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‘You should be sorry’: Former PwC GC slammed for role in tax leaks

Amid shocking evidence PwC partners “weaponised” legal privilege to allegedly hide crucial documents from the Tax Office, its former general counsel was accused of shunning a “considerable problem”.

user iconNaomi Neilson and Christine Chen 02 August 2024 Big Law
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After learning in 2018 that the Australian Taxation Office (ATO) was concerned PwC Australia members were sharing confidential information, former general counsel Meredith Beattie insisted she was the one “rattling the can” and alerting the executive board.

However, a parliamentary committee questioned the extent of her knowledge and intervention as general counsel, with chair Deborah O’Neill accusing Beattie of “turning your head and diverting attention”.

 
 

Appearing publicly for the first time since the scandal broke, Beattie said certain members of the tax group were not following legal protocols and had made invalid legal professional privilege claims.

The ATO had raised “very serious allegations” that the privilege claims were used “in a way that was designed to hide matters”.

This caused “a very, very tense relationship”, and the ATO believed the firm was purposefully failing to comply with compulsory notices and withheld information “on the grounds that privilege did not exist”.

“This issue was raised with the governance board, with the executive board, it was made known and at the time we were engaging with the ATO, the ATO had indicated it was going to take action.

“It did take action, which resulted in the settlement agreement.

“Throughout that period … I continued to raise issues about the culture … and I continued to raise them in 2023 and 2022, there needed to be an outcome of this because while we dealt with the privilege issues, there needed to be accountability,” Beattie said.

Beattie also insisted she raised her concerns with former CEO Luke Sayers about successor Tom Seymour and his role in the leaks.

When pressed on what the next steps were, Beattie said there were no requests made of her to do anything.

O’Neill said it was a “considerable problem” and that it appeared Beattie did not “do anything” after learning of the invalid privilege claims.

“You should be sorry,” O’Neill shot at her during evidence.

Fellow committee member Alex Hawke said it did not add up that the board “virtually did nothing” in response to Beattie’s concerns.

“Every meeting I’ve had [with a lawyer], I’ve always thought ‘that’s a very important point, I have a big problem,” Hawke said.

“You are the general counsel, you have briefed the board about a major problem and your evidence is they virtually did nothing.”

Appearing later in the inquiry, Seymour disputed Beattie’s evidence that it was the tax members responsible for producing documentation to the ATO, and it was in fact Beattie who carried out this role.

“No notice was served on me to deliver documents at any stage, and the document process was not run by me.

“Meredith Beattie was the person responsible who ran that,” he said.

Sayers also told the committee he does not recall ever being given advice from Beattie about Seymour’s position.

“She may have provided it to the governance board, but I do not recall any legal advice being provided,” he said.

However, he added that if Beattie said she did, “then I’m sure she did”.

Ethics concerns over $1.2m secret payment

CEO Kevin Burrowes faced blistering criticism for concealing a $1.2 million annual payment from the firm’s international parent for almost a year, deceiving his own colleagues and Parliament.

The revelation and Burrowes’ failure to acknowledge it reignited concerns about PwC’s governance protocols and the sincerity of efforts to rebuild trust in the wake of the tax leaks scandal, members of the bipartisan corporations and financial services committee agreed.

O’Neill said Burrowes was “serving two masters” by accepting payment from PwC International, which is supervising the Australian arm in a remediation process.

“Your decision to accept pay from two masters is replete with conflict of interest”, she said, drawing parallels between Burrowes and Peter-John Collins, the former PwC partner at the heart of the tax leaks.

The undisclosed $1.2 million salary from PwC International came on top of Burrowes’ $2.8 million salary from PwC Australia.

PwC International has previously come under question for its opaque conduct after it used its management powers to seize control of its Australian arm at the height of the scandal in June 2023, parachuting in Burrowes to replace then-interim CEO Kristin Stubbins.

It has also been accused of “thumbing its nose at Parliament” by withholding a key report by law firm Linklaters on international partners’ involvement in the tax scandal.

Burrowes claimed he could not access the Linklaters report despite being paid by the international entity.

“I don’t believe it’s pertinent to what we’re trying to do in Australia,” he said.

He added that there was no conflict between his dual roles, the firm had made “huge progress” with its governance protocols and had been “extraordinarily transparent” with Parliament.

Chief risk and ethics officer Jan McCahey, who only found out about the payment last month while preparing for the committee hearing, said the work Burrowes was doing for PwC International and Australia was “very aligned”.

“There’s a potential for conflict, I guess, but being in the midst of it, I’d say it’s very much an alliance of interests,” she said.

But Hawke said that even if there was no conflict, the firm had once again failed to be transparent with the committee.

“Why are we having such a terrible time in getting transparency in this matter if you’re restructuring your firm completely top to bottom?” he said.

“The volume of transparency doesn’t impress me. You can be transparent about 99.9 per cent of things that are mundane.”

O’Neill called PwC and Burrowes’ conduct was no different than its past actions.

“How can you serve the two masters and not reveal that to your own colleagues here and Australian partners who are supposed to be leading in a reform process that you describe as a commitment to change?” she said.

“It seems like more of the same to me.”