© Reuters. PwC sign is seen in the lobby of their offices in Barangaroo, Australia June 22, 2023. REUTERS/Lewis Jackson/File photo
By Lewis Jackson
SYDNEY (Reuters) – PwC Australia will appoint people from outside the firm to senior roles and link partner pay to integrity after an external review found a “whatever it takes” approach to making money may have led a former partner to leak confidential national tax plans to win clients.
PwC Australia in May commissioned former Telstra (OTC:) CEO Ziggy Switkowski to review the firm’s culture and governance after revelations a former partner had leaked confidential tax documents to colleagues to drum up work with global companies.
Switkowski identified poor practices “uncorrected for many years”, including a board stacked with longstanding PwC partners, a powerful CEO “not perceived to be accountable to the board” and a “whatever it takes” approach to making money.
The partnership’s decentralised business model limited oversight and accountability while an “overly collegial” culture made staff reluctant to call out misbehavior, especially from “rainmakers” at the firm, the review also found.
“We deeply regret and apologise for our failures,” CEO Kevin Burrowes said in a statement accompanying the release.
“While at times difficult and disappointing to read, Dr Switkowski’s Review lays bare where shortcomings exist in our firm and a culture that allowed them to go unchecked over time.”
The review did not assess how the leaks occurred, who was responsible or how they should be punished. Two law firms have been tasked with investigating the breach. PwC Australia has not committed to releasing their reports publicly.
First revealed in January, the scandal has forced out 12 partners, including the chief executive, prompted public and private sector clients to freeze ties and entangled clients Google (NASDAQ:), Uber (NYSE:) and Facebook (NASDAQ:).
PwC Australia said on Wednesday it would adopt, and in some cases already had, the report’s 23 recommendations, which include appointing an external chief risk officer, revamping firm culture, and linking partner pay to ethical behaviour.
The “big four” firm had earlier flagged its intention to adopt the recommendation it appoint outsiders to its board and said on Wednesday the search for candidates is underway.
The board will also be empowered to hire and fire the CEO, who was traditionally elected by partners, one of several changes that will require a vote by PwC partners to approve.
The firm expects to have implemented all the recommendations by December 2025.
Police and tax regulators are still investigating the breach. Australia said last month it would drastically toughen penalties against those who promote dodgy tax schemes and strengthen regulators in response to the scandal