1 00:00:01,240 --> 00:00:03,560 Speaker 1: My name is Lily Maddon and I'm a proud Arunda 2 00:00:03,800 --> 00:00:08,600 Speaker 1: Bunjelung Cargotin woman from Gadighl Country. The Daily oz acknowledges 3 00:00:08,680 --> 00:00:10,840 Speaker 1: that this podcast is recorded on the lands of the 4 00:00:10,840 --> 00:00:14,400 Speaker 1: Gadighl people and pays respect to all Aboriginal and Torres 5 00:00:14,440 --> 00:00:17,360 Speaker 1: Straight Island and nations. We pay our respects to the 6 00:00:17,360 --> 00:00:20,080 Speaker 1: first peoples of these countries, both past and present. 7 00:00:25,920 --> 00:00:28,720 Speaker 2: Good morning and welcome to the Daily os. It's Monday, 8 00:00:28,760 --> 00:00:29,960 Speaker 2: the twenty ninth of May. 9 00:00:30,080 --> 00:00:31,480 Speaker 3: I'm Nina, I'm Sam. 10 00:00:31,680 --> 00:00:33,760 Speaker 2: You may have heard in the news that the firm 11 00:00:33,920 --> 00:00:36,839 Speaker 2: PwC is in some pretty serious trouble. 12 00:00:37,640 --> 00:00:42,239 Speaker 4: Billions on the line, political pressure and the threat of 13 00:00:42,360 --> 00:00:48,560 Speaker 4: criminal charges. PwC has tentacles that reach deep into corporate Australia, 14 00:00:48,840 --> 00:00:53,920 Speaker 4: government departments and agencies. The company's reputation, even its future 15 00:00:54,000 --> 00:00:55,400 Speaker 4: business is in question. 16 00:00:56,400 --> 00:00:59,840 Speaker 2: So how did PwC go from investigating fraud for the 17 00:00:59,840 --> 00:01:04,280 Speaker 2: government to being investigated for committing fraud against the government. 18 00:01:05,200 --> 00:01:08,200 Speaker 2: We'll let you know in the deg dive. But on Sam, 19 00:01:08,319 --> 00:01:12,080 Speaker 2: what's making headlines this morning? 20 00:01:13,600 --> 00:01:16,760 Speaker 3: US President Joe Biden and House Republicans, led by Speaker 21 00:01:16,800 --> 00:01:19,800 Speaker 3: Kevin McCarthy have reached an in principal agreement on a 22 00:01:19,840 --> 00:01:22,600 Speaker 3: deal to raise the debt sealing for two years. The 23 00:01:22,640 --> 00:01:25,520 Speaker 3: debt ceiling refers to the legal limit the US government 24 00:01:25,600 --> 00:01:29,040 Speaker 3: has on its debt. Announcing the agreement, President Biden said 25 00:01:29,160 --> 00:01:32,280 Speaker 3: the agreement represents a compromise which means not everyone gets 26 00:01:32,319 --> 00:01:35,039 Speaker 3: what they want. That's the responsibility of governing. 27 00:01:36,920 --> 00:01:40,039 Speaker 2: Over half of Gen z and millennial women are experiencing 28 00:01:40,120 --> 00:01:44,039 Speaker 2: significant difficulties paying for menstrual health products. That's according to 29 00:01:44,040 --> 00:01:47,960 Speaker 2: a survey commissioned by Plan International Australia, which involved five 30 00:01:48,040 --> 00:01:51,960 Speaker 2: hundred and seventeen people aged eighteen to forty two in Australia. 31 00:01:52,280 --> 00:01:54,880 Speaker 2: It also found a majority of respondents were finding it 32 00:01:54,920 --> 00:01:57,800 Speaker 2: difficult to pay for menstrual pain management and that's because 33 00:01:57,800 --> 00:01:59,040 Speaker 2: of cost of living pressures. 34 00:02:00,680 --> 00:02:03,720 Speaker 3: Independent Senator Lydia Thorpe will launch a complaints with the 35 00:02:03,760 --> 00:02:08,480 Speaker 3: Australian Human Rights Commission over alleged racism in the Federal Greens. 36 00:02:08,520 --> 00:02:11,359 Speaker 3: In an interview on ABC's Insiders, Thorpe s edge h had 37 00:02:11,360 --> 00:02:14,960 Speaker 3: faced racism her entire life in every workplace and quote 38 00:02:15,080 --> 00:02:16,639 Speaker 3: the Greens are no different. 