PricewaterhouseCoopers claims it was created to fulfil one purpose: “To build trust in society and solve important problems”. Inevitably, its mission statement contains a list of platitudes explaining how it hopes to achieve this; among them is the insistence that employees should “act as if our personal reputations were at stake”.
Whether or not this commandment was ever read out in its Australian HQ — and the evidence suggests it was not — it certainly now makes for uncomfortable reading. In May, accusations that had been bubbling under the surface since late last year exploded into the headlines. Between 2013 and 2015, PwC Australia allegedly advised the government on how to design a system to get more tax out of multinationals — and then used its insider knowledge to advise corporate clients on how to dodge the very same measures.
At the centre of the scandal is PwC Australia’s former head of international tax, Peter-John Collins, though as many as 160 other staff could be implicated. Collins signed three confidentiality agreements with the federal government between 2013 and 2018, before circulating information about the tax plans to 63 PwC partners and senior managers in a long email chain — yes, in writing. His interlocutors didn’t seem too perturbed, either.
In the ensuing kerfuffle, politicians, including prime minister Anthony Albanese and treasurer Jim Chalmers, clamoured to express their outrage at PwC’s conduct. The company was dragged through the coals before a parliamentary inquiry and promised to publicly name all responsible staff. To save the firm, PwC parachuted a new British boss into its Australian division and then sold off its government consulting arm for $1. This section of the business, by the way, employs 1,700 staff with an annual turnover of $300 million — around 20% of PwC’s income in Australia. It seems reasonable to assume the bargain price represents the possible extinction of its entire income stream.
While PwC’s days of having it both ways appear to be over, it remains unclear whether the scandal will be enough to force the Government to wean itself off the consultancy sector. Australia’s management consulting market is the world’s biggest per capita, and fourth-biggest overall, remarkable for a country of only 25 million. And the federal government has been leading the way. Between 2013 and 2022, its annual spending on consultants shot up from $352 million to $888 million per annum. Over the same period, the Big Four professional services firms — PwC, KPMG, Deloitte and Ernst & Young — pocketed $1.2 billion in federal government consultancy contracts, and a whole lot more in professional services fees. Fellow consultancy giants McKinsey & Co. and BCG have also been having a swell time in Australia, rapidly expanding their government business.
Inevitably, since these firms all provide services to both the government and the private sectors, conflicts of interest risks abound. This week, for instance, KPMG launched its own internal review of its contracts advising both the Government on quality and safety audits of aged care facilities, and operators on passing these audits and gaining accreditation. Even the Australian Federal Police, which is now investigating Collins for potential criminal conduct, has awarded PwC consulting contracts worth over $20 million over the past two years, and another $30 million to the other “Big Seven” consulting firms (a group that also includes Accenture). Rather ironically, PwC is also the AFP’s external auditor.
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