1 00:00:01,440 --> 00:00:03,760 Speaker 1: My name is Lily Maddon and I'm a proud Arunda 2 00:00:04,000 --> 00:00:08,799 Speaker 1: Bungelung Calcotten woman from Gadigol Country. The Daily oz acknowledges 3 00:00:08,840 --> 00:00:11,000 Speaker 1: that this podcast is recorded on the lands of the 4 00:00:11,039 --> 00:00:14,600 Speaker 1: Gadighl people and pays respect to all Aboriginal and Torres 5 00:00:14,600 --> 00:00:17,520 Speaker 1: Strait Island and nations. We pay our respects to the 6 00:00:17,560 --> 00:00:20,320 Speaker 1: first peoples of these countries, both past and present. 7 00:00:25,600 --> 00:00:28,560 Speaker 2: Hello and welcome to the Daily os. It's Sam. Welcome 8 00:00:28,560 --> 00:00:30,760 Speaker 2: to tda's summer series. I hope you're having a nice 9 00:00:30,800 --> 00:00:33,080 Speaker 2: couple of weeks over summer, whether you're working, taking some 10 00:00:33,159 --> 00:00:35,800 Speaker 2: time off, headed to a music festival, or just you know, 11 00:00:35,960 --> 00:00:39,040 Speaker 2: hanging out with family and friends. This week, we're going 12 00:00:39,120 --> 00:00:41,960 Speaker 2: to share more of our favorite deep dives from twenty 13 00:00:42,040 --> 00:00:45,159 Speaker 2: twenty three, from some of our most popular interviews to 14 00:00:45,240 --> 00:00:47,960 Speaker 2: some stories you might have missed. I guess we're trying 15 00:00:47,960 --> 00:00:50,479 Speaker 2: to keep your company here over the summer. We'll be 16 00:00:50,560 --> 00:00:54,480 Speaker 2: back to some regular programming next week. Until then, here 17 00:00:54,600 --> 00:00:55,480 Speaker 2: is our summer series. 18 00:00:56,760 --> 00:01:00,840 Speaker 3: The Australian Federal Police the AFP has longed a criminal 19 00:01:00,840 --> 00:01:05,720 Speaker 3: investigation into a former executive of the firm PwC. He's 20 00:01:05,760 --> 00:01:08,920 Speaker 3: accused of using information he learned trying to improve the 21 00:01:08,959 --> 00:01:12,959 Speaker 3: Australian tax system to help his clients avoid paying tax. 22 00:01:13,280 --> 00:01:15,679 Speaker 3: It's a really serious case that goes to the heart 23 00:01:15,800 --> 00:01:18,679 Speaker 3: of how the government reviews its policies and who the 24 00:01:18,720 --> 00:01:20,919 Speaker 3: government trusts with tax payer money. 25 00:01:21,120 --> 00:01:24,800 Speaker 2: So, Nina, why don't we start with the company PwC. 26 00:01:25,360 --> 00:01:26,600 Speaker 2: What do they actually do? 27 00:01:27,280 --> 00:01:29,800 Speaker 3: It's one of those companies you always hear about and 28 00:01:29,840 --> 00:01:31,560 Speaker 3: you're never exactly sure. 29 00:01:31,480 --> 00:01:35,839 Speaker 2: And like on skylines of cities with signs on big buildings, it's. 30 00:01:35,720 --> 00:01:36,800 Speaker 3: One of those that's always there. 31 00:01:36,840 --> 00:01:37,160 Speaker 2: Yeah. 32 00:01:37,880 --> 00:01:41,240 Speaker 3: The full name is actually Price Waterhouse Coopers and they 33 00:01:41,280 --> 00:01:45,600 Speaker 3: call themselves a professional services network. Basically, what that means 34 00:01:45,720 --> 00:01:49,200 Speaker 3: is they help businesses do things better, whether that means 35 00:01:49,280 --> 00:01:52,040 Speaker 3: running a tighter ship or doing better with their finances. 36 00:01:52,120 --> 00:01:55,920 Speaker 3: It could be things like accounting, auditing, human resources, consulting 37 00:01:56,080 --> 00:01:59,880 Speaker 3: and strategy management. And it's huge business. They have almost 38 00:02:00,160 --> 00:02:03,680 Speaker 3: three hundred and twenty eight thousand staff worldwide and made 39 00:02:03,720 --> 00:02:07,800 Speaker 3: over seventy seven billion Australian dollars in gross revenue last 40 00:02:07,800 --> 00:02:12,760 Speaker 3: financial year. More locally, PwC has nine offices in Australia 41 00:02:12,919 --> 00:02:15,280 Speaker 3: with a team of over nine thousand