The walls are closing in. Can PwC survive in Australia?

Save articles for later

Add articles to your saved list and come back to them any time.

Every fresh piece of intel that further illuminates PwC’s egregious breach of trust, the firm’s brazen avarice and its cover up of the tax leak scandal adds weight to the view that the Australian arm of this big four services company may not recover.

The unpleasant smell around PwC comes in waves and only gets stronger. But you can’t ringfence an odour.

Parliamentarians were unanimous in their scathing assessment of PwC in a Senate report.Credit: Luis Enrique Ascui

The fallout has moved well past the bounds of the original misconduct in which PwC acted as a double agent – working as the poacher and the gamekeeper.

Its senior tax partner Peter Collins used confidential information gleaned while consulting to the government on the architecture of new tax avoidance laws, and then he and others in the firm used this highly valuable material to advise its corporate and potential clients on how to sidestep the laws it had helped to author.

It is hard to imagine that PwC could have outdone this awful misdeed. But its cover-up is almost as gobsmacking as the initial leak. The lack of transparency and attempts to minimise the seriousness and the breadth of the problem is the latest wave crashing over PwC.

A report by the Senate committee investigating PwC concludes that “PwC engaged in a deliberate strategy over many years to cover up the breach of confidentiality and the plan by PwC personnel to monetise it”.

The reports states further that: “PwC has given every appearance of attempting to minimise the seriousness of the issue, hoping that standing down its CEO, Mr [Tom] Seymour, and announcing the [Ziggy] Switkowski review of PwC Australia’s culture, governance, and accountability, would suffice to assuage public concern.”

Corporate history is littered with investigations commissioned (and paid for) by those in the firing line that fall woefully short of properly ascribing blame to those who deserve it or recommending tough consequences.

In the Senate report’s words, the actions of PwC in the cover-up were “calculated”. The firm claimed legal privilege over tens of thousands of legal documents to avoid surrendering them to the Australian Tax Office during its own investigation into the actions of Collins.

How deep into the bowels of PwC this scandal reaches is now what the Senate committee is attempting to ascertain. PwC has provided the committee with 63 of its people who may have some involvement in the breach, but the measure of each individual’s complicity has not been made clear.

The lack of transparency and attempts to minimise the seriousness and the breadth of the problem is the latest wave crashing over PwC.

Whether there was a degree of ineptitude by the Australian Federal Police which abandoned, but has since reinitiated an investigation, or the Australian Tax Office, both agencies concluded in 2019 that there was insufficient evidence to pursue a formal investigation.

With a Senate committee composed of Greens, Labor and Liberals unified in their resolve to use their powers to look under every PwC rock, the unpleasant wafts will keep assaulting the nostrils.

The federal government has effectively banned awarding any new contracts to PwC while the NSW government has suspended new dealings with PwC for at least six months.

As painful as this government abandonment to PwC’s profit is, it will be the size of the broader brand damage it sustains that will decide whether it has a business.

And there will likely be a long tail to this.

Although the audit side of PwC is not embroiled in the tax consultancy scandal, large companies with a public image to protect will think twice about signing up PwC for any work, including large auditing contracts.

Already there is a suggestion that on the eve of PwC winning the audit tender for Lend Lease, the process has been paused.

Meanwhile, large industry funds including those that oversee $750 billion in retirement savings have frozen new contracts with PwC as the prudential regulator, which oversees super funds, warned companies working with PwC need to consider the governance risks connected to their contractor decisions.

As the PwC pile-on continues, no institution wants to be close to the nasty odour.

The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.

Most Viewed in Money

From our partners

Source: Read Full Article