CRIMINAL CAPITALI$M
PwC Australia vows 'severe' consequences for tax leak staffThe acting CEO of the Australian branch of PricewaterhouseCoopers (PwC) has faced a parliamentary inquiry, her first public appearance since her predecessor resigned over a tax-avoidance and conflict of interest scandal.
DW
JUNE 26,2023
What is the case about?
PwC is under fire after a former partner, Peter-John Collins, had access to information about Australian government plans to revise its tax laws — primarily in a bid to ensure multinational tech giants like Google, Facebook, or Amazon could not so easily avoid paying taxes in Australia.
He had signed a non-disclosure agreement with the government as he worked with it on the project, promising to keep the information secret.
But Collins shared the information with colleagues at PwC, who then used it to try to help private sector clients take preemptive steps to limit the new laws' impact on their balance sheets.
PwC or PricewaterhouseCoopers Australia is facing major difficulties that could yet intensify
Image: Joel Carrewtt/AAP/IMAGO
The acting CEO of PwC (PricewaterhouseCoopers) Australia, Kristin Stubbins, told a parliamentary inquiry on Monday that staff will face "severe" consequences if they are found to have acted improperly in a scandal over sharing secret Australian government tax plans with major multinationals to help them avoid paying.
PwC is currently conducting an internal investigation and has already suspended a series of executives, some of whom it has named and others it has not.
Stubbins told the Senate for the state of New South Wales that once the investigation was complete, PwC would release all the identities of those found to have transgressed the rules.
"We will expect to announce consequences and you'll see that publicly, and they will be severe," Stubbins told the inquiry.
In the meantime, a criminal investigation is also running against the company.
It was Stubbins' first public appearance since taking up the job last month, when her predecessor resigned over the scandal.
It also came one day after PwC Australia issued a statement saying it was selling its public sector business for a symbolic sum of AU$1 (roughly €0.60 or $0.67) in a bid to ensure such a conflict of interest could not repeat itself.
The acting CEO of PwC (PricewaterhouseCoopers) Australia, Kristin Stubbins, told a parliamentary inquiry on Monday that staff will face "severe" consequences if they are found to have acted improperly in a scandal over sharing secret Australian government tax plans with major multinationals to help them avoid paying.
PwC is currently conducting an internal investigation and has already suspended a series of executives, some of whom it has named and others it has not.
Stubbins told the Senate for the state of New South Wales that once the investigation was complete, PwC would release all the identities of those found to have transgressed the rules.
"We will expect to announce consequences and you'll see that publicly, and they will be severe," Stubbins told the inquiry.
In the meantime, a criminal investigation is also running against the company.
It was Stubbins' first public appearance since taking up the job last month, when her predecessor resigned over the scandal.
It also came one day after PwC Australia issued a statement saying it was selling its public sector business for a symbolic sum of AU$1 (roughly €0.60 or $0.67) in a bid to ensure such a conflict of interest could not repeat itself.
What is the case about?
PwC is under fire after a former partner, Peter-John Collins, had access to information about Australian government plans to revise its tax laws — primarily in a bid to ensure multinational tech giants like Google, Facebook, or Amazon could not so easily avoid paying taxes in Australia.
He had signed a non-disclosure agreement with the government as he worked with it on the project, promising to keep the information secret.
But Collins shared the information with colleagues at PwC, who then used it to try to help private sector clients take preemptive steps to limit the new laws' impact on their balance sheets.
Although the figures are hard to pin down with certainty, past studies suggest that taxing the modern US tech giants more effectively could bring a huge boost to state coffers in multiple countries
The case raises serious conflict of interest questions, with PwC a major service provider for Australian authorities.
"We failed the standards we set for ourselves as an organization and I apologize on behalf of our firm," Stubbins told parliament on Monday.
News of the indiscretions, which date back around a decade, first came to light early in the year.
But the probe has gathered pace over the last month or so, as the scope of the scandal started to become more apparent, in no small part thanks to the contents of internal company emails released by the inquiry on May 2.
Some of these partly redacted emails showed staff celebrating "the accuracy of the intelligence" on Australia's incoming tax plans provided by Collins, and how it had been giving them an edge with potential clients, particularly US-based tech multi-nationals.