39 00:02:19,080 --> 00:02:21,880 Speaker 2: And the good news. New Zealand pop artist Benny has 40 00:02:21,919 --> 00:02:25,880 Speaker 2: created a song designed to ease anxious feelings. Benny created 41 00:02:25,880 --> 00:02:30,200 Speaker 2: a song called Bagels with neuroscientists from the Auckland University 42 00:02:30,240 --> 00:02:34,800 Speaker 2: of Technology. It uses musical elements proven to reduce anxiety 43 00:02:35,040 --> 00:02:37,160 Speaker 2: and that sounds like a great way to relax when 44 00:02:37,160 --> 00:02:42,440 Speaker 2: you finished listening to this episode of The Dahlias. The 45 00:02:42,480 --> 00:02:47,120 Speaker 2: Australian Federal Police the AFP has launched a criminal investigation 46 00:02:47,360 --> 00:02:51,760 Speaker 2: into a former executive of the firm PwC. He's accused 47 00:02:51,800 --> 00:02:55,120 Speaker 2: of using information he learned trying to improve the Australian 48 00:02:55,200 --> 00:02:59,040 Speaker 2: tax system to help his clients avoid paying tax. It's 49 00:02:59,080 --> 00:03:01,720 Speaker 2: a really serious that goes to the heart of how 50 00:03:01,760 --> 00:03:05,280 Speaker 2: the government reviews its policies and who the government trusts 51 00:03:05,320 --> 00:03:06,519 Speaker 2: with tax payer money. 52 00:03:06,720 --> 00:03:10,320 Speaker 3: So, Nina, why don't we start with the company PwC. 53 00:03:10,919 --> 00:03:12,200 Speaker 3: What do they actually do. 54 00:03:12,880 --> 00:03:15,400 Speaker 2: It's one of those companies you always hear about and 55 00:03:15,440 --> 00:03:17,160 Speaker 2: you're never exactly sure. 56 00:03:17,040 --> 00:03:21,600 Speaker 3: And like on skylines of cities with signs on big buildings. 57 00:03:21,120 --> 00:03:23,840 Speaker 2: It's one of those that's always there. Yeah. The full 58 00:03:23,880 --> 00:03:27,520 Speaker 2: name is actually Price Waterhouse Coopers and they call themselves 59 00:03:27,600 --> 00:03:31,600 Speaker 2: a professional services network. Basically what that means is they 60 00:03:31,639 --> 00:03:35,240 Speaker 2: help businesses do things better, whether that means running a 61 00:03:35,280 --> 00:03:38,080 Speaker 2: tightership or doing better with their finances. It could be 62 00:03:38,120 --> 00:03:42,760 Speaker 2: things like accounting, auditing, human resources, consulting and strategy management. 63 00:03:43,000 --> 00:03:46,480 Speaker 2: And it's huge business. They have almost three hundred and 64 00:03:46,520 --> 00:03:50,360 Speaker 2: twenty eight thousand staff worldwide and made over seventy seven 65 00:03:50,640 --> 00:03:55,920 Speaker 2: billion Australian dollars in gross revenue last financial year. More locally, 66 00:03:56,000 --> 00:03:59,120 Speaker 2: PwC has nine offices in Australia with a team of 67 00:03:59,160 --> 00:04:02,920 Speaker 2: over nine thousand people. So it's stillness, it's huge, huge, 68 00:04:03,120 --> 00:04:05,840 Speaker 2: But as well as dealing with Australian businesses, they also 69 00:04:05,920 --> 00:04:09,000 Speaker 2: work pretty closely with Australian governments and they do things 70 00:04:09,080 --> 00:04:11,920 Speaker 2: like consult on issues or policy areas or things that 71 00:04:11,960 --> 00:04:15,640 Speaker 2: the government's considering undertaking. It's such a big area of 72 00:04:15,680 --> 00:04:18,640 Speaker 2: business for PwC that they actually have a dedicated office 73 00:04:18,680 --> 00:04:19,279 Speaker 2: in Canberra. 74 00:04:19,360 --> 00:04:21,800 Speaker 3: Okay, so if it's a major part of their business, 75 00:04:21,839 --> 00:04:22,840 Speaker 3: what's gone wrong. 