PwC global chair flies into Australia as firm braces for further turmoil
The global chair of PwC, Bob Moritz, is flying into Sydney as the firm braces itself for further turmoil in the wake of the tax leaks scandal.
The global chairman of PwC, Bob Moritz, will jet into Australia next month as the firm braces itself for further turmoil with the public release of its own external investigation into its tax leaks scandal, and as the Australian Federal Police investigation reaches a critical point.
Mr Moritz may have hoped for a quiet entrance into Australia from New York – his first visit since the pandemic – but his arrival will spark the interest of the politicians helming the senate inquiry into consultants, which holds further hearings in two weeks.
PwC’s Australian operations exploded into the public consciousness earlier this year when it emerged the firm had taken confidential information provided by the government to help it advise on international tax laws – the so-called Google tax – and used that same information to advise clients on avoiding the above mentioned tax.
Initially the firm attempted to make a scapegoat of one international tax partner, Peter Collins, who had received the government briefings. However, under a question on notice from the senate inquiry, PwC was forced to reveal that 63 partners and staff had received emails relating to the tax avoidance scandal, with a special team set up to capitalise on its “unique” knowledge of the new tax laws, called Project North America.
Mr Moritz is due to arrive in Sydney at the start of October, which means he will just miss the next two scheduled days of senate hearings. However, it is understood there is an additional day set aside for mid-October should the politicians require more time to hear witnesses.
Mr Moritz is likely to stay in the new Sydney five-star Crown Resorts where Dianna Weiss, PwC’s global general counsel, and other US PwC executives have been based since the shocking confidentiality breaches first came to light.
At the height of the scandal, PwC commissioned former Telstra chief executive Ziggy Switkowski to report on the firm’s culture and how it can ensure better governance going forward. The firm has promised to release that report this month but it is not expected to go into the detail of who knew what about the use of confidential tax information.
PwC so far has attempted to contain the fallout to its Australian operations, but given Mr Collins was part of a cross-border team this may prove difficult in the long term.
Senator Richard Colbeck, who is leading the inquiry into consultants, has said that he would like to explore further the extent to which PwC partners from other countries were involved.
The AFP’s investigation into the PwC scandal is ongoing and the federal police force may be called to give evidence at the October senate hearings. PwC has not yet been called to give evidence because of concern statements given could jeopardise the AFP investigation.
Whether Mr Moritz is coming to Sydney to once more try to contain the matter to Australia, or potentially issue a mea culpa remains to be seen.
Certainly he has some experience at apologies. In 2020, he told the Financial Times he was “shocked and disappointed” that PwC had been advising Isabel dos Santos, the daughter of Angola’s kleptocratic former president Jose Eduardo dos Santos, disregarding red flags in her companies’ accounting as she made millions from deals approved by her father, the FT said.
Before Russia invaded Ukraine, the firm had a proud history of advising firms controlled by Russian oligarchs including “Gazprom, the energy giant dubbed Putin’s ‘geopolitical tool’; Sberbank, Russia’s biggest state-owned bank; and Sibur, a petrochemical giant partly-owned by Kirill Shamalov, who is Putin’s former son-in-law,” according to the FT.
Back in Australia, many current and former PwC partners believe it is “extremely unlikely” that Mr Moritz was unaware of Project North America, if not at the time it was occurring, then once the Tax Practitioners Board had banned Peter Collins from practising as a tax agent.
And yet last year he told the FT that he was comfortable that PwC could manage any conflicts of interest that arise when his firm provides consulting and auditing advice.
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