PwC Australia's Ballooning Crisis Could Taint United States Business, Expert Warns

13th July 2023

This weeks newsletter from The International Consortium of Journalists writes about the unfolding story in Australia involving one of the biggest accounting firms in the world.

You can't buy much for a dollar these days but a Sydney private equity firm recently nabbed PwC Australia's government consulting arm for a single Australian dollar, or around 67 U.S. cents.
The fire sale came after the auditing giant burned its local reputation in a tax leak scandal likely to rank among the country's biggest financial stories of the year.

In January, the Australian Financial Review revealed PwC partner Peter Collins had shared confidential information about a Treasury tax reform plan, on which he was advising, with dozens of his colleagues. PwC then used the intel to court top U.S. tech companies eager to minimize their tax bills Down Under.

The Big Four firm now faces a growing crisis — along with multiple related government inquiries and a federal police investigation — that threatens to engulf parts of its business overseas.

New reporting from AFR shows Uber and Facebook's tax-dodging maneuvers just weeks before a new law to make multinationals pay their fair share of tax came into effect in Australia at the start of 2016. Following PwC's advice, both companies reportedly restructured in December 2015. They've since told AFR they were unaware PwC was using improperly obtained information.

A PwC Australia spokesperson said the company's clients were not involved in any wrongdoing and no confidential information was used to enable clients to pay less tax.

Less than a buck for a business that formerly raked in hundreds of millions of dollars in government contracts each year may seem like a bargain, but its ongoing revenue will rely on restoring its reputation. The fallout now risks leaching to another country, after PwC belatedly reported details about the scandal to a key U.S. regulator.

As business expert James Guthrie told AFR: "This a big deal because it’ll have an effect upon the reputation of PwC in the U.S."

About
What Is PwC? PwC, also known as PricewaterhouseCoopers, offers clients various professional business services, including accounting, auditing, human resources consulting, and strategy management. It is among the "Big Four" professional services firms, alongside Deloitte, EY, and KPMG

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