76 00:04:22,800 --> 00:04:25,080 Speaker 2: Well, what's gone wrong is pretty simple, but there is 77 00:04:25,120 --> 00:04:27,320 Speaker 2: a backstory. So let me start at the beginning. In 78 00:04:27,320 --> 00:04:31,680 Speaker 2: twenty thirteen, the Australian government was reeling from some revelations 79 00:04:31,760 --> 00:04:36,240 Speaker 2: about multinational organizations avoiding paying their fair share of tax. 80 00:04:37,240 --> 00:04:39,840 Speaker 2: This revelation came from a trove of two point five 81 00:04:40,120 --> 00:04:44,919 Speaker 2: million leaked documents which exposed a complex world of offshore 82 00:04:45,080 --> 00:04:49,119 Speaker 2: tax havens that were costing Australia revenue but other tax 83 00:04:49,160 --> 00:04:52,240 Speaker 2: generating countries around the world. So in response to this, 84 00:04:52,440 --> 00:04:54,840 Speaker 2: Australia teamed up with the US and the UK to 85 00:04:54,920 --> 00:04:58,080 Speaker 2: launch an investigation into these so called tax sheets. And 86 00:04:58,120 --> 00:05:01,680 Speaker 2: when they started looking into Itustralian Tax Office found more 87 00:05:01,720 --> 00:05:04,920 Speaker 2: than a hundred wealthy Australians, some of them really high profile, 88 00:05:05,240 --> 00:05:07,880 Speaker 2: who had avoided paying tens of millions of dollars in 89 00:05:07,960 --> 00:05:11,320 Speaker 2: tax in Australia by setting up what's called shell companies 90 00:05:11,440 --> 00:05:15,200 Speaker 2: or trusts in so called tax havens in Singapore or 91 00:05:15,240 --> 00:05:18,240 Speaker 2: the Cayman Islands. And basically what that means is that 92 00:05:18,279 --> 00:05:21,280 Speaker 2: these individuals or businesses were sending their money or their 93 00:05:21,320 --> 00:05:25,120 Speaker 2: assets elsewhere to avoid paying tax on them here in Australia. 94 00:05:25,240 --> 00:05:27,200 Speaker 3: And we know that that happens in a lot of 95 00:05:27,240 --> 00:05:30,600 Speaker 3: other countries as well, and that's how businesses are structured 96 00:05:30,680 --> 00:05:34,720 Speaker 3: around the world. So how did PwC specifically get involved 97 00:05:34,760 --> 00:05:34,960 Speaker 3: in that? 98 00:05:35,080 --> 00:05:38,240 Speaker 2: Then, when the Australian government worked out that this was 99 00:05:38,240 --> 00:05:40,839 Speaker 2: happening or at least were exposed to the scale of 100 00:05:40,880 --> 00:05:44,320 Speaker 2: what was happening. As well as investigating the individuals and 101 00:05:44,360 --> 00:05:47,839 Speaker 2: the businesses they believed were dodging tax, the Australian federal 102 00:05:47,880 --> 00:05:50,719 Speaker 2: government also set out to review the entire system and 103 00:05:50,760 --> 00:05:53,719 Speaker 2: actually look at what legislation was doing or not doing 104 00:05:54,000 --> 00:05:55,440 Speaker 2: to avoid this happening. 105 00:05:55,120 --> 00:05:57,479 Speaker 3: And how to keep more money in the country going 106 00:05:57,520 --> 00:05:58,240 Speaker 3: forward exactly. 107 00:05:58,240 --> 00:05:59,960 Speaker 2: So they set out to try and reform the system, 108 00:06:00,400 --> 00:06:04,440 Speaker 2: and to do that they engaged PWC's head of International tax, 109 00:06:04,720 --> 00:06:07,880 Speaker 2: a man named Peter Collins, as a consultant to help 110 00:06:07,920 --> 00:06:10,640 Speaker 2: them do that. And remember that name because it's going 111 00:06:10,720 --> 00:06:13,279 Speaker 2: to be important for the rest of this episode. So 112 00:06:13,360 --> 00:06:17,599 Speaker 2: Collins was tasked with developing enforcement rules on multinational companies 113 00:06:17,800 --> 00:06:21,200 Speaker 2: believed to be dodging tax, and again important to remember 114 00:06:21,240 --> 00:06:25,000 Speaker 2: this point. To carry out this work, Colins signed not one, 115 00:06:25,080 --> 00:06:29,520 Speaker 2: but numerous confidentiality agreements during his time working with the government. 