Luke Sayers - PWC Scandal

[Corn Cobbers]

This is an issue. Unlike many revenue authorities in other countries, ATO do not have criminal investigative powers - hence referral to AFP.

And then ATO says to AFP "oh because of priiiiiiiivacy we can't really give you any details, sorry"

Boy have we been stitched up as a populace

 

[Taylor]

The ATO can also enter special agreements with parties for their own rulings, the company can enact those rulings and then the ATO can change it's mind and have those people charged and convicted with attempting to defraud the commonwealth - off to prison. Seen it happen more than once.

The system is too complicated... but imagine if we had a system where your occupation produced your flat tax rate.

 

[GWT6]

to be clear thats Collins the PWC Partner not Sayers.

As far as we are aware Sayers was not named in any emails (it would be highly unlikely to include the CEO in those kind of discussions).

You might claim that Sayers "should have known" but its a fairly long bow imo.

Also this isn't a governance failure - this is a classic ethics failure. Collins had signed a personal NDA. He knew he was breaking it. You can have all the governance in the world but if people just ignore it then it doesn't work.

It's a serious failure by Sayers - he led the culture that made people think that this type of behavior was ok.

This was not one rogue employee, it was shared among top people throughout the company who all thought that was the appropriate way to act. That's on the heads of the board and the Executive team, they all need to be held responsible for it.

 

[RightYouAreThen]

So are PWC getting nicknamed "Privileged White-collar Criminals" or "Piss Weak Campaigners"?

Hope fully it will be Prison Without Condoms

 

[RightYouAreThen]

to be clear thats Collins the PWC Partner not Sayers.

As far as we are aware Sayers was not named in any emails (it would be highly unlikely to include the CEO in those kind of discussions).

You might claim that Sayers "should have known" but its a fairly long bow imo.

Also this isn't a governance failure - this is a classic ethics failure. Collins had signed a personal NDA. He knew he was breaking it. You can have all the governance in the world but if people just ignore it then it doesn't work.

No its a governance failure. CEO (Sayers) was aware and did nothing .

 

[Belnakor]

No its a governance failure. CEO (Sayers) was aware and did nothing .

was he though.

he was the CEO, he wouldn't be across those kind of actions

 

[Satan]

was he though.

he was the CEO, he wouldn't be across those kind of actions

He should have been , it wasnt buying too many boxes of pens

 

[big_e]

was he though.

he was the CEO, he wouldn't be across those kind of actions

The CEO is ultimately responsible for everything that happens beneath them.

This isn't some grad telling his mates down the pub how much a famous client earns - this is a wilful, and widespread use of confidential information for their own benefit and against the interests of the government they were entrusted to advise. It's akin to insider trading - an offence that lands you in prison.

If that's the culture in the senior ranks of the organisation, that's absolutely on your head.

 

[krustyman]

PWC should conduct there own independent investigation to prove there was no wrong doing

 

[Satan]

PWC should conduct there own independent investigation to prove there was no wrong doing

ziggy Switkowski likes this

 

[Grand Uncle Horace]

All footy clubs have their share of well know racing identities. Carlton however is the exemplar. Elliot and Pratt were lucky to avoid doing time with Patsy Cline. Sayers is just another in the long line.

His general position in corporateville is very shakey, but his position as Prez of the Blues is untenable.

The Feds will look for financial compensation from PWC. They will lose their status as a preferred supplier of consultancy services with all arms of government and a lot of pte sector users. The AFP are not the smartest tools in the shed but I expect as well as being asked heaps of please explains their own governance will be beefed up. This may include a specially constructed investigative team to investigate PWC inc criminal liability of staff and Partners.

 

[BarbieITFC]

Probably off topic with regards to Sayers - but here’s my prediction for what happens next with regards to PwC.

Worth saying up front that I have previously worked for two of the ‘Big 4’, my wife worked for one of the others and she also worked for Arthur Anderson when it collapsed (she was in her second year on the graduate program).

Not a lot of people realise that these organisations are not single global entities. They are a network of single jurisdiction partnerships that come together under a single brand and binding agreements.

