For a firm that makes such a fuss about its expertise in ESG, it should have noticed that the “governance” part of those three letters is slowly being taken seriously.
PwC is discovering the truth of “it’s not the crime, it’s the cover-up”. Which is not to say or even suggest any crimes have been committed. We don’t know yet and the Australian Federal Police are investigating what might be the consequences of the leaking of confidential government information.
But the point of the adage is that although mistakes happen and sometimes things go wrong, in the case of PwC very badly wrong – it’s what you do about it that matters. To observers of this week’s parliamentary hearings it appears that getting information from PwC about who knew what and when is like pulling teeth.
It can’t be claimed PwC has made “full and frank” disclosures about what happened. “PwC stonewalled tax office attempts to investigate leak” was the headline in Tuesday’s The Sydney Morning Herald.
The way PwC has handled the scandal, it’s as if no one at the firm has watched anything that’s been going on in Australia for the past few years.
The treatment of the banks at the Hayne royal commission by the public, the media, and politicians is exhibit 1A demonstrating what occurs when corporations are caught hiding behind obfuscations and mealy-mouthed excuses.
PwC has surely sponsored enough political fundraisers (for both parties) that someone when its corporate affairs department would have noticed “INTEGRITY” was a pretty big theme in last year’s federal election.
ESG window dressing
For a firm that makes such a fuss about its expertise in the area, PwC should have noticed that despite all the window dressing of ESG the concept has now been washing through boardrooms long enough that the “governance” part of those three letters is slowly being taken seriously. What PwC tells its clients to do, apparently it doesn’t do itself.
Why PwC has handled the scandal so badly will be talked about inside and outside the firm for years. From the outside, there are a few possible explanations.
To begin with, tax is boring, multinational anti-avoidance law is complicated, until a month ago hardly anyone in Canberra had heard of the Tax Practitioners Board, and what occurred didn’t directly affect mum-and-dad voters.
Until last week, PwC gave every indication it regarded it as an “inside the beltway: issue to be managed. Unfortunately for PwC, the world has changed.
Why PwC has handled the scandal so badly will be talked about inside and outside the firm for years.
Another explanation follows the “too big to fail” argument. Some at the firm might mistakenly have believed PwC was too integrated into every part of the business of government (federal and state), was paid too much, and was simply too influential to be hung out to dry by a Labor or Coalition government. The irony for PwC is that it could be that it’s precisely because it is so powerful that it is now such a target.
The story of the big four consulting firms and the federal government is now slowly being uncovered. The story of the four and state governments is yet to be told.
PwC played a key role in the development of the idea of the largest boondoggle in the history of Victoria. Daniel Andrews’ Suburban Rail Loop, if it is ever built, will cost at least $200 billion. (To put that figure into perspective, total Victorian government spending in 2023/24 will be $93 billion.)
When the project was announced in 2018 it was to cost $50 billion. The project was conceived in secret, and as The Age reported in 2021 – “only a few trusted insiders were aware it (the Suburban Rail Loop) was coming. Among the inner circle were Labor’s go-to-board director James MacKenzie, former Labor political adviser Tom Considine and a personal friend of Daniel Andrews, then PricewaterhouseCoopers chief, Luke Sayers.”
And the revelations keep coming. When Greens Senator Barbara Pocock asked the Australian Taxation Office about its initial interaction with Treasury on the leaks, the response from the ATO was: “We expressed general concerns to Treasury but due to secrecy, we could not share specific information or share specific concerns.”
Pocock replied: “It is absurd for you to know that a breach of confidentiality was under way, and you know the individual involved, and you cannot make any comment to anyone in Treasury. That is unbelievable, it’s gobsmacking.”
This article was originally published in The Australian Financial Review on or about 1 June 2023 and was written by the author in their capacity as a contributor for that publication. It has been republished on the IPA website with permission. The views expressed are those of the author alone.