PwC tax scandal: staff stood down over concerns problem ...

PwC has agreed to a federal government order to stand down all employees involved in the alleged misuse of confidential information from government work, responding to concern the problem is “significantly broader” than one partner at the firm.

The public service has stepped up its response to PwC for sharing confidential tax policy information to drum up business, with the head of Treasury referring the matter to police and finance ordering staff “directly involved in, or who had knowledge of, the significant breach” to be stood down.

Questioning in Senate estimates on Thursday also revealed that former New South Wales police commissioner and now PwC partner, Mick Fuller, contacted his friend the AFP commissioner, Reece Kershaw, after the scandal broke in January.

Kershaw told the Senate legal and constitutional committee that Fuller, who conducted unrelated work reviewing ACT policing services, had texted him to say he was “disappointed with what’s occurred, as in the conduct … of the firm”.

Kershaw said he intended to provide a copy of the text message exchange to the committee, and took on notice questions about whether Fuller had contacted anyone else at the AFP.

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Earlier, AFP officials confirmed they had “received a report” alleging “unauthorised use or disclosure of confidential information” in breach of the Crimes Act, leading to what is now an “active investigation”.

PwC has been under pressure since January when the Australian Financial Review first reported the former head of international tax for PwC Australia Peter-John Collins had been deregistered by the tax practitioners board for failing to act with integrity and for sharing confidential government briefings.

On Thursday the finance department secretary, Jenny Wilkinson, revealed that on 19 May the department directed PwC to stand the relevant staff down “from all existing and future contracts under the management advisory services panel”.

It also issued a recommendation for PwC to stand the staff down with respect to all commonwealth contracts until the review of PwC’s culture and governance, to be led by Ziggy Switkowski, was complete. PwC has agreed to both measures and complied with the requests.

Wilkinson said the department had become aware on 2 May that the “breach of confidentiality was significantly broader than a single individual within PwC” and that PwC’s initial response “insufficiently addressed” the issues raised.

This raised “serious concerns about the broader culture in PwC and undermined our confidence in their earlier response”, she said.

Finance officials revealed that the commonwealth has a total of $255.2m in contracts with PwC. Nine of these are with the AFP, including seven related to its role as the AFP’s internal auditor.

Greens senators David Shoebridge and Barbara Pocock labelled that alleged conflict “untenable” and “impossible”, calling on the AFP to terminate the PwC contracts immediately.

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Kershaw responded that the public could have confidence that the audit function and investigation were structurally separated.

In an email to senior finance department executives, tabled in the hearing, Wilkinson said the department had “provided greater flexibility for contract managers to terminate a contract for material breach, including in relation to performance that is beyond the specific contractual arrangement”.

Model clauses will also “require ongoing notification so that contract managers are aware of such behaviour as soon as it is found”, she said.

In January, a PwC spokesperson told Guardian Australia it was “deeply disappointed that in this government consultation process we failed the high standards we set for ourselves as a firm”.

“We recognise and understand the need for our tax system to operate with integrity and deeply regret confidentiality in this matter was not maintained.”

On Wednesday Guardian Australia revealed PwC was warned for using confidential information gleaned from meetings with senior executives at the agriculture department to make unsolicited proposals for more work.

The Nationals leader, David Littleproud, who was agriculture minister at the time PwC was selected as a strategic partner of the department, told Guardian Australia that PwC had “done the wrong thing” in that instance and should “pay the penalty”.