It’s all on deck at top global accounting firm PriceWaterHouseCooper (PwC). The company is doing everything it can to defuse the international ramifications of a major Australian trust issue.
The scandal revolves around confidential documents from the Australian government, which were allegedly used by PwC partners to approach new clients in the tech sector for tax advice.
Government documents outline what the new Australian tax avoidance laws and regulations will look like. This enabled PwC clients to start considering financial constructs even before the legislation went into effect in 2016. The issue came up during a Senate hearing, in which internal correspondence from PwC was revealed.
PricewaterhouseCoopers had access to confidential documents as an advisor to the Australian Ministry of Finance. A PwC partner with a decades-long track record would have shared the documents with colleagues, who then passed them on to potential clients.
customers in the United States
The internal emails then found their way to colleagues in the US, Ireland and the UK. American customers in particular would have been profitable in this regard: millions of new services were issued to companies in San Francisco. It is not yet clear if and how many clients illegally used the information.
The PwC partner who allegedly leaked the documents was part of a team of accountants who advised the Australian Treasury. He signed strict confidentiality agreements. After the scandal emerged, the man was banned from working in Australia for two years. He is no longer employed by PricewaterhouseCoopers.
This issue is very sensitive at the accounting firm, which has placed the concept of “trust” at the center of its business strategy for several years after a number of scandals. The fact that this is happening in Australia in particular is very painful. The country presents itself as a pioneer in the fight against tax evasion, but despite tough legislation, it has not been able to control multinational companies that have found ways to pay or reduce taxes.
Leading man Tom Seymour of the Australian branch of PricewaterhouseCoopers has already had to give way on this issue, but this is not enough for Australian politicians.
Labor Senator Deborah O’Neill is demanding that the names of all the partners who sent the emails and the companies that received them be made public. “This isn’t about a few bad apples. It’s a widespread cultural problem that extends far beyond Australia,” O’Neill told the British business newspaper. financial times
If O’Neill has her way, the case could take an international tailgating. Something PwC wants to avoid at all costs. On Friday, a delegation of PwC heavyweights boarded a plane for Sydney, including PwC’s top lawyer and chief tax advisor. The higher delegation would like to try to smooth things over immediately – and at the same time get a picture of the scope of the company culture that O’Neill defines. PricewaterhouseCoopers has now launched an independent investigation into the situation in Australia.
Names may be generic
According to sources in financial times PricewaterhouseCoopers will also prepare to contact clients who may be involved in the case. There is a possibility that they will soon hear the name of their company during the hearings in the Australian Senate.
Although Australian politicians now point to the role of accountants in international tax evasion efforts, relations between accountants and the government have been very close in the past.
The new government of Prime Minister Anthony Albanese is currently working on regulations to reduce reliance on the “Big Four”, accounting firms KPMG, EY, PwC and Deloitte.
A version of this article also appeared in the May 13, 2023 Journal.
