PricewaterhouseCoopers, or PwC, is a global company that provides accounting and consulting services who, in the business world, is considered to be one of the Big 4 firms in the field alongside Deloitte, KPMG and Ernst & Young. PwC’s largest domestic client is the Federal Government who engage PwC’s services for consultation regard defence, education, transport spending and in some instances, proposed legislative changes. However, it has been recently brought to light that PwC is now subject to a police investigation crisis that has the potential of having global implications.
Almost 10 years ago, the Federal Government requested that Peter-John Collins, PwC’s international tax expert, help them in designing laws that could solve the issue of large overseas companies, such as Facebook and Apple, to pay their appropriate share of tax in Australia. This legislation was known as the Multinational Anti-Avoidance Law. In doing so, Mr Collins was required to sign various confidentiality agreements. However, the Tax Practitioners Board found that he in fact shared confidential knowledge with other members of PwC which allowed them to create ways that companies can avoid paying the new tax and, to the PwC’s advantage, obtain new clients to make more money. This breach of trust, as a result of the misuse of confidential tax information, is a threat that goes beyond the Australian border as PwC used its global connections to profit, bringing in other large professional services firms from around the world.
In 2022, the Tax Practitioners Board suspended Mr Collin’s tax licence for two years, finding that he had leveraged insider knowledge and had failed to properly manage his conflicts of interest. Additionally, nine other partners in PwC have been directed to take leave whilst waiting for the determination of an internal investigation. The names of these partners are yet to be released. In May 2023, emails were released that showed the true extent of what had been occurring in PwC which further showed how Mr Collin’s colleagues were aware that he was leaking confidential secret government documents. That information was then shared to at least 53 other PwC partners who later approached at a minimum 14 global companies regarding tax avoidance. Three of these companies took on the information and restructured to avoid the new tax scheme.
Consequently, the relationships between PwC and the Federal and State Government has been greatly affected. The Reserve Bank has even stopped signing new contacts with PwC until they can demonstrate complete transparency. Treasurer Jim Chalmers has commented that “this is a shocking breach of trust, an appalling breach of trust” which for a firm whose public slogan is “build trust and solve important problems” has hit home. The scandal has resulted in former chair of the Australian Competition and Consumer Commission to call for a separation of the audit and consulting services of the Big 4 firms.
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