In the last month, PwC Australia's former CEO Tom Seymour has resigned, criminal investigations have been launched, nine partners have been suspended without being named, and four have been suspended and identified — although two of them have publicly denied any wrongdoing.
Who are PwC and what do they do?
PricewaterhouseCoopers is one of the so-called "Big Four" consultancy giants, the largest professional services networks in the world, along with Deloitte, Ernst & Young, and KPMG.
These companies might only be genuine household names in specialist circles, but they're among the most significant in the world for the public and private sectors alike.
They provide services like auditing and consultancy (advice or analysis on all manner of issues, potentially), and their main clients tend to be national governments and large private sector businesses.
Their proximity to both sectors, and the comparable or overlapping services they provide to each, has long prompted questions of possible conflicts of interest.
Strictly speaking, none of the "Big Four" are single entities. Technically, they are networks of companies each operating in individual countries but all agreeing to coalesce under one global badge and to abide by the same standards. All four parent entities are UK-registered.
Combined, the four groups' revenues for the last financial year were in the region of $190 billion — to give a sense of scope, that's roughly comparable to the national GDP of Iraq or Greece.
The case raises serious conflict of interest questions, with PwC a major service provider for Australian authorities.
"We failed the standards we set for ourselves as an organization and I apologize on behalf of our firm," Stubbins told parliament on Monday.
News of the indiscretions, which date back around a decade, first came to light early in the year.
But the probe has gathered pace over the last month or so, as the scope of the scandal started to become more apparent, in no small part thanks to the contents of internal company emails released by the inquiry on May 2.
Some of these partly redacted emails showed staff celebrating "the accuracy of the intelligence" on Australia's incoming tax plans provided by Collins, and how it had been giving them an edge with potential clients, particularly US-based tech multi-nationals.
In the last month, PwC Australia's former CEO Tom Seymour has resigned, criminal investigations have been launched, nine partners have been suspended without being named, and four have been suspended and identified — although two of them have publicly denied any wrongdoing.
Who are PwC and what do they do?
PricewaterhouseCoopers is one of the so-called "Big Four" consultancy giants, the largest professional services networks in the world, along with Deloitte, Ernst & Young, and KPMG.
These companies might only be genuine household names in specialist circles, but they're among the most significant in the world for the public and private sectors alike.
They provide services like auditing and consultancy (advice or analysis on all manner of issues, potentially), and their main clients tend to be national governments and large private sector businesses.
Their proximity to both sectors, and the comparable or overlapping services they provide to each, has long prompted questions of possible conflicts of interest.
Strictly speaking, none of the "Big Four" are single entities. Technically, they are networks of companies each operating in individual countries but all agreeing to coalesce under one global badge and to abide by the same standards. All four parent entities are UK-registered.
Combined, the four groups' revenues for the last financial year were in the region of $190 billion — to give a sense of scope, that's roughly comparable to the national GDP of Iraq or Greece.
Public sector work to move to new company
Last month, PwC had promised to ring-fence its public sector work from its private contracts going forward.
But on Sunday, its incoming CEO Kevin Burrowes issued a statement saying PwC would be splitting completely, selling its public sector operations for a symbolic sum of one Australian dollar to another company, Allegro.
A Green member of parliament, Abigail Boyd, said she worried this recent switch was nothing but a "PR move," and asked Stubbins if the decision amounted to an admission that PwC could not conduct government business in an "ethical manner."
"No, it doesn't," Stubbins said. "It's an announcement that looks at the situation and what is best for our people, and to ensure continuity of service to our government clients."
"There will be no question around management of conflict at all in a completely separate business," she said.
But these measures might not satisfy politicians in New South Wales. State Labor Senator Deborah O'Neill has already said that she will lead another inquiry into PwC given the new developments of the last few weeks. She has even hinted that the government is considering legislative or regulatory changes targeting the industry.
"We have a self-regulation model operating in this sector," O'Neill told Australian public broadcaster ABC. "I don't think it's too much to say that it's palpably failed."
msh/nm (AP, Reuters)
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