The sudden ‘collapse’ of Arthur Anderson came off the back of two quick scandals in the US partnership (Enron and then WorldCom) that threatened to drag the whole reputation of Arthur Anderson through the mud. Why I put ‘collapse’ into quote marks is because it was the brand that collapsed, not the people or the contracts. Across the world the various national partnerships sold out to the biggest bidder. In the UK (where my wife worked) they went home on the Friday as Arthur Anderson employees and came to work on the Monday as Deloitte employees. Same desk, same clients, same colleagues and boss, same laptop - just a different business card and email address. Across mainland Europe, Arthur Anderson sold out mostly to EY and so on. This all happened in the space of about 10 days across the world.

What this meant was the the US partnership was left high and dry with all of the liabilities and prosecutions. Many US partners not directly involved in Enron or WorldCom resigned their partnerships and took their teams and clients to other firms (the main difference being that individual partners in the US had to do this themselves rather than the whole national partnership moving as one).

The big difference between Arthur Anderson then and PwC now is this was the US partnership’s problem for Anderson and so got global coverage. With PwC it’s a more of a local Australia problem. The chances of it irreparably damaging PwCs brand globally is far smaller (mind you, in 2001 in the UK nobody in Arthur Anderson thought what was going on in the US would impact the European business).

So, what happens now with PwC. We’ve already seen global leaders come in to try and do damage control - but if this continues to spiral the next step for the global firm could well be they effectively disown and cut off the Australian practice. There may even be a ‘cease and desist’ notice on the firm in Australia using the PwC brand.

PwC partners (especially in consulting who don’t deal with Tax/Finance) will start to hawk themselves around to other local firms; trusting that their clients buy them as much as they buy the PwC brand. (I’m sure some will be doing this already). You may even see the consulting arm divorce from the audit/tax business and set up under a new name.

All of this will be designed to keep their individual fees rolling in - because in my experience most of the partners don’t really give a sh*t about the firm; they care about their own little fiefdom.

The tax partners will be the ones to suffer because they will be too toxic for other firms to touch (guilt by association); the audit partners may be impacted but the consulting/Digital partners will come out just fine.

There are plenty of jurisdictions where one or more of the Big 4 don’t operate and Australia isn’t a big enough fish for the global PwC brand to care about - they’ll just keep out for a few years.

 

[big_e]

In further news...

 

[Satan]

In further news...

Who offered?

 

[Corn Cobbers]

was he though.

he was the CEO, he wouldn't be across those kind of actions

Of course he bloody knew

Those emails were going everywhere

They're all in it up to their necks

 

[The Nostradamus]

Probably off topic with regards to Sayers - but here’s my prediction for what happens next with regards to PwC.

Worth saying up front that I have previously worked for two of the ‘Big 4’, my wife worked for one of the others and she also worked for Arthur Anderson when it collapsed (she was in her second year on the graduate program).

Not a lot of people realise that these organisations are not single global entities. They are a network of single jurisdiction partnerships that come together under a single brand and binding agreements.

The sudden ‘collapse’ of Arthur Anderson came off the back of two quick scandals in the US partnership (Enron and then WorldCom) that threatened to drag the whole reputation of Arthur Anderson through the mud. Why I put ‘collapse’ into quote marks is because it was the brand that collapsed, not the people or the contracts. Across the world the various national partnerships sold out to the biggest bidder. In the UK (where my wife worked) they went home on the Friday as Arthur Anderson employees and came to work on the Monday as Deloitte employees. Same desk, same clients, same colleagues and boss, same laptop - just a different business card and email address. Across mainland Europe, Arthur Anderson sold out mostly to EY and so on. This all happened in the space of about 10 days across the world.

What this meant was the the US partnership was left high and dry with all of the liabilities and prosecutions. Many US partners not directly involved in Enron or WorldCom resigned their partnerships and took their teams and clients to other firms (the main difference being that individual partners in the US had to do this themselves rather than the whole national partnership moving as one).

The big difference between Arthur Anderson then and PwC now is this was the US partnership’s problem for Anderson and so got global coverage. With PwC it’s a more of a local Australia problem. The chances of it irreparably damaging PwCs brand globally is far smaller (mind you, in 2001 in the UK nobody in Arthur Anderson thought what was going on in the US would impact the European business).

So, what happens now with PwC. We’ve already seen global leaders come in to try and do damage control - but if this continues to spiral the next step for the global firm could well be they effectively disown and cut off the Australian practice. There may even be a ‘cease and desist’ notice on the firm in Australia using the PwC brand.

PwC partners (especially in consulting who don’t deal with Tax/Finance) will start to hawk themselves around to other local firms; trusting that their clients buy them as much as they buy the PwC brand. (I’m sure some will be doing this already). You may even see the consulting arm divorce from the audit/tax business and set up under a new name.