people. So it's 42 00:02:15,280 --> 00:02:18,480 Speaker 3: still it's huge, huge, But as well as dealing with 43 00:02:18,520 --> 00:02:22,720 Speaker 3: Australian businesses, they also work pretty closely with Australian governments 44 00:02:22,760 --> 00:02:25,359 Speaker 3: and they do things like consult on issues or policy 45 00:02:25,400 --> 00:02:29,239 Speaker 3: areas or things that the government's considering undertaking. It's such 46 00:02:29,280 --> 00:02:31,880 Speaker 3: a big area of business for PwC that they actually 47 00:02:31,919 --> 00:02:33,680 Speaker 3: have a dedicated office in Canberra. 48 00:02:33,760 --> 00:02:36,000 Speaker 2: Okay, so if it's a major part of their business, 49 00:02:36,240 --> 00:02:37,600 Speaker 2: what's gone wrong, Well. 50 00:02:37,440 --> 00:02:40,160 Speaker 3: What's gone wrong is pretty simple, but there is a backstory. 51 00:02:40,200 --> 00:02:42,840 Speaker 3: So let me start at the beginning. In twenty thirteen, 52 00:02:43,000 --> 00:02:47,320 Speaker 3: the Australian government was reeling from some revelations about multinational 53 00:02:47,440 --> 00:02:52,320 Speaker 3: organizations avoiding paying their fair share of tax. This revelation 54 00:02:52,440 --> 00:02:55,440 Speaker 3: came from a trove of two point five million leaked 55 00:02:55,480 --> 00:02:59,959 Speaker 3: documents which exposed a complex world of offshore tax heavy 56 00:03:00,520 --> 00:03:04,040 Speaker 3: that were costing Australia revenue but also other tax generating 57 00:03:04,080 --> 00:03:07,400 Speaker 3: countries around the world. So in response to this, Australia 58 00:03:07,440 --> 00:03:09,600 Speaker 3: teamed up with the US and the UK to launch 59 00:03:09,600 --> 00:03:12,720 Speaker 3: an investigation into these so called tax sheets. And when 60 00:03:12,720 --> 00:03:15,760 Speaker 3: they started looking into it, the Australian Tax Office found 61 00:03:15,919 --> 00:03:18,600 Speaker 3: more than a hundred wealthy Australians, some of them really 62 00:03:18,639 --> 00:03:21,920 Speaker 3: high profile, who had avoided paying tens of millions of 63 00:03:21,919 --> 00:03:24,799 Speaker 3: dollars in tax in Australia by setting up what's called 64 00:03:24,880 --> 00:03:28,680 Speaker 3: shell companies or trusts in so called tax havens in 65 00:03:28,720 --> 00:03:32,280 Speaker 3: Singapore or the Cayman Islands. And basically what that means 66 00:03:32,400 --> 00:03:35,400 Speaker 3: is that these individuals or businesses were sending their money 67 00:03:35,480 --> 00:03:38,280 Speaker 3: or their assets elsewhere to avoid paying tax on them 68 00:03:38,400 --> 00:03:39,240 Speaker 3: here in Australia. 69 00:03:39,640 --> 00:03:41,600 Speaker 2: And we know that that happens in a lot of 70 00:03:41,640 --> 00:03:45,040 Speaker 2: other countries as well, and that's how businesses are structured 71 00:03:45,080 --> 00:03:49,160 Speaker 2: around the world. So how did PwC specifically get involved 72 00:03:49,160 --> 00:03:49,440 Speaker 2: in that? 73 00:03:49,520 --> 00:03:53,040 Speaker 3: Then, when the Australian government worked out that this was happening, 74 00:03:53,120 --> 00:03:55,360 Speaker 3: or at least were exposed to the scale of what 75 00:03:55,520 --> 00:03:58,840 Speaker 3: was happening. As well as investigating the individuals and the 76 00:03:58,880 --> 00:04:02,680 Speaker 3: businesses they believe for dodging tax, the Australian federal government 77 00:04:02,800 --> 00:04:05,520 Speaker 3: also set out to review the entire system and actually 78 00:04:05,520 --> 00:04:08,480 Speaker 3: look at what legislation was doing or not doing to 79 00:04:08,560 --> 00:04:09,840 Speaker 3: avoid this happening. 80 00:04:09,560 --> 00:04:11,920 Speaker 2: And how to keep more money in the country going 81 00:04:11,920 --> 00:04:12,600 Speaker 2: forward exactly. 