The fraud scandal that has engulfed the Australian arm of PricewaterhouseCoopers (PwC), a global accounting and consulting company, stems from its own greed.
In 2015, PwC was commissioned by the Abbott government to develop ways of increasing the tax take from multinational companies.
It then used that confidential insider knowledge to try to gain new business from the most notorious of tax avoiders in Australia, the so-called “dirty 34”.
The Financial Review named Apple, Google and Microsoft among those that PwC targeted to sell tax avoidance schemes to circumvent new Australian tax laws coming into force the following year.
More than 30 multinationals routinely avoid paying tax in Australia despite making billions here.
The Australian branch of PwC used its worldwide offices to form a “global team” in Ireland, The Netherlands, Britain, Singapore and the US to get the word out that PwC had solutions to future tax laws because it had insider information.
PwC told its staff, worldwide, that tech companies, online retailers, insurers, telcos, fund managers and commodity traders might benefit from PwC’s advice—for a fee, of course.
As one PwC email said, “So the field is large and time is short.”
The US part of the project in the “tax avoidance sell” apparently netted PwC $2.5 million, which is small change compared to the $330 million the Australian government paid PwC in the financial year of 2022.
There are three other worldwide accounting/consultancy firms which compete for outsourced government business with PwC: Deloitte, Ernst Young (EY) and KPMG. The latter picked up $373 million in public payments in the year to 2022.
Overall, the Morrison government paid $20.8 billion on consultants and service providers in 2021-22, the equivalent of 40 per cent of the cost of the 144,000 people employed by the Australian Public Service.
The Financial Review broke the story in January. It was onto the trail of a former PwC tax partner who was banned for breaching a confidentiality order with the Treasury Department by a little known body called the Tax Practitioners Board.
Labor Treasurer Jim Chalmers did nothing despite being supposedly “absolutely furious” at PwC’s law breaking.
Rot goes to the top
But a senate inquiry report released in April revealed that more than 50 PwC partners were in the loop about the tax dodge, not just “one bad apple”.
Chalmers has now flagged further action against PwC “that could imperil the hundreds of millions of dollars in fees” which the company receives from government contracts, year in, year out.
The former chief executive of PwC, Tom Seymour, along with two senior executives who were in the loop with the banned PwC partner in 2015, have resigned their positions in the company, but not from the company itself.
Three top executives from PwC flew into Australia “to oversee an independent review to rebuild the firm’s reputation”, according to Nine Media.
Greens Senator Barbara Pocock has called for PwC to be investigated by the new National Anti-Corruption Commission.
The Robodebt royal commission revealed that then Department of Human Services Secretary, Kathryn Campbell, socialised with Terry Weber, then a PwC partner.
He was hoping to get more Centrelink contracts for PwC, which had reviewed the scheme and, wrongly, declared that Robodebt was not illegal.
Campbell has been rewarded by being moved to the Defence Department to become the head public servant in charge of the nuclear submarines program on a salary package close to $900,000.
Stuart Robert, another former Robodebt minister, is retiring from parliament with full pension rights despite telling the royal commission that lying to the public was defensible if it was in the name of “cabinet solidarity.”
Robert’s career in parliament has been peppered with questionable behaviour. In 2014, he used public money to fly to Beijing to witness the signing of a business deal by a “close personal friend”.
He was sacked as a minister by Malcolm Turnbull (but later reinstated by Morrison) when it turned out he owned shares in a company which in turn had a stake in the company involved in the China deal.
On another occasion he was given a $250,000 gift bag of Rolex watches by a Chinese billionaire. Meanwhile he was claiming $2000 a month in parliamentary expenses for home internet.
PwC partners, Campbell, Robert—these are just some of those getting fat at the public trough. To add insult to injury, they will be among those who gain the most from the Stage Three tax cuts. One more reason for Labor to scrap them.
By Tom Orsag