Inquiry into the corrupt behaviour of PwC is a whitewash

By Jim Hayes

The report from the Senate inquiry into the PwC scandal has recommended that the multinational consultancy firm should be “open and honest,” implying this this isn’t how it has behaved. The report also recommended stricter regulation of large partnerships between government and large private organisations. In all there are 12 recommendations.

PwC and the other big consultancy firms, Deloitte, EY, and KPMG, had all been caught misusing their connection with the Australian government to obtain dishonestly use confidential information to help their big overseas clients to avoid paying tax and for their own direct benefit.

But the inquiry only concerned itself with one of them. It should have considered how the whole industry operates and the conflicts of interest relating to senior government functionaries and even ministers.

By limiting the scope of investigation, the inquiry was designed to limit what it recommended towards dealing with the problem. It avoided investigation into why Australian governments have increasingly turned towards reliance on outsourcing to large private sector consultancies and ditched the capacity of public sector departments. Australia happens to spend proportionally more on this than other countries.

This is a recipe for corrupt behaviour that has been ignored.

The greens had called for a cut in spending on these consultants. The bipartisan approach of the major parties was to block this.

Two interim reports Accused PwC of hiding behind legal professional privilege to hinder investigation of its conduct. Its representatives at the inquiry refused to disclose the identities of those it had been working for. By hiding, PwC shows it knows it has something to hide, and this implies it knowingly and willingly embroiled itself in wrongdoing.

None of this would have happened if governments had not tied themselves so thoroughly to firms only concerned with their bottom line. This fact has been swept under the carpet. Thew inquiry’s recommendation is to improve the practice, not to end or even reduce reliance on it.

There should have been a recommendation to restore the capacity of the public sector to investigate and provide advice to government. The advantage is that the public sector is not so tie to its own bottom line, and the temptation to misuse information coming into its hands. Irm may not be perfect. But it’s a damn sight better than what we have now.

PwC will be left off the hook in return for promising to improve its behaviour. Much has been made of its claim of internal overhauling of its governance structures and cutting its business with government. Far less has been made of the fact that it has set up a subsidiary called Scyne Advisory to take over this work. It seems business will continue as usual.

Deloitte, EY, and KPMG haven’t even slowed their operations.

This is a whitewash, and like the inquiry into the behaviour of the big banks a few years ago, it will lead to no real change. This isn’t good enough, and Australia should never forget this.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.