Why PwC’s latest grand apology falls flat

The most obvious example is the firm’s approach to naming those most directly involved.

Just hours after Prime Minister Anthony Albanese added his voice to the chorus calling for PwC to name those at the centre of the scandal, the firm refused to divulge the identities of the nine partners who have been ordered to go on leave pending further investigations.

Clearly, there will be lawyers from all parties heavily involved in this matter, making the naming of names difficult. And as Stubbins argues in her letter, there are different levels of culpability at play here – just because you were sent an email doesn’t confirm guilt.

Why not just retire them now?

The Australian Financial Review has already reported about how the firm’s legal representatives have created a list of about 35 Australian partners colour-coded by level of involvement and knowledge that confidential information was used. Partners have been told that there are four Australian partners who were “most involved” in the tax leaks scandal.

When you fail to do what the prime minister demands, you’re hardly cauterising the wound.

PwC has thrown a fresh bone to those demanding heads on spikes by announcing the chairman of the governance board, Tracey Kennair, and its governance board risk chairman, Paddy Carney, have decided to step aside from these roles.

Both are long-standing members of PwC’s board of partners, so their decisions are appropriate, particularly given the horrendous handling of this scandal since it became public five months ago. But Chanticleer can’t help but note it’s two women who received the most public drubbing on Monday.

The appointment of external directors to PwC’s governance seems a sensible if belated move. It’s one thing to admit to “a culture of aggressive marketing in our tax business” but it’s another thing entirely, as Stubbins quite rightly notes, that the leadership of PwC was too weak to “identify and keep this in check”.

Where does the ring-fence stop and start?

The announcement that PwC will “ring-fence the provision of services to federal government departments and agencies to enhance our controls to prevent conflicts of interest” is head-scratching.

While the attempt to contain the fallout from this scandal to one part of the firm is understandable in theory, how this works in practice is harder to understand. For starters, the work that PwC does for the federal government spans many areas of its business, from tax to technology to defence. Where will the fence stop and start?

But more importantly, this tax scandal has occurred because PwC was prepared to hop across the Chinese walls between corporate work and government work. Does the fence prevent this? Or just put different governance rules around it?

At least some of the unnamed nine are members of the firm’s executive board and governance board, two of the key decision-making bodies within the firm. This would seem to underscore that those at the centre of this scandal are not in some far-flung corner of the firm, but right at the centre of it.

While the clarification that Stubbins offers around the culpability of staff who were involved in these confidentiality breaches is reasonable, her attempt to clarify a second matter falls flat.

The embattled CEO writes that its “clients were not involved in any wrongdoing and no confidential information was used to enable clients to pay less tax”.

Technically, this appears to be true; as previously reported by The Australian Financial Review’s Neil Chenoweth and Edmund Tadros, PwC did wait for then-treasurer Joe Hockey to announce the multinational anti-avoidance law on budget night in May 2015 before it started marketing its work-around to clients a few hours later.

But what PwC’s clarification doesn’t acknowledge is that while the firm might have waited for Hockey to fire the starting gun, its misuse of confidential information meant it had a huge head start over its rivals.

The entire purpose of the tax advice was to reduce tax liabilities in the targeted companies with the head start afforded by the confidential information to beat the December 31 cut-off for restructuring.

Stubbins might think this clarification protects its clients, but for a firm aiming for full transparency, it’s too cute by half.