‘Tone is obviously inappropriate’: read the government’s letter to PwC

After PwC used confidential government information to solicit more work from a department, the government sent the consulting firm a “friendly” letter reminding it not to do it again and thanking the firm for its efforts. 

The consulting firm, which had been engaged as a “strategic partner” of the Department of Agriculture, Water and the Environment as part of a $40 million contract, was warned in November 2021 over “high levels of direct sourcing and concerns around the strategic partner using confidential information to make unsolicited proposals”.

The warning came after “an instance where the strategic partner offered an Information Technology solution to [the department] as a result of insights gained by the strategic partner firm from attending [executive leadership team] meetings,” a recent auditor-general report said.

The news comes as the Australian Federal Police confirmed it’s investigating another confidentiality scandal involving PwC, also known as PricewaterhouseCoopers.

The January 2022 letter to PwC from Lionel Riley, a senior bureaucrat at the Agriculture Department, was revealed at budget estimates this week and obtained by Crikey. 

“I would initially acknowledge PwC’s significant contribution to the department’s transformation agenda and its multi-faceted role of both supplementing and building the department’s internal capacity and capability, while at the same time delivering specialist expertise, critical advice and solutions,” the letter began. 

Riley went on to say that while the department appreciated that it was necessary for PwC to get access to government operations, senior staff and information in order to do its job, PwC “must not use the knowledge and access … to develop commercial service offerings … or to otherwise provide unsolicited proposals to the department”. 

The firm was also reminded not to share its knowledge of department operation “more broadly within its business”.

“In closing, I would like to acknowledge PwC’s ongoing commitment to supporting the department and [look] forward to working with you and your team in 2022 to assist us in achieving our transformation agenda,” the letter ended. 

Department of Agriculture Secretary Andrew Metcalfe was grilled over the PwC contract at estimates on Wednesday. 

He acknowledged that “$40 million is a very big sum of money” but insisted it had been spent wisely. 

“In putting in place this arrangement, we were seeking to ensure the best possible value for money,” he said. 

Metcalfe also said the department would have liked to hire more public servants instead of using consultants but that it had been unable to. 

“Because we were being asked to do a lot more work and not being given any public servants to do that job, we were relying upon consultants and contractors,” he said. 

Metcalfe described the meeting, involving PwC staff, that gave rise to the unsolicited proposal as a “workshop or a brainstorming session” rather than a “confidential discussion”. 

“Following that, it’s clear that some form of conversation occurred between one of those PwC people at that meeting, and another part of PwC … and hence, we got this unsolicited approach,” Metcalfe said. 

A PwC spokesperson told Crikey: “When the matter was raised by the client we addressed the feedback immediately and the engagement continued.”

Greens Senator Barbara Pocock, who grilled Metcalfe and obtained the letter from the department to PwC, described it as “a very friendly letter for what is clearly a serious breach of trust”.

“The tone is obviously inappropriate for such a serious matter,” she told Crikey. 

In a separate development, Treasury Secretary Steven Kennedy said on Wednesday he had asked the AFP to consider a criminal investigation into PwC’s former head of international tax, Peter-John Collins, who shared confidential information about tax laws with colleagues and clients.

Collins had been asked by the federal government to help draft new laws to target multinational corporations accused of moving profits offshore. 

“An investigation has commenced and no further comment will be made at this time,” an AFP spokesperson told Crikey.

The matter was investigated by the Tax Practitioners Board, which found Collins hadn’t acted with “integrity” and disqualified him from practising until the end of next year.