Rogue Consultants: PwC, Tax Evasion and Getting Clients
Things are not looking up at PricewaterhouseCoopers (PwC), a global professional services firm piratically free in sharing confidential tax information gathered from government clients. Then again, the firm’s expertise is not so much to look up to a principled heaven as down to a tax-proof Hades, buried in the scrambling minutiae of accounting and deception.
This year has been particularly eventful for PwC, notably in connection with its relationship with one of its most valuable clients: the Australian Commonwealth. It all began with the Australian Financial Review’s sniffing around the role played by now former PwC tax partner Peter Collins. Collins had circulated confidential information about proposed government plans to target the moving of multinational company profits to offshore havens to avoid tax. This took place despite the signing of a number of confidentiality agreements with the Australian Treasury between 2013 and 2018.
The little-known regulator, the Tax Practitioners Board (TPB), had made little fuss of the whole business, only going so far as to place a two-year ban on re-registering Collins as a tax practitioner. It was small beer given his breaches, which included a failure “to act with integrity, as required by his professional, ethical, and legal obligations.” The best TPB Chair, Ian Klug, could do was express concern “when tax practitioners abuse their positions of trust, or fail to act with integrity.”
Then came the probing of an inquiry from the Senate Finance and Public Administration Committees, and the release of 144 pages of internal PwC emails. These revealed that PwC had created a “global team” to increase their client base using the tax information in question. The emails also reveal 53 redacted PwC emails addressed in Australia, the United States, the United Kingdom and Ireland. Others were sent to tax partners and directors. It is estimated that the company raked in A$2.5 million from the leaked material.
In March, the PwC Australia executive Tom Seymour did few favours for himself, observing at the Financial Review’s Business Summit that evidence submitted to the Senate committee revealing that 20 to 30 partners and staff had received confidential information was merely a “perception problem.” He also insisted, without clarification, that those “found to be directly involved,” had left the firm.
Since then, Seymour, along with two other board members, Pete Calleja and Sean Gregory, have also joined the ranks of the departed, though they are unlikely to face any consequences. The firm’s pompously named global legal business solutions leader, Tony O’Malley, has been thrown into the role of chief risk and ethics leader, a title befitting a company obsessed by the jargon of “values”.
Committee Chair Labor Senator Deborah O’Neill, champing at the bit, is keen to identify the 50 PwC partners and 14 US tech companies that are said to feature in the relevant emails. Educated guesses already point to such companies as Google, Microsoft and Apple as recipients of the confidential tax information.
Her assessment of PwC’s overall contribution to government is barbed: “Between [the company’s] role in multinational tax avoidance and the shabby way they handled their report into the Robodebt scheme, there are serious doubts about whether any work the consulting firm did for government can be relied upon.”
Even as the flames rise, PwC is attempting to rein in the prospects of a broader inquiry, hoping that a review the company itself announced, to be led by former Telstra CEO Ziggy Switkowski, will take care of any matters regarding company governance and practice. In a toothless threat, a promise has been made that “exiting further people and partners from the firm” would take place, a form of cleansing that will leave the transgressions essentially unpunished.
As for the public and press, the best they can hope for is a skimpy summary of findings. “That the release of the information will be controlled by PwC,” argues O’Neill, showed how “the review does not have any credibility.”
Greens Senator Barbara Pocock has made much the same observation. “What PwC is proposing is like putting someone who’s been charged with corruption in charge of their own trial.” Irrespective of who was “put in charge, it’s still paid for and run by PwC. Promising to release a summary of the fundings is not the same thing as making the findings available to the public.”
In Australia, it has also been particularly galling to see the prospect that sharing such confidential information – notably in terms of tax policies – will see no PwC employee or member of management spend time mournfully gazing from a prison cell. That prospect is what faces Richard Boyle, the Australian Taxation Office’s whistleblower who exposed the predatory conduct of its debt collecting practices with tigerish courage.
Boyle recently lost his appeal to seek immunity from prosecution from that most feeble of instruments, the Public Interest Disclosure Act 2013 (Cth), with the judge taking issue with his supposedly cavalier tactics in gathering material on the abuses in question. In the words of ABC business editor Ian Verrender, it “has highlighted the stark difference in justice meted out to those acting alone as opposed to those protected by the veil of the corporate world.”
To share details of such abuses with a public audience is considered a criminal act; to share confidential government information with wealthy, private entities and individuals keen to increase client numbers clearly isn’t. At best, regulatory agencies will threaten deregistration. Internal reviews will suggest resignation or exits, moneyed, of course. One course of action, used by Boyle, involves injecting an ounce of integrity into a system already maligned, hopefully trying to improve it; the PwC formula is intended on not merely mocking it but making a pile along the way. It’s time for governments to cut the financial and accounting consultocracy loose, and maybe jail a few of its members.
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8 comments
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New England Cocky
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Williambtm
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Anthony Judge
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Chan
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leefe
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New England Cocky
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B Sullivan
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Clakka
Return to home pageSadly the Albanese LABOR government will be too scared to take appropriate action in this matter. So what would be appropriate action?
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1) A full Royal Commission to determine the players in this betrayal of the Australian taxpayers and to get an estimate of the cost to Australian revenue.
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2) the banning of PwC from all work from any Australian or any state government or government agency work for at least 20 years, with a fine equivalent to the amount earned by PwC in this consultancy matter, paid for individually and severally by the accountants involved.
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3) More importantly, a whole of life ban from both accountancy and any other work for any Australia or state government or government agency for each and every PwC accountant who took part in this huge breach of trust that may even qualify as treason.