82 00:04:12,680 --> 00:04:14,440 Speaker 3: So they set out to try and reform the system, 83 00:04:14,800 --> 00:04:18,839 Speaker 3: and to do that they engaged PWC's head of International Tax, 84 00:04:19,160 --> 00:04:22,279 Speaker 3: a man named Peter Collins, as a consultant to help 85 00:04:22,320 --> 00:04:25,080 Speaker 3: them do that. And remember that name because it's going 86 00:04:25,120 --> 00:04:27,680 Speaker 3: to be important for the rest of this episode. So 87 00:04:27,800 --> 00:04:32,000 Speaker 3: Collins was tasked with developing enforcement rules on multinational companies 88 00:04:32,240 --> 00:04:35,599 Speaker 3: believed to be dodging tax and again important to remember 89 00:04:35,640 --> 00:04:39,400 Speaker 3: this point. To carry out this work, Colins signed not one, 90 00:04:39,480 --> 00:04:43,960 Speaker 3: but numerous confidentiality agreements during his time working with the government. 91 00:04:44,440 --> 00:04:48,800 Speaker 2: So it all sounds pretty standard. The government has contracted consultants, 92 00:04:48,960 --> 00:04:52,440 Speaker 2: the consultants have signed a confidentiality agreement, when did things 93 00:04:52,560 --> 00:04:53,440 Speaker 2: start to unravel? 94 00:04:53,720 --> 00:04:57,599 Speaker 3: So, at its most simple level, what went wrong is 95 00:04:57,640 --> 00:05:00,920 Speaker 3: that while Collins was working with the government to improve 96 00:05:00,960 --> 00:05:04,320 Speaker 3: their tax laws, he was also helping people to avoid 97 00:05:04,360 --> 00:05:07,680 Speaker 3: paying tax under the very laws he was helping to design. 98 00:05:08,800 --> 00:05:12,200 Speaker 3: Through the consultation process he was going through with the government, 99 00:05:12,680 --> 00:05:17,000 Speaker 3: he was privy to some pretty important information information about 100 00:05:17,040 --> 00:05:19,440 Speaker 3: how the government was going to going to legislate these 101 00:05:19,520 --> 00:05:20,920 Speaker 3: multinational corporations. 102 00:05:21,360 --> 00:05:22,320 Speaker 2: The only thing was. 103 00:05:22,560 --> 00:05:26,800 Speaker 3: PwC was working with the various a multinational corporations the 104 00:05:26,839 --> 00:05:28,560 Speaker 3: government was setting out to legislate. 105 00:05:28,760 --> 00:05:32,479 Speaker 2: Well, what could possibly go wrong there? Well, evidently quite. 106 00:05:32,320 --> 00:05:36,600 Speaker 3: A lot, because PwC was found to be actively distributing 107 00:05:36,640 --> 00:05:40,800 Speaker 3: the confidential information they were receiving from Treasury, and not 108 00:05:40,839 --> 00:05:44,640 Speaker 3: only using it to benefit PWC's current clients, they were 109 00:05:44,680 --> 00:05:47,240 Speaker 3: also using it to win over prospective clients as well. 110 00:05:47,279 --> 00:05:50,480 Speaker 2: Wow. So like part of their marketing play exactly Wow. 111 00:05:50,600 --> 00:05:54,880 Speaker 3: Internal communications within PwC revealed that that is exactly what 112 00:05:54,960 --> 00:05:58,240 Speaker 3: was happening. Collins was intentionally using the knowledge he gained 113 00:05:58,279 --> 00:06:03,360 Speaker 3: to advance PWC's position in the market. By some accounts, 114 00:06:03,520 --> 00:06:08,800 Speaker 3: PwC earned two point five million dollars after actively promoting 115 00:06:08,920 --> 00:06:12,440 Speaker 3: that they had insider information on how to sidestep the 116 00:06:12,480 --> 00:06:16,640 Speaker 3: government's knew multinational anti avoidance law, which again. 117 00:06:16,360 --> 00:06:19,800 Speaker 2: They had helped to design. Okay, so how did things 118 00:06:19,800 --> 00:06:22,200 Speaker 2: eventually come to a head. How did they get caught? 