Mr Seymour has not responded to requests for comment on the report.

The report also highlights how the firm had a broader issue about repeatedly breaching confidences across at least five different sets of government consultations, and a misunderstanding of its obligations as a tax adviser and how legal professional privilege should apply.

Aggressive tax advice

The tax leaks issues date back to 2013, when former international tax partner Peter Collins triggered the scandal. Mr Collins shared confidential tax information with PwC personnel who used it to help clients sidestep Multinational Anti Avoidance Laws he was helping Treasury develop.

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 legal firms concluded “the conduct of the PwC Australia partners responsible for proposing and implementing the [advice] was inconsistent with PwC’s Global Tax Code of Conduct”. The document notes that PwC Australia took “a series of steps” to stop this type of advice being offered at the time.

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”.

LPP is an established legal principle that keeps confidential documents and communications between lawyers and their clients that were created for providing legal advice.

“The ATO challenged many of [PwC’s] 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 report says PwC took steps to resolve this issue as well at the time. The law firms say PwC failed to publicly “acknowledged the findings and its failings” over its tax leaks scandal.

‘Perception issue’

The findings of the Tax Practitioner Board against Mr Collins were first reported in January by The Australian Financial Review.

“Faced with subsequent media questioning and public scrutiny, however, former senior leadership downplayed the significance of the matter and severity of the findings and did not adequately represent the key issues,” the report says.

It also criticised Mr Seymour’s decision to tell the audience at The Australian Financial Review Business Summit in March that the tax leaks matter was merely a “perception issue”.

“Further, in March 2023, it was reported in the media that Mr Seymour characterised the matter as a ‘perception issue’ that the firm did not have in place effective systems to manage confidentiality agreements.”

Weaknesses in PwC’s internal processes meant it took four years before the firm’s top leadership was properly briefed that Mr Collins was being investigated for sharing confidential information, the report says.

“There is no single answer to the question of why the breaches of confidentiality and conflicts occurred and were not discovered and addressed earlier. Rather, it appears to be the result of a combination of multiple failings as well as missed opportunities to address the issues at an earlier point in time,” it says.

There was a “failure of individuals to identify and mitigate potential conflicts of interest” inherent in the firm providing advice on how to create tax laws while also providing advice to clients on how to respond to the same laws.

“Fundamentally, the confidentiality breaches occurred due to PwC
Australia’s failure to recognise and take steps to mitigate the inherent conflict of interest that existed from PwC Australia advising Treasury on the implementation of tax legislation while, at the same time, assisting clients to structure their business operations to comply with the new laws,” it states.

Other failures

Macquarie Business School Emeritus Professor James Guthrie said the report released did not take into account information that was not publicly available. “It has taken a decade for PwC Australia to admit its internal failings concerning governance structure and risk management in public,” he said.

The document outlines how PwC failed to track who had signed confidentiality agreements or to investigate the tax leaks properly, and took too long to identify and punish those responsible.

Partners were also criticised for failing to speak up about the issues.

“Those professionals should have spoken up when they received the information and brought the issue to the attention of PwC Australia’s [office of the general counsel] and risk teams so that it could be appropriately investigated and addressed in a timely manner,” the report said.

The firm has since updated its confidentiality tracking system and has vowed to implement all 27 of Dr Switkowski’s recommendations to plug holes in the firm’s governance, culture and accountability.