116 00:06:30,040 --> 00:06:34,400 Speaker 3: So it all sounds pretty standard. The government has contracted consultants, 117 00:06:34,560 --> 00:06:38,040 Speaker 3: the consultants have signed a confidentiality agreement. When did things 118 00:06:38,120 --> 00:06:39,000 Speaker 3: start to unravel? 119 00:06:39,320 --> 00:06:43,200 Speaker 2: So at its most simple level, what went wrong is 120 00:06:43,240 --> 00:06:46,520 Speaker 2: that while Collins was working with the government to improve 121 00:06:46,560 --> 00:06:49,880 Speaker 2: their tax laws. He was also helping people to avoid 122 00:06:49,960 --> 00:06:53,279 Speaker 2: paying tax under the varying laws he was helping to design. 123 00:06:54,400 --> 00:06:57,800 Speaker 2: Through the consultation process he was going through with the government, 124 00:06:58,279 --> 00:07:02,599 Speaker 2: he was privy to some pretty important information information about 125 00:07:02,600 --> 00:07:05,000 Speaker 2: how the government was going to going to legislate these 126 00:07:05,080 --> 00:07:10,160 Speaker 2: multinational corporations. The only thing was PwC was working with 127 00:07:10,280 --> 00:07:13,520 Speaker 2: the various a multinational corporations the government was setting out 128 00:07:13,520 --> 00:07:14,200 Speaker 2: to legislate. 129 00:07:14,440 --> 00:07:16,040 Speaker 3: What could possibly go wrong there? 130 00:07:16,440 --> 00:07:20,920 Speaker 2: Well, evidently quite a lot, because PwC was found to 131 00:07:20,920 --> 00:07:24,840 Speaker 2: be actively distributing the confidential information they were receiving from 132 00:07:24,880 --> 00:07:29,760 Speaker 2: Treasury and not only using it to benefit PWC's current clients, 133 00:07:29,920 --> 00:07:32,520 Speaker 2: they were also using it to win over prospective clients 134 00:07:32,520 --> 00:07:32,840 Speaker 2: as well. 135 00:07:32,880 --> 00:07:36,080 Speaker 3: Wow. So like part of their marketing play. Exactly Wow. 136 00:07:36,200 --> 00:07:40,480 Speaker 2: Internal communications within PwC revealed that that is exactly what 137 00:07:40,520 --> 00:07:43,800 Speaker 2: was happening. Collins was intentionally using the knowledge he gained 138 00:07:43,840 --> 00:07:48,960 Speaker 2: to advance PWC's position in the market. By some accounts, 139 00:07:49,120 --> 00:07:54,400 Speaker 2: PwC earned two point five million dollars after actively promoting 140 00:07:54,520 --> 00:07:58,040 Speaker 2: that they had insider information on how to sidestep the 141 00:07:58,040 --> 00:08:02,600 Speaker 2: government's knew multinational avoidance law, which again they had helped 142 00:08:02,760 --> 00:08:03,320 Speaker 2: to design. 143 00:08:04,160 --> 00:08:06,440 Speaker 3: Okay, so how did things eventually come to a head 144 00:08:06,480 --> 00:08:07,800 Speaker 3: how did they get caught? 145 00:08:07,960 --> 00:08:10,920 Speaker 2: Well, the tax offers started to work out that things 146 00:08:10,920 --> 00:08:13,440 Speaker 2: weren't quite adding up, and they were concerned about the 147 00:08:13,440 --> 00:08:17,000 Speaker 2: fact that PwC seemed to be promoting schemes to get 148 00:08:17,040 --> 00:08:20,120 Speaker 2: around that legislation that they had helped to design. So 149 00:08:20,160 --> 00:08:24,800 Speaker 2: they requested and eventually got their hands on internal PwC communications, 150 00:08:25,240 --> 00:08:27,680 Speaker 2: which revealed the extent of what was actually happening behind 151 00:08:27,680 --> 00:08:31,600 Speaker 2: the scenes. Then in twenty twenty one, an investigation began 152 00:08:31,720 --> 00:08:34,800 Speaker 2: into Peter Collins, who, if you've forgotten, that's PWC's head 153 00:08:34,800 --> 00:08:37,600 Speaker 2: of international tax and the go between here between Treasury 154 00:08:37,679 --> 00:08:38,479 Speaker 2: and PwC. 155 00:08:38,800 --> 00:08:40,640 Speaker 3: And what was the result of that investigation. 