PwC must be stopped instead of papering over what it has done

Contributed by Joe Montero

Scandal ridden PwC aims at a cover up to get itself off the hook. The US based giant consultancy to big business firm is now known in Australia for using its connections with government for its dirty dealings.

Exposed by information falling into the hands of a Senate committee finding that the firm had engaged in a “calculated” breach of trust by using confidential government information to help clients avoid tax, PwC finds itself reeling from multiple tax related scandals.

The response of the parent n the US has been to transfer Australian division CEO Kristin Stubbins and bring in an executive from its British wing, Kevin burrows, to take over the role of Australia CEO. PwC hopes that doing this will help to convince the Australian public that it is actively turning over a new leaf.  

Photo by Jessica Hromas: Moved PwC COE Kristin Stubbins as a senior partner in 2016

A shallow cosmetic change like this will do nothing to change behaviour, and it is a good indicator that there will be no change.

More sinister is the deal about selling off its government contracts for $1. The news was revealed by the Australian Financial Review (23 June 2023). This makes a catchy headline. The catch is that there is something shady going on.

PwC’s government business is to be hived off to a Stock Exchange listed firm calling itself Allegro Funds. The $4 billion entity was Founded in 2004 by Chester Moynihan and Adrian Loader. Sounds reasonable? The catch is that part of the deal is that PwC will maintain its involvement.

It is still unclear how this is going to be brought about. But we know PwC will be involved in Allegro’s consulting arm. We know that both will be involved in the establishment of a new entity to handle PwC’s government contracts, and we know that 130 PwC partners and 1,750 staff will be transferred to the new arrangement, where they will Presumably carry on business as usual, from their new address and using a new logo.

The reorganisation has been made necessary by the effective block on PwC from getting any new contracts, and more importantly, rising public antipathy. PwC has a bad smell about it. the new arrangements amount to a public relations campaign to turn attention away from wrongdoings.

for a start, PwC’s scandal has highlighted a need for greater accountability. It also highlighted an unhealthy connection between government and corporate interests, which doe harm o society. It is this connection that is the most important matter.

This case took on what amounts to the theft, even if technically legal, of tax money that could have been used to bring benefit to the Australian community. It also revealed the willingness of government authorities to pass on sensitive information for private business use.

Then there is the spectacle of an ongoing investigation by the Federal Police, when they too are tied in contracts with PwC, and {Police Commissioner has been revealed to have had a close personal involvement in at least one of these contracts. Here is a clear conflict of interest, meaning that the outcome of any investigation will be subject to question.

It is unlikely that PwC will be properly held to account for what it has done.

PwC is one of the big four auditing US based giants that dominate the field. All operate in Australia an enjoy similar government contracts. This is the true extend of the scandal, and it begs a question. why aren’t they been investigated? nothing is going to change unless they are investigated and appropriate regulation of how they operate is put in place.

The big four are central to a global framework that is designed to facilitate profit shifting to minimise tax. an important part of the business model is to build connections with government and profit from profit from privileged information, The OECD and G20 nations discussed this and came up in 2015 with what they called the Profit Shifting Project (or BEPS Project), to counter the framework. The agreements remained on the books but were never applied.

Peter Collins, a former PwC advisor, was supposed to have been recruited to advise the Australian government on developing legislation to counter multinational tax evasion. Imagine that. Recruiting a key figure in the tax evasion industry to curtail the tax evasion industry. No wonder this industry had continued unchecked, and PwC won contracts to ensure more corporate tax evasion.

Collins was deregistered by the Tax Practitioners Board late last year after an investigation found he shared confidential information and documentation obtained from consultations with Treasury.

Peter Collins is not the only link into this murky and corrupt world.

Australia has a right to know how widespread such unhealthy connections between government agencies and the corporate world are and has a right to expect that something serious will be done to put an end to this corrupt behaviour.

Unfortunately, even in the face of the present scandal, Australia’s political elite remains reluctant to do anything. Australia must insist on better and remember this come election time.

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