Deborah O’Neill alerts US regulators over PwC scandal

Labor senator Deborah O’Neill has put the powerful US consulting sector regulator on notice over the alleged involvement of an American partner in the PwC tax leaks scandal.

Senator Deborah O’Neill. Picture: NCA NewsWire / Martin Ollman

Labor senator Deborah O’Neill has put the powerful US consulting sector regulator on notice over the alleged involvement of an American partner in the PwC tax leaks scandal.

Senator O’Neill, the chair of a parliamentary inquiry into the auditing and consulting sectors, has written to the Public Company Accounting and Oversight Board, referring the powerful regulators to the inquiry’s findings.

In the letter published on the parliamentary website on Monday, Senator O’Neill points the PCAOB and the US Senate committee on banking, housing and urban affairs to the findings and concerns over attempts to quarantine the damage from the scandal surrounding PwC Australia.

Senator O’Neill calls on the PCAOB to review the findings, noting the regulator may have interest in the evidence and conclusions of the inquiry “to the extent that the large accounting firms operate as international entities sharing common features of structure and governance across multiple jurisdictions”.

PwC chief executive Kevin Burrowes fronts a Senate inquiry into consultancy services at Parliament House in Canberra. Picture: NCA NewsWire / Martin Ollman

The Labor Senator takes aim at PwC, which “frustrated” attempts to investigate confidentiality breaches.

“This included the refusal of PwC International to identify PwC partners in overseas jurisdictions with whom the confidential information was shared, or to provide the committee with a copy of the review that it commissioned into PwC Australia’s breaches of trust conducted by the law firm Linklaters,” Senator O’Neill writes.

“The committee considers that PwC’s strategic reliance on the jurisdictional separation of its international entities to effectively quarantine critical information and frustrate the committee’s inquiry raises concerns for legislators, policymakers and regulators in all jurisdictions in which large multinational firms operate.”

PwC International partner, Washington National Tax Services, Matthew Chen

Senator O’Neill also points the PCAOB to revelations, revealed in The Australian, that PwC International Washington National Tax Services partner Matthew Chen allegedly “was a recipient of the confidential Australian Treasury information, at a time when PwC was targeting new business with large US companies operating in Australia, including Uber, Facebook and Meta”.

“While the committee is unaware of the extent to which Mr Chen may or may not have been knowingly involved in the misuse of the confidential Australian Treasury information to design PwC’s tax-avoidance scheme, the committee provides this information in case it is of any relevance to the PCAOB’s important oversight and regulation of public accounting and audit firms operating in the US markets,” she says.

Previously PwC has taken issue with suggestions the firm’s international arm frustrated reviews, noting the firm has “confronted and apologised for past failings and commenced our comprehensive transformation journey”.

Already the PCAOB has moved to punish PwC over the tax scandal, doling out a $US600,000 ($920,000) fine to the firm for failing to disclose to the regulator that the firm was under investigation for sharing confidential government information.

The PCAOB also ordered the firm to improve its reporting compliance, saying it ­failed to make any disclosures to the regulator until June 2023, years after first becoming aware of investigations into the confidential breaches.

The fine came on the same day PwC was fined $US2.75m over auditor independence violations relating to the firm’s tax practice.

Senator O’Neill notes in her letter to the PCAOB “challenges for the regulation and parliamentary scrutiny of large multinational accounting firms such as PwC in all jurisdictions in which they operate”.

She also notes the committee recommended Australia establish a similar regulator to the PCAOB, as part of its almost 40 recommendations which include a call to restrict the size of partnerships.