156 00:08:41,280 --> 00:08:44,840 Speaker 2: So the federal government's Tax Practitioner Board, they're the people 157 00:08:44,880 --> 00:08:47,000 Speaker 2: who decide whether or not you get to be registered 158 00:08:47,040 --> 00:08:51,520 Speaker 2: as a tax agent. They deregistered Colins for integrity breaches, 159 00:08:51,880 --> 00:08:54,760 Speaker 2: so he won't be able to reapply for registration until 160 00:08:54,800 --> 00:08:57,720 Speaker 2: the end of twenty twenty four. At the start of 161 00:08:57,720 --> 00:09:01,679 Speaker 2: this month, the TPB also TV copies of those internal 162 00:09:01,679 --> 00:09:05,920 Speaker 2: PwC emails in Parliament, which puts this whole case well 163 00:09:05,920 --> 00:09:07,760 Speaker 2: and truly in the spotlight, and we've seen the media 164 00:09:07,840 --> 00:09:11,440 Speaker 2: coverage take off since then. Then on the PwC side, 165 00:09:11,480 --> 00:09:15,720 Speaker 2: so them internally as a corporation, they commissioned an independent 166 00:09:15,760 --> 00:09:19,640 Speaker 2: review of its culture, accountability and governance after those emails 167 00:09:19,679 --> 00:09:23,240 Speaker 2: were tabled in Parliament. They've said they're open to firing 168 00:09:23,280 --> 00:09:26,520 Speaker 2: people based on the findings of that report. And PwC 169 00:09:26,800 --> 00:09:30,240 Speaker 2: CEO Tom Seymour, he has already steped down from his 170 00:09:30,320 --> 00:09:33,000 Speaker 2: position because he said that he was privy to the 171 00:09:33,040 --> 00:09:35,679 Speaker 2: information that has caused all of this drama. 172 00:09:36,000 --> 00:09:39,200 Speaker 3: So PwC say they're going on a soul searching mission, 173 00:09:39,320 --> 00:09:43,000 Speaker 3: they're reviewing their culture. Their CEO has stepped down, But 174 00:09:43,080 --> 00:09:46,640 Speaker 3: what repercussions will PwC and Colin's face. 175 00:09:47,320 --> 00:09:49,400 Speaker 2: So at this point the matter has been referred to 176 00:09:49,400 --> 00:09:53,080 Speaker 2: the AFP, they've confirmed and investigation is underway and that 177 00:09:53,120 --> 00:09:56,079 Speaker 2: could result in charges, maybe even jail time. 178 00:09:56,200 --> 00:09:58,320 Speaker 3: Right okay, And it's going to be really interesting to 179 00:09:58,360 --> 00:10:02,320 Speaker 3: see what comes from that. It's very hard to get 180 00:10:02,320 --> 00:10:06,080 Speaker 3: convictions of the top dogs in corporate Australia and I 181 00:10:06,120 --> 00:10:09,160 Speaker 3: do wonder what the long term repercussions of this are 182 00:10:09,200 --> 00:10:11,920 Speaker 3: going to be, especially because the government does work with 183 00:10:12,040 --> 00:10:15,080 Speaker 3: a lot of consultancy firms. PwC are not the only ones. 184 00:10:15,280 --> 00:10:18,400 Speaker 2: I didn't realize how big this business was, but Australia's 185 00:10:18,440 --> 00:10:24,199 Speaker 2: five largest consulting firms, including PwC, they secured two billion 186 00:10:24,240 --> 00:10:27,600 Speaker 2: dollars worth of tax payer funded work last financial year. 187 00:10:28,040 --> 00:10:29,880 Speaker 2: So that's huge. That's huge business. 188 00:10:29,920 --> 00:10:30,720 Speaker 3: It's a big business. 