Three legal inquiries blamed the big four firm’s troubles on a “combination of multiple failings” by individuals and in its governance, culture and accountability.
Legal inquiries ordered by PwC Australia into its tax leaks scandal found a “combination of multiple failings” by individuals and the firm’s governance, culture and accountability systems.Wood Mallesons, Allens and Linklaters concluded that the scandal – which has rocked PwC’s local operation and heightened scrutiny of the multibillion-dollar consulting sector – was due to a litany of shortcomings and missed opportunities to address problems earlier.
The report outlines how in 2016 tax partners at the firm proposing tax structures relating to the then-new MAAL for two clients that were so aggressive that the Tax Office forced the companies involved to unwind the arrangements and replace them “with a structure acceptable to the ATO”. The report also takes aim at PwC’s loose understanding of legal professional privilege when it tried to apply the principle to stop the ATO getting hold of certain documents related to its MAAL advice in 2016.At the time, the firm argued that the respective projects were being “directed by legal practitioners in PwC’s engagement letters, which would have permitted clients to claim LPP over their communications”.
“The ATO challenged many of [PwC’s]the LPP claims” and a subsequent review of the firm’s actions found that conduct “was contrary to PwC Australia’s values and policies concerning the assertion of LPP”.The law firms say PwC failed to publicly “acknowledged the findings and its failings” over its tax leaks scandal.
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