(Bloomberg Law) -- The head of PwC’s Australian arm resigned Monday as the fallout over the firm’s leaking of confidential government tax plans intensifies.
“After discussion with the PwC Australia Board of Partners, Tom Seymour is stepping down as CEO, effective immediately,” the firm, also known as PricewaterhouseCoopers LLP, said in an emailed statement. Kristin Stubbins, leader of PwC Australia’s Audit and Trust & Risk businesses, is taking over as acting CEO. A permanent replacement will be elected by partners “in coming months,” the firm said.
It was the latest shoe to drop in a crisis that has gripped the firm for months. The Australian Tax Practitioners Board revealed in January that it had barred PwC’s former international tax chief, Peter Collins, for breaking rules that prohibiting the sharing of confidential government plans, in this case related to programs for preventing corporate tax avoidance.
Seymour’s position had begun to look untenable last week, after emails related to the affair were made public following a demand from a key Labor Party finance official, Sen. Deborah O’Neill. The messages showed that the Australian firm had widely shared the confidential information internally with dozens of members, including as part of an effort to obtain business in Silicon Valley.
Seymour had initially played down the affair, describing it as a “perception issue,” and claiming that everyone with knowledge of it had left the firm. But after the email release, Seymour, a firm partner since 2002 and CEO since 2020, acknowledged that he knew the confidential information was being shared. He didn’t immediately respond to requests for comment Monday, outside of normal Australian business hours.
Stubbins, an 18-year partner, said in a statement that the firm was “committed to learning from our mistakes, listening to our stakeholders, and enhancing our culture to build stronger trust and transparency.”
In a separate statement Monday, PwC’s global network said the recent revelations presented “a clear violation of our Code of Conduct and our professional standards. It is unacceptable and goes against our culture and our values.”
The global firm said it was planning to commission an external, independent review of the Australian firm’s governance, culture and accountability, and, “we will not hesitate to take further actions.”
“As PWC’s statement indicates, this is a clear and serious Code of Conduct violation, so it would seem appropriate for the person responsible to step down,” said Mark DeFond, a professor at the University of Southern California’s Leventhal School of Accounting. “I am sure the investigation will eventually disclose whether he was directly involved or not.”
Echoes of KPMG Scandal
The affair, DeFond added, “sounds somewhat similar to the changes made at KPMG following their use of confidential PCAOB information a few years ago.”
In that case, KPMG US informed regulators in 2017 that its staff knew in advance which audits would be inspected by the Public Company Accounting Oversight Board, the US audit regulator. The firm responded to the cheating scandal by overhauling its audit practice, replacing four leaders, and moving its internal inspections teams outside the audit practice. It later invested heavily to reinvent its audit tools and expanded partner resources available to audit teams.
PwC, meawhile, is facing parliamentary demands for a full investigation of the firm.
“We need to get to the bottom of what happened and determine the extent of the deception that’s been orchestrated here,” Greens Sen. Barbara Pocock said in a statement. “Finance Minister Katy Gallagher has the power to immediately ban PwC from gaining further government contracts and she needs to step up and take action on this.”
“PwC is not the only consulting firm that plays both sides of the street when working for the government while at the same time advising private clients,” she added. “Actual and perceived conflicts of interest make many of these arrangements absolutely untenable.”
The Senate in February began probing the leak of the information. It has since launched an inquiry into the integrity of consulting services provided to the government.
—With assistance from Deborah Nesbitt and Amanda Iacone.
To contact the reporter on this story: Michael Kapoor at correspondents@bloomberglaw.com
To contact the editors responsible for this story: Jeff Harrington at jharrington@bloombergindustry.com; David Jolly at djolly@bloombergindustry.com
(Updates comment from Sen. Pocock in 13th and 14th paragraphs.)