189 00:10:31,080 --> 00:10:34,040 Speaker 2: All of these revelations have really caused a lot of 190 00:10:34,080 --> 00:10:37,640 Speaker 2: different government departments to really stop and reflect on who 191 00:10:37,720 --> 00:10:40,400 Speaker 2: they're asking to do this really important work of advising 192 00:10:40,400 --> 00:10:43,880 Speaker 2: them on policy and also where they're putting tax payer money. 193 00:10:44,640 --> 00:10:47,360 Speaker 2: The Department of Finance has made it very clear that 194 00:10:47,400 --> 00:10:52,360 Speaker 2: government officials should be considering past confidentiality breaches when deciding 195 00:10:52,679 --> 00:10:56,319 Speaker 2: who to work with, and that effectively means that government 196 00:10:56,360 --> 00:10:59,880 Speaker 2: departments are unlikely to work with PwC in the immediate future. 197 00:11:00,600 --> 00:11:03,839 Speaker 2: The government's also committed to a new ten million dollar 198 00:11:04,000 --> 00:11:06,439 Speaker 2: unit to try and do more of its own assessments 199 00:11:06,440 --> 00:11:10,160 Speaker 2: in evaluations to ease their reliance on these consulting firms. 200 00:11:11,120 --> 00:11:14,199 Speaker 2: But that's that's going to be a long term game. 201 00:11:15,000 --> 00:11:18,719 Speaker 2: In the short term, a Senate Committee inquiry is investigating 202 00:11:18,720 --> 00:11:21,320 Speaker 2: the issue of how the government can ensure integrity when 203 00:11:21,360 --> 00:11:25,720 Speaker 2: engaging with firms like PwC. So that's underway, and experts 204 00:11:25,800 --> 00:11:29,080 Speaker 2: have already told the inquiry that an over reliance on 205 00:11:29,160 --> 00:11:32,960 Speaker 2: consultants over the years has eroded the public service. So 206 00:11:33,040 --> 00:11:35,200 Speaker 2: traditionally it was the public service doing this work for 207 00:11:35,240 --> 00:11:38,400 Speaker 2: the government, but these experts are saying that over time 208 00:11:39,000 --> 00:11:40,920 Speaker 2: the ability to do that kind of work has been 209 00:11:40,960 --> 00:11:42,679 Speaker 2: avoided by the fact that more and more of this 210 00:11:42,720 --> 00:11:44,400 Speaker 2: money is going to these consulting firms. 211 00:11:44,559 --> 00:11:46,560 Speaker 3: They need more internal consultants. 212 00:11:46,760 --> 00:11:49,040 Speaker 2: We'll have to wait and see what the inquiry recommends 213 00:11:49,040 --> 00:11:51,280 Speaker 2: when it makes its recommendations, but it feels like that 214 00:11:51,280 --> 00:11:53,160 Speaker 2: could very much be one of the things that the 215 00:11:53,240 --> 00:11:54,800 Speaker 2: investigation will uncover. 216 00:11:55,120 --> 00:11:57,440 Speaker 3: Well, definitely keep an eye on this story. It's a 217 00:11:57,480 --> 00:12:01,240 Speaker 3: really interesting one about the connection between the private sector 218 00:12:01,320 --> 00:12:03,720 Speaker 3: and government and it's important to remember that when we 219 00:12:03,760 --> 00:12:06,640 Speaker 3: say tax payer money, that's us we're paying tax that's 220 00:12:06,679 --> 00:12:09,480 Speaker 3: our money, and that's what makes this story really interesting. 221 00:12:09,760 --> 00:12:12,079 Speaker 3: We're definitely going to keep an eye on these findings 222 00:12:12,120 --> 00:12:15,760 Speaker 3: and what the AFP investigation uncovers and whether any criminal 223 00:12:15,840 --> 00:12:16,959 Speaker 3: charges will be laid. 224 00:12:20,080 --> 00:12:22,319 Speaker 2: Thanks for joining us on the daily ODS. If you 225 00:12:22,400 --> 00:12:24,920 Speaker 2: learned something from today's episode. Why not share it with 226 00:12:24,960 --> 00:12:27,480 Speaker 2: a friend. It really helps us grow. We'll be back 227 00:12:27,520 --> 00:12:35,400 Speaker 2: again tomorrow. Until then, have a great day.