Contributed by Joe Montero

First the PwC scandal and its fraudulent relationship to government. Now Deloitte is taking a hit as its similar toxic relationship with government is made public, thanks yet again, to whistlebower leaked documents.

The new scandal makes it clear that there is something wrong with the ways the consultancy giants operate and that this is systemic to the way they do business. The problem can’t be written off as merely a case of a few bad apples. It demands an appropriate response from the government, and when this isn’t coming, the rest of us gets to pay the price.

Consider the Deloitte case. Access to confidential defence documents was given, and they were used to help Deloitte line up lucrative government contracts.  Deloitte was previously involved in the creation of the Robodebt scheme that is now recognised to have been illegal. Get the picture?

A third of the big four, EY or Ernst and Young as it used to be known, was the advisor to the Victorian government on the Commonwealth Games and central to the cost blowout from around $2.5 billion to almost $7 billion.

Image by erhui/IGetty

Fourth on the list is KPMG. This one might not have been caught out yet. But consider this. Its Australian division was fined $US450,000 in a United States court in 2022 for violations by the Public Company Accounting Oversight Board (PCAOB) over several years, in connection with its internal training program. They were found to have shared confidential information with their clients. Some of the other countries where KPMG has been found to have acted improperly are South Africa, Bangladesh, Colombia, Sri Lanka, Nigeria, and the Philippines.

Odds are they have behaved similarly in Australia.

Australian governments have helped to create this by allowing the ballooning of the lobbying industry and the wholesale tendering out of public sector advice and planning. This was always going to go rotten.

The big players moved in, and they were in it for the money. The network of contacts developed between them, senior public servants, and politicians, created both the incentive and opportunity for corruption on an industrial scale.

Together, the big four are a cartel controlling their industry. All are based in the United States and serve as conduits to Wall Street and global financial system.  Operating as a cartel means collusion over shared interests. Using a combination of accounting, taxation, audit, consulting, and legal services, they have established influence over governments and international trade, finance and investment flows.  

Australia has been locked into this. The big four have considerable influence over the government and the domestic finance and investment system, and a measure of the strength of major Wall Street investors in the Australian economy.

The past decade saw government spending on the four rise by a whopping 1,200 percent, according to analysis by Centre for Public Integrity. A telling lack of transparency in contractual arrangements means that most of the details remain hidden away. Major political parties have been the receivers of $4.1 million in donations over the same period according to one study. The truth is we don’t really know how much they gave.

The penetration of this cartel compromises the separation between government and conflicts of interest in the decision-making process.

What has been unearthed so far is likely to be only a glimpse at a problem that exists on a much bigger scale, stretching out to how  big business is conducted through government and the economy, via the network of contacts, in which the four stand at the centre, and use government as a tool, aiding anti-competitive practices, tax avoidance, and the channelling of public resources to the economy by diverting resources from other uses.

Australia can only begin to put a stop to this by enforcing a separation between government and the big four, returning planning and advice to government departments, closing the legal loopholes, and applying effective control and the punishment of bad behaviour.