Court blocks PwC Australia from removing partner over tax leak scandal

FILE PHOTO: PwC sign is seen in the lobby of their offices in Barangaroo

By Lewis Jackson

SYDNEY (Reuters) - PwC Australia's attempt to remove a partner after an internal investigation into the leak of confidential government tax plans hit a roadblock on Friday after an Australian court ruled the professional services firm failed to follow due process.

The decision complicates PwC Australia's efforts to move past a national scandal which has cost the firm its local chief executive, forced a fire sale of its lucrative government consulting business and embroiled clients Google, Uber and Facebook.

The "big four" firm in July named eight partners and announced publicly they had left or would soon leave the firm following an internal investigation into the leak of confidential tax documents by a former partner advising government.

One of the partners named, Richard Gregg, filed suit and claimed PwC did not provide him with sufficient reasons to remove him from the partnership. In the media release, PwC said his actions failed to meet professional responsibilities without elaborating.

The Australian Supreme Court on Friday ruled in favour of Gregg and ordered PwC to pay legal costs. Justice David Hammerschlag said PwC's notice to Gregg did not "disclose any path of reasoning by which Management reached its view that the outcome should be that Gregg should be required to retire."

Lawyers for Gregg claim the firm's media release defamed him and in July began the first steps of a possible defamation suit, according to court documents reviewed by Reuters. Two former partners named by the firm over the scandal have also pushed back against allegations any wrongdoing.

A solicitor representing Gregg declined to comment.

PwC Australia was "committed to taking the appropriate action against those we believe have failed to live up to the firm’s professional, ethical or leadership standards" and was considering next steps in relation to Gregg, a spokesperson said in an emailed statement.

According to court documents reviewed by Reuters, PwC told Gregg the decision to remove him was not based on a finding he misused confidential government information.

The firm instead referenced several other issues, including a failure to "discharge his supervisory functions" for which he was fined A$100,000 in the 2021 financial year.

"Neither the occasions upon which he is said to have failed nor the way in which he is said to have failed is identified," Hammerschlag said.

(Reporting by Lewis Jackson; Editing by Shri Navaratnam)