In this era of state nationalism, reputational crime doesn’t get much worse than PWC in Australia which sold its foreigners inside information sourced during consulting to the National Treasury on multinational tax avoidance. A once trusted advisor in Canberra, PWC’s head of International Tax Peter Collins, is accused of having passed on secrets to many colleagues, with 53 PWC partners exposed in emails made public earlier this month. Among the major beneficiaries were US Big Tech companies which have been in running battles with Canberra for some years. The Australian Government has now banned anyone involved in the scandal from working on State business – a tall order as Canberra is PWC Australia’s biggest client. There is no disclosure of involvement by any South African partners or companies, but sharing of the information has been confirmed in some other English speaking countries, including the US and the UK.
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Relevant timestamps from the video
- 01:19 – Alec Hogg outlines the PWC Australia scandal
- 03:31 – The Financial Time’s report on PWC Australia
- 05:58 – Alec provides more context to the situation and highlight’s PWC South Africa’s lacklustre response
- 07:34 – PWC Africa comments on the situation
- 08:23 – Alec comments and concludes his report
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Highlights from the report
Alec Hogg reports on the PWC Australia scandal
“PWC hits the rocks in Australia: 53 partners implicated in using government inside info to generate fees” Yeah, it’s that bad. 53 partners from this auditing firm used secrets that were derived from one of their number, a fellow by the name of Peter Collins, who served on a committee as an advisor for Canberra to find ways of stopping international companies from not paying their fair amount of tax in Australia. So what happened was particularly the big tech companies had not been paying proper tax in Australia and the Australian government was really upset about it. So they brought in one of their trusted advisers, the head of international tax at PWC, Mr. Collins, and asked him to work with them in drafting legislation. Well, he did, and then he took all those secrets, everything that they discussed there [and] shared it amongst his partners in the firm, 53 of whom were named in emails that were distributed earlier this month in Australia. They’re in the public domain now. We don’t know how many partners from other parts of the world were also tipped off by Mr. Collins, but as it is relating to international companies, you can be sure there’s quite a few of those.
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Highlights from the Financial Times’ accountancy correspondent Michael O’Dwyer
So this story began to really kick off, I guess, earlier this year when a former PWC tax partner in Australia was banned from acting as a tax agent in that country for two years. And that was because he had been part of an advisory board to the Australian Treasury Department when it was drawing up plans for a crackdown on multinational tax avoidance. What happened next was that this partner, Peter Collins, seems to have taken that information, shared it widely within PWC with his colleagues, not just in Australia, but in various countries around the world, including the US and the UK. And they’ve used that information to basically drum up business for the firms, selling advice to companies as to how they should react to these changes in Australia’s tax code. So essentially it was a breach of confidentiality obligations that were owed to to the Australian Government.
There has been a huge furore after this news broke quite quickly after the emails published and released publicly in Australia. Its CEO in that country had to step down from his leadership position and he has now left the firm. The firm locally has set up an external review and the international bosses of PWC are also extremely worried. They’ve sent in some of their most senior executives to try and get on top of the problem, to try and minimise it, and to stop a global contagion – because the big risk for them is that their global brand gets tarnished. They spent a huge amount of money and a huge amount of time in the last couple of years building their entire global brand around this idea of building trust with stakeholders, with companies, [and] with wider communities. This type of a scandal massively undermines and goes against those values that they’re publicly professing. So it’s that danger that they are trying to minimise.
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PWC Africa’s General Counsel Anton du Randt provides a lacklustre comment on the controversy
PWC is unequivocal that the unauthorised sharing and or utilisation of confidential information is unacceptable and goes against our culture and values. We expect all partners to meet the highest standards of professional and ethical behaviour and act in accordance with our code of conduct and our professional standards. All of our people must meet the highest standards of ethical conduct. That starts with our legal and professional obligations and complying with policies and procedures. But it does not end there: It is also about ensuring behaviours consistent with our values and purpose. Failure to live up to these expectations is unacceptable and we will not hesitate to take swift and firm actions against those who have been found to have breached our code of conduct.
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