal, Labor and Greens senators all repeatedly criticised Mr Burrowes and the firm over its tardy response to the tax leaks scandal and noted that the sweeping governance changes announced by the firm late last month were meaningless because they were unenforceable on a private partnership that is not covered by the Corporations Act.

The senators also expressed disbelief that a report by law firm Linklaters had cleared overseas PwC partners of using confidential information related to the tax leaks scandal “for commercial gain” and were equally incredulous when Mr Burrowes admitted he had not seen the Linklaters report.

Switkowski review criticised

The hearing began with senators painting the review by Dr Ziggy Switkowski into PwC’s governance as a report with limited terms, sweeping but vague statements, and inaccuracies. The report found a “shadow” culture that tolerated bad behaviour in the pursuit of profit “growth at all costs”, and a lack of governance that “went unexamined and uncorrected for many years” and that led to the firm’s tax leaks scandal.

Mr Burrowes argued it was detailed and independent.

Liberal senator Richard Colbeck, who is also chairman of the committee, said: “I don’t think that you’ve been completely honest with the Australian people and with the international community.”

Greens senator Barbara Pocock said the Australian public has viewed the firm’s response to the tax leaks scandal “very critically, even cynically” and called its reports “whitewashes” because they did not contain critical details of who did what.

Labor senator Deborah O’Neill said the firm had agreed to keep government information secret as part of its standard contractual terms with the Commonwealth.

“I’m not going to sit here and defend what happened,” Mr Burrowes said. “It’s totally inappropriate that some of our partners, a small number of partners, that are laid out in our statement of facts, took confidential Treasury information and shared it within our firm ... and we apologise to you, and we apologise to the people of Australia that we’ve fallen short of the standards.”

Sayers: ‘I don’t recall’ on emails

Mr Sayers said the Tax Office should have told him there had been a breach of confidentiality by the firm’s tax practice during his time at the firm.

“[Let] me clearly say if the ATO had directly informally advised me, as the CEO of PwC Australia, that Peter Collins had breached obligations of confidence, I would have sought details and ensured a full and thorough investigation. They did not,” Mr Sayers said.

Mr Hirschhorn has previously said he told Mr Sayers on August 29, 2019, to “personally review the internal emails”.

Mr Sayers also said he wanted to sell the firm’s Australia consulting arm because of the growing number of conflicts emerging as it expanded, and amid growing concerns about audit quality.

This was around the same time the firm was also telling the then-joint inquiry into audit quality that a multidisciplinary accounting and consulting firm was best-placed to ensure audit quality in Australia.

The firm’s executive spent “about 12 months” working through what was known as “Project Kookaburra”, he said.

The plan, which was rejected by PwC’s global leadership in 2019, would have involved using part of the funds raised to pay out the firm’s fabled retired partner payment plan, and would have extinguished the conflict of former PwC partners receiving ongoing payments from the firm while holding senior corporate and public sector positions.

The $1 billion targeted price of the deal is in contrast to the $1 fire sale of PwC’s public sector consulting arm to private equity investor Allegro Funds announced in June, a deal which created the new company Scyne. That sale was made after PwC was effectively cut off from winning new federal government work when the extent of its tax leaks scandal became public in May.

Finance approves Scyne

On Thursday morning, the powerful Finance Department announced it had approved Scyne to take on the federal government contracts of its predecessor and accept new Commonwealth work.

Senator Pocock rejected Mr Sayers argument that the tax leaks scandal was due to “bad actors” within the firm’s tax division, instead saying it was a wider cultural problem at PwC Australia.

“How much shame do you feel for what happened?” Senator Pocock asked the former CEO.

Mr Sayers replied: “Of course I feel terrible. I’m sure every PwC person feels terrible ... it is just a terrible, terrible situation. But the bottom line is that there [were] a number of bad actor tax partners, bad actor tax partners that behaviourally made the wrong choices.”