Ex-PwC Partner Blames Tax Scandal Fall-Out on Leaders’ Failures

A former Pricewaterhouse Coopers Australia tax partner has hit back against a claim brought by the firm which alleged he was responsible for the tax scandal that has plagued PwC for two years.

It’s the latest in a legal fight between Paul McNab and PwC over post-termination payments denied to him, which was filed in the New South Wales Supreme Court in January.

PwC’s cross-claim in the case, filed Nov. 14, alleged McNab caused “identifiable loss and damages” for the cost of investigations and inquiries into the leaking of confidential government tax information, “and the loss of all value in PwC’s government business which was sold to private equity fund Allegro Funds in a $1 distressed sale”.

PwC’s cross-claim alleged the damage McNab caused the firm outweighed any partnership payments it may owe him.

McNab breached the firm’s partnership agreement by knowingly receiving and sharing confidential information provided by former partner Peter Collins about consultations on government plans for a multinational anti-avoidance tax law, PwC’s claim alleged. Collins was barred from working as a tax agent by regulators in 2022, for breaching his government confidentiality agreement.

“PwC’s remarkable position is that I, a single partner in the Australian firm operating under direct instruction from senior PwC partners in Australia and internationally, am solely responsible for the significant reputational damage caused by the ‘PwC tax scandal’ over the past two years,” McNab said in a LinkedIn post on Wednesday.

“That damage was caused by allegations of breach of confidentiality obligations by partners who had them, and the utter failure of significant parts of the firm’s management to properly respond to these allegations and related issues,” he said.

McNab said he had not signed a government confidentiality agreement and had never provided a client with advice contrary to Australian tax law.

McNab’s dispute with the firm over partner post-termination payments began when he left PwC in 2020 for law firm DLA Piper.

PwC named McNab as being involved in the leak in June 2023 and, after he resigned from DLA Piper the following month, denied him the payments.

“It is implausible that the conduct alleged by PwC against McNab could be the cause of the tax scandal loss,” his Nov. 14 response to the firm’s claim said.

His statement partly reproduced emails from Collins to him and other recipients including “persons from PwC Australia, PwC UK and PwC US” as evidence he was not alone in receiving and sharing the information. It indicates his lawyers will be seeking disclosure of more documents related to the leak by PwC.

A directions hearing in the case will be held on Friday, Nov. 22. PwC said it would not comment on ongoing legal matters.