119 00:06:22,400 --> 00:06:25,320 Speaker 3: Well, the Tax Office started to work out that things 120 00:06:25,320 --> 00:06:27,839 Speaker 3: weren't quite adding up, and they were concerned about the 121 00:06:27,839 --> 00:06:31,440 Speaker 3: fact that PwC seemed to be promoting schemes to get 122 00:06:31,440 --> 00:06:34,520 Speaker 3: around that legislation that they had helped to design. So 123 00:06:34,600 --> 00:06:39,200 Speaker 3: they requested and eventually got their hands on internal PwC communications, 124 00:06:39,640 --> 00:06:42,080 Speaker 3: which revealed the extent of what was actually happening behind 125 00:06:42,120 --> 00:06:46,000 Speaker 3: the scenes. Then in twenty twenty one, an investigation began 126 00:06:46,120 --> 00:06:49,200 Speaker 3: into Peter Collins, who, if you've forgotten, that's PWC's head 127 00:06:49,200 --> 00:06:52,039 Speaker 3: of international tax and the go between here between Treasury 128 00:06:52,080 --> 00:06:52,920 Speaker 3: and PwC. 129 00:06:53,200 --> 00:06:55,080 Speaker 2: And what was the result of that investigation. 130 00:06:55,720 --> 00:06:59,279 Speaker 3: So the Federal Government's Tax Practitioner Board, they're the people 131 00:06:59,279 --> 00:07:01,400 Speaker 3: who decide whether or not you get to be registered 132 00:07:01,480 --> 00:07:05,920 Speaker 3: as a tax agent. They de registered Collins for integrity breaches, 133 00:07:06,279 --> 00:07:09,160 Speaker 3: so he won't be able to reapply for registration until 134 00:07:09,200 --> 00:07:12,120 Speaker 3: the end of twenty twenty four. At the start of 135 00:07:12,160 --> 00:07:16,040 Speaker 3: this month, the TPB also tabled copies of those internal 136 00:07:16,120 --> 00:07:20,320 Speaker 3: PwC emails in Parliament, which puts this whole case well 137 00:07:20,360 --> 00:07:22,160 Speaker 3: and truly in the spotlight, and we've seen the media 138 00:07:22,240 --> 00:07:25,840 Speaker 3: coverage take off since then. Then on the PwC side, 139 00:07:25,880 --> 00:07:30,160 Speaker 3: so them internally as a corporation, they commissioned an independent 140 00:07:30,200 --> 00:07:34,080 Speaker 3: review of its culture, accountability and governance after those emails 141 00:07:34,080 --> 00:07:37,680 Speaker 3: were tabled in Parliament. They've said they're open to firing 142 00:07:37,680 --> 00:07:41,040 Speaker 3: people based on the findings of that report. And PwC 143 00:07:41,240 --> 00:07:44,680 Speaker 3: CEO Tom Seymour, he has already stepped down from his 144 00:07:44,720 --> 00:07:47,400 Speaker 3: position because he said that he was privy to the 145 00:07:47,440 --> 00:07:50,080 Speaker 3: information that has caused all of this drama. 146 00:07:50,440 --> 00:07:53,640 Speaker 2: So PwC say they're going on a soul searching mission, 147 00:07:53,720 --> 00:07:57,400 Speaker 2: they're reviewing their culture. Their CEO has stepped down. But 148 00:07:57,520 --> 00:08:01,040 Speaker 2: what repercussions Well, PwC and Colin's face. 149 00:08:01,720 --> 00:08:03,800 Speaker 3: So at this point the matter has been referred to 150 00:08:03,840 --> 00:08:07,520 Speaker 3: the AFP, they've confirmed and investigation is underway and that 151 00:08:07,560 --> 00:08:10,560 Speaker 3: could result in charges, maybe even jail time. 152 00:08:10,600 --> 00:08:12,720 Speaker 2: Right okay, And it's going to be really interesting to 153 00:08:12,760 --> 00:08:16,720 Speaker 2: see what comes from that. It's very hard to get 154 00:08:16,760 --> 00:08:20,520 Speaker 2: convictions of the top dogs in corporate Australia, and I 155 00:08:20,520 --> 00:08:23,560 Speaker 2: do wonder what the long term repercussions of this are 156 00:08:23,600 --> 00:08:26,360 Speaker 2: going to be, especially because the government does work with 157 00:08:26,440 --> 00:08:29,440 Speaker 2: a lot of consultancy firms. PwC are not the only ones. 158 00:08:29,720 --> 00:08:32,840 Speaker 3: I didn't realize how big this business was, but Australia's 159 00:08:32,840 --> 00:08:38,600 Speaker 3: five largest consulting firms, including PwC, they secured two billion 160 00:08:38,679 --> 00:08:42,000 Speaker 3: dollars worth of tax payer funded work last financial year. 161 00:08:42,480 --> 00:08:44,240 Speaker 3: So that's huge. That's huge business. 