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4) If footballers can receive bans for improper playing tactics, then white collar crooks like PwC should also be subjected to the same standards.
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It is time to stop pussy-footing around with these white collar criminals who rely upon their school old boys networks to stay out of jail where they truly belong after conviction on criminal charges.
Well said New England Cocky, the shine of Australia’s Labor party is rapidly diminishing.
I had read a Mondaq article today that had spelled out the the legal intricacies & consequences relating to the carriage of or an action of White Collar Crime committed in Australia, as there was sufficient information held in that Mondaq article report that bears directly on the Lib/Nat party’s infamous Robot Debt scheme.
The referred to article was able to translate how the Robo-Debt Scheme, in my mind had been pushed through despite the number of misgivings held by a certain small number of better informed persons summoned to the Inquiry into the Robo-debt scheme.
So there you have it AIM followers. I present the linked article below.
Be sure to read this link in its entirety to capture the conduct of 2 of Australia’s Big Banks.
Interesting is the history of the Commonwealth Bank after it had been listed on Australia’s Stock Exchange. Wherein the volume of White Collar crimes having been committed just prior to the Royal Commision of Inquiry into Australia’s Financial Sector.
https://www.mondaq.com/australia/white-collar-crime-anti-corruption–fraud/1316042/white-collar-crime-definition-categories-evolution-and-notable-cases
The focus is necessarily on a particular case. For me the question is whether identifying a tree ensures loss of perspective on the wood — as the saying goes. The article notes the role of regulatory bodies, citing the Tax Practitioners Board (TPB) and the responsibility of the Senate Finance and Public Administration Committees. I am however fascinated by the cynical dependence on such “oversight” bodies — given the deliberate ambiguity with respect to blindspots offered by “oversight”. With what frequency does oversight enable abuse — excused by the challenge of blindspots. Oversight bodies, and their honourable members, are understandably challenged by the amount of information they are expected to process, and the limited time for even the most conscientious to fulfil their assumed responsibilities. The Roman Empire offers the saying Quis custodiet ipsos custodes? — Who watches the watchers? (https://en.wikipedia.org/wiki/Quis_custodiet_ipsos_custodes%3F). Who has oversight on oversight bodies, presumably themselves similarly vulnerable to inefficacy — and rejoicing in the facilities of oversight? Are there even higher orders of oversight to be imagined? Are governments susceptible to dementia — and who would know?
Besides PWC, there is the matter of how each gov has used the expertise of highly qualified local tax experts to stitch up little Aussie battlers in general, year in, year out.
The gov plan is a slow-mo demolition of the middle class.
Any inquiry needs strict guidelines as to what is questioned lest the peasants stir.
Probably best to avoid inquiry into any and all tax advice, international and national. The law of unintended consequences might uncover rabbit warrens of predatory policy making along with the attendant advantage that goes with insider knowledge. When policy makers design tax-free thresholds to deliberately lag inflation, or use negative gearing as a both a hand-break on productivity and cunning route to pay less tax, or captial-gains tax discount to entrench wealth at the top end, etc, it is no wonder govs will do nothing about PWC.
NEC:
Can we give a few days in the pillory, as well? Not to detract from your entirely appropriate suggestions, but I have some tomatoes that are going off and the compost bin is full …
@ leefe: Hmm ….. I would prefer the Italian method of hanging by the ankles inverted from the deck of the Sydney Harbour bridge
Anthony Judge, “cynical dependence”
Is that like wealthy poverty? Cynicism is a philosophy of self reliance depending upon nobody else but one’s self. Cynics have no desire to be dependent on others, no desire to manipulate others, nor cheat or exploit other people to acquire anything, least of all wealth, because they want to live as unencumbered by possessions as they possibly can. The term you use is quite common in public speech and I don’t blame you for using it, but it is a misleading oxymoron non the less.
On another point of pedantry, it is less ambiguous to use the words – can’t see the forest for the trees – trees being made of wood can confuse the saying, implying that you can’t see the wood because it is in the shape of wooden trees. The forestry industry are certainly incapable of seeing the wonders, the intricacies and the vulnerability of a living forest because all they can see is the wood just standing their waiting to be converted into money.
My apologies for my intrusive pedantry, I commend your excellent comment.
No surprise to me at all, I have understood first hand the guile and BS of at least 2 of the big 4 in ‘consulting’ number crunching for the government (NSW – Darling Harbour Development, and Vic – Regional Fast Rail). It beggars belief when first encountered, but over umpteen years in major developments, one gets to understand it’s pretty standard m.o. in the provision of ‘cover’ for come-what-may, pork barreling politicians. Any way to make their thought bubble work, is a good way.
I must at this point brag that I (as a one man band) led my client’s crew in unravelling a NSW gov’t pork barrel, and subsequent deception that cost my client dearly. The gov’t fought me viciously for 2+ years, but we brought them to brook, when they settled on the steps of the Supreme Court for multiple millions of dollars. It’s a hard and dirty job, and you’ve gotta know where and how to look – you need to understand the allegiances of your lawyers, and then work them hard, and you need a client with the courage to take it all the way. It’s a rarity, most roll-over.
Of course there is a tacit understanding between those big gov’t consultants, the pollies, and the benefiting corporations, that what comes around goes around, and favours must be returned. The taxpayer’s pocket just does not come into it.
For example, take this Washington Post book review of the worldwide operations of McKinsey & Co. – it’s a pearler:
https://www.washingtonpost.com/books/2022/09/29/scandals-hypocrisy-behind-mckinseys-sterling-reputation/