All of this will be designed to keep their individual fees rolling in - because in my experience most of the partners don’t really give a sh*t about the firm; they care about their own little fiefdom.

The tax partners will be the ones to suffer because they will be too toxic for other firms to touch (guilt by association); the audit partners may be impacted but the consulting/Digital partners will come out just fine.

There are plenty of jurisdictions where one or more of the Big 4 don’t operate and Australia isn’t a big enough fish for the global PwC brand to care about - they’ll just keep out for a few years.

i've already heard many australian companies now cut PwC and go to tender as a result of this

they are extremely vulnerable to the other big 4 atm in aus

 

[BarbieITFC]

Of course he bloody knew

Those emails were going everywhere

They're all in it up to their necks

As per my longer message above - they really aren’t. If you asked Partner X in Sydney office what Partner Y was doing in the Canberra office, chances are they wouldn’t have a clue. They all operate their own mini practices within the bigger firm.

Can absolutely believe that multiple partners were in on it - but no chance ‘all of them’ were in on it.

If you’d asked the Sayers equivalent in the firm I worked in (one of the Big 4) what work the partner I worked for was involved in - they wouldn’t have had a clue.

 

[BarbieITFC]

i've already heard many australian companies now cut PwC and go to tender as a result of this

they are extremely vulnerable to the other big 4 atm in aus

100%

 

[big_e]

As per my longer message above - they really aren’t. If you asked Partner X in Sydney office what Partner Y was doing in the Canberra office, chances are they wouldn’t have a clue. They all operate their own mini practices within the bigger firm.

Can absolutely believe that multiple partners were in on it - but no chance ‘all of them’ were in on it.

If you’d asked the Sayers equivalent in the firm I worked in (one of the Big 4) what work the partner I worked for was involved in - they wouldn’t have had a clue.

They weren't just random partners.

Collins was the head of international tax, and was advising the government on a very big-ticket item. Pretty sure Sayers and Collins were tax partners in the Melbourne office at the same time, and would have been known to each other.

And there was a specific and deliberate plan - they even gave it a name, FFS - to use the information to get some of the world's biggest clients onboard as clients.

It doesn't pass the sniff test to think that the CEO had no idea.

But then again, if he didn't know, that may be even worse.

 

[Corn Cobbers]

As per my longer message above - they really aren’t. If you asked Partner X in Sydney office what Partner Y was doing in the Canberra office, chances are they wouldn’t have a clue. They all operate their own mini practices within the bigger firm.

Can absolutely believe that multiple partners were in on it - but no chance ‘all of them’ were in on it.

If you’d asked the Sayers equivalent in the firm I worked in (one of the Big 4) what work the partner I worked for was involved in - they wouldn’t have had a clue.

Can't believe it sorry.

 

[BobHawk]

Probably off topic with regards to Sayers - but here’s my prediction for what happens next with regards to PwC.

Worth saying up front that I have previously worked for two of the ‘Big 4’, my wife worked for one of the others and she also worked for Arthur Anderson when it collapsed (she was in her second year on the graduate program).

Not a lot of people realise that these organisations are not single global entities. They are a network of single jurisdiction partnerships that come together under a single brand and binding agreements.

The sudden ‘collapse’ of Arthur Anderson came off the back of two quick scandals in the US partnership (Enron and then WorldCom) that threatened to drag the whole reputation of Arthur Anderson through the mud. Why I put ‘collapse’ into quote marks is because it was the brand that collapsed, not the people or the contracts. Across the world the various national partnerships sold out to the biggest bidder. In the UK (where my wife worked) they went home on the Friday as Arthur Anderson employees and came to work on the Monday as Deloitte employees. Same desk, same clients, same colleagues and boss, same laptop - just a different business card and email address. Across mainland Europe, Arthur Anderson sold out mostly to EY and so on. This all happened in the space of about 10 days across the world.

What this meant was the the US partnership was left high and dry with all of the liabilities and prosecutions. Many US partners not directly involved in Enron or WorldCom resigned their partnerships and took their teams and clients to other firms (the main difference being that individual partners in the US had to do this themselves rather than the whole national partnership moving as one).

The big difference between Arthur Anderson then and PwC now is this was the US partnership’s problem for Anderson and so got global coverage. With PwC it’s a more of a local Australia problem. The chances of it irreparably damaging PwCs brand globally is far smaller (mind you, in 2001 in the UK nobody in Arthur Anderson thought what was going on in the US would impact the European business).

