PwC Australia, caught up in a breach-of-confidentiality scandal that has run for seven years, has said failure of leadership “contributed to an erosion of good governance” and weakened the firm’s “focus on our professional and ethical standards”.

An independent review of the firm found it suffers from “excessive” power conferred on the chief executive and a “lack” of “independence” and “external voices” in its governing body.

Chief executive Kevin Burrowes, who was appointed only in May this year, issued an apology and says the scandal, which began in 2016, was “never adequately investigated”.

Commenting on the independent review, Burrowes says: “The findings from these reviews and investigations reveal that in addition to identified wrongdoing, a series of mistakes, wrong decisions and poor judgements were made.

“Repeated failures of leadership contributed to an erosion of good governance and weakened our focus on our professional and ethical standards.”

The report and apology come as the culmination of a long-running scandal centred on the leaking of confidential information from a government client by a former partner, Peter John Collins, to colleagues. Collins had been working at the Australian Treasury since 2013 helping shape new tax laws for internet companies that became known generically as the “Google” law..

However, the scandal only went public in December last year when the Tax Practioners Board, a regulator, banned Collins from practice for two years. It later emerged in a statement from the then PwC chief executive, Tom Seymour, that Collins had left the firm. The affair has since cost the jobs of several partners, including Seymour.

The Tax Practitioners Board, a government agency, found that despite confidentiality agreements, PwC staff shared the information about with colleagues and subsequently clients.

The firm has since put its government consulting service up for sale and reportedly lost a number of government clients.

Rainmakers unchallenged

PwC’s independent review, conducted by Ziggy Switkowski, a nuclear physicist and former CEO of Telstra, Australia’s largest telecommunications company, found “rainmaker” partners—those bringing in high-value business—faced little challenge internally; board members being partners led to “impediments” to challenge; and the firm’s “aggressive” growth plans “overshadowed and occurred at the expense of the firm’s values and purpose”.

Switkowski writes that PwC also suffered from unclear lines of accountability, ineffective structures and processes, and an “overly collegial culture inhibiting constructive challenge”.

He says: “PwC Australia earned the trust of governments, regulators and the wider community over many decades.

“However, the firm is now in the unenviable position of navigating the brutal unravelling of that trust.

“It is also facing into the challenge of re-establishing trust internally, including among partners.”

PwC will be hoping this report and apology will finally cap the scandal. Accountants across the world will be watching closely—and potentially reviewing their own governance arrangements.