162 00:08:44,320 --> 00:08:46,160 Speaker 2: It's a big business. All of these. 163 00:08:46,000 --> 00:08:49,840 Speaker 3: Revelations have really caused a lot of different government departments 164 00:08:49,880 --> 00:08:52,840 Speaker 3: to really stop and reflect on who they're asking to 165 00:08:52,840 --> 00:08:55,640 Speaker 3: do this really important work of advising them on policy 166 00:08:55,920 --> 00:08:59,559 Speaker 3: and also where they're putting tax payer money. The Department 167 00:08:59,559 --> 00:09:02,760 Speaker 3: of Finance has made it very clear that government officials 168 00:09:02,800 --> 00:09:07,480 Speaker 3: should be considering past confidentiality breaches when deciding who to 169 00:09:07,559 --> 00:09:11,320 Speaker 3: work with, and that effectively means that government departments are 170 00:09:11,360 --> 00:09:15,080 Speaker 3: unlikely to work with PwC in the immediate future. The 171 00:09:15,120 --> 00:09:18,679 Speaker 3: government's also committed to a new ten million dollar unit 172 00:09:18,880 --> 00:09:20,920 Speaker 3: to try and do more of its own assessments and 173 00:09:20,960 --> 00:09:25,640 Speaker 3: evaluations to ease their reliance on these consulting firms, but 174 00:09:25,760 --> 00:09:29,560 Speaker 3: that's that's going to be a long term game. In 175 00:09:29,600 --> 00:09:33,200 Speaker 3: the short term, a Senate Committee inquiry is investigating the 176 00:09:33,240 --> 00:09:36,319 Speaker 3: issue of how the government can ensure integrity when engaging 177 00:09:36,360 --> 00:09:40,280 Speaker 3: with firms like PwC. So that's underway, and experts have 178 00:09:40,320 --> 00:09:44,200 Speaker 3: already told the inquiry that an over reliance on consultants 179 00:09:44,240 --> 00:09:47,960 Speaker 3: over the years has eroded the public service. So traditionally 180 00:09:47,960 --> 00:09:50,160 Speaker 3: it was a public service doing this work for the government, 181 00:09:50,520 --> 00:09:54,120 Speaker 3: but these experts are saying that over time the ability 182 00:09:54,120 --> 00:09:55,840 Speaker 3: to do that kind of work has been avoided by 183 00:09:55,880 --> 00:09:57,520 Speaker 3: the fact that more and more of this money is 184 00:09:57,559 --> 00:09:59,000 Speaker 3: going to these consulting firms. 185 00:09:58,960 --> 00:10:00,960 Speaker 2: Me then need more in consultants. 186 00:10:01,160 --> 00:10:03,440 Speaker 3: We'll have to wait and see what the inquiry recommends 187 00:10:03,440 --> 00:10:05,680 Speaker 3: when it makes its recommendations, but it feels like that 188 00:10:05,720 --> 00:10:07,600 Speaker 3: could very much be one of the things that the 189 00:10:07,640 --> 00:10:09,199 Speaker 3: investigation will uncover. 190 00:10:09,520 --> 00:10:11,840 Speaker 2: We'll definitely keep an eye on this story. It's a 191 00:10:11,920 --> 00:10:15,640 Speaker 2: really interesting one about the connection between the private sector 192 00:10:15,760 --> 00:10:18,160 Speaker 2: and government, and it's important to remember that when we 193 00:10:18,160 --> 00:10:21,080 Speaker 2: say tax payer money, it's us We're paying tax that's 194 00:10:21,080 --> 00:10:23,880 Speaker 2: our money, and that's what makes this story really interesting. 195 00:10:24,160 --> 00:10:26,479 Speaker 2: We're definitely going to keep an eye on these findings 196 00:10:26,559 --> 00:10:30,160 Speaker 2: and what the AFP investigation uncovers and whether any criminal 197 00:10:30,280 --> 00:10:31,360 Speaker 2: charges will be laid. 198 00:10:34,480 --> 00:10:36,719 Speaker 3: Thanks for joining us on the Daily ODS. If you 199 00:10:36,840 --> 00:10:39,320 Speaker 3: learn something from today's episode, why not share it with 200 00:10:39,360 --> 00:10:41,880 Speaker 3: a friend. It really helps us grow. Will be back 201 00:10:41,920 --> 00:10:49,080 Speaker 3: again tomorrow. Until then, have a great day.