So, what happens now with PwC. We’ve already seen global leaders come in to try and do damage control - but if this continues to spiral the next step for the global firm could well be they effectively disown and cut off the Australian practice. There may even be a ‘cease and desist’ notice on the firm in Australia using the PwC brand.

PwC partners (especially in consulting who don’t deal with Tax/Finance) will start to hawk themselves around to other local firms; trusting that their clients buy them as much as they buy the PwC brand. (I’m sure some will be doing this already). You may even see the consulting arm divorce from the audit/tax business and set up under a new name.

All of this will be designed to keep their individual fees rolling in - because in my experience most of the partners don’t really give a sh*t about the firm; they care about their own little fiefdom.

The tax partners will be the ones to suffer because they will be too toxic for other firms to touch (guilt by association); the audit partners may be impacted but the consulting/Digital partners will come out just fine.

There are plenty of jurisdictions where one or more of the Big 4 don’t operate and Australia isn’t a big enough fish for the global PwC brand to care about - they’ll just keep out for a few years.

It is complicated here with the number of and size of government contracts. I don't think that the business with government can just be terminated so there needs to be a solution that caters for all this. It does expose how entrenched PWC is in the government and how dependent the government is on them. This scandal should prompt an all of government rethink of the entire consulting model. I imagine that conflict of interest runs very deep and has resulted in abuse of the power across many other facets of their work (this would include the other three consulting firms). My guess is that the whole thing is probably utterly corrupted.

 

[Bombermania]

It is entirely possible for one partner to not know what other partners are doing, it might sound far fetched but its a myth of office work that everyone is talking to each other when in reality most people only know what's going on in their team.

 

[BobHawk]

It is entirely possible for one partner to not know what other partners are doing, it might sound far fetched but its a myth of office work that everyone is talking to each other when in reality most people only know what's going on in their team.

From what I have read, one of the issues for PWC is that the information was communicated via email and many, many people received it. A major part of the problem for PWC is that it looks like a business-as-usual thing. This is why I think that PWC is in big trouble and can't just have one or two fall guys (which they have already tried) and that they use all the information and knowledge they are privy to from government work to generate income and profits for their business with other clients. And most likely the other consultancies would be doing the same thing. Again, the whole system looks completely corrupted. The Big 4 look like they are getting their cake with billions of dollars in government contract and get to eat it too by using that to generate other business. That would be a very simple and clear case of conflict of interest. This is a huge issue for PWC, the other consultancies and the government. It would be interesting to know if government members were aware of such activity and turning a blind eye. It all seems so incestuous. Morrison tried to get a job at PWC. I believe Frydenberg did get a job there. And so on.

 

[RAPPA]

Sayers it isn’t so

 

[BarbieITFC]

It is complicated here with the number of and size of government contracts. I don't think that the business with government can just be terminated so there needs to be a solution that caters for all this. It does expose how entrenched PWC is in the government and how dependent the government is on them. This scandal should prompt an all of government rethink of the entire consulting model. I imagine that conflict of interest runs very deep and has resulted in abuse of the power across many other facets of their work (this would include the other three consulting firms). My guess is that the whole thing is probably utterly corrupted.

What it does do is re-expose the core issue with the Big 4 - that they provide audit, tax and consulting services.

EY, KPMG and PwC all sold their consulting businesses in the wake of Enron and the Arthur Andersen collapse. Deloitte decided to hang on to theirs and try to ride out the independence debate in the US.

When selling their consulting arms each had clauses that the wouldn’t set up new consulting businesses for 10 years - and all three got around this after 7-8 years by setting up ‘Risk assurance’ practices.

The issue for these firms is they started out as accountancy firms and there is prestige in the tax and audit work - but the big $$ is in the consulting work.

The issue is that this creates competition internally for the audit/tax partners to bring in the same revenues as the consulting partners - and so they start to take risks and cut corners, when their work should be by the rules.

I worked on the consulting side in two of the Big 4, but also worked in two large but not audit/tax affiliated consultancies - mainly on government work. Far preferred the non Big 4 firms I worked for.

And to be clear - when consultancies are used properly they bring skills and expertise that make no sense for government and organisations to maintain on their books. The issue is the consultancies (and the Big 4 are renowned for this) that try to create a dependency on their work.