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 its 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 $1.6 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 with 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 U.S. 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 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.