PWC are in trouble in Australia. The suggestion that they shared government secrets does not look good

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As the FT has reported this morning:

PwC is racing to contain the global fallout of an Australian leak scandal on its business after it emerged that the firm used confidential government tax plans to advise tech clients.

Emails released by an Australian senate committee last week showed that PwC had used information received during its work with the government to win business by advising corporate clients on new anti-tax-avoidance rules.

The Big 4 have long ‘advised' government.

When I worked, voluntarily, with a Treasury appointed committee in 2013 to help develop the UK's general anti-avoidance tax rule the email correspondence on the work all went through a PWC file server.

The secondment of Big 4 staff to ‘assist' government and even opposition parties is normal.

And I have never trusted it precisely because either the firms are doing this to overly promote the interests of their clients or, as likely, to secure information to provide them with a competitive advisory edge. Cynically, why else get engaged?

As is clear from allegations in this case, PWC Australia may have got too close to the edge in sharing the knowledge they secured from advising the government. The suggestion would appear to be that as a result they actually worked against the interests of the government, who was their supposed client as well.

If the allegations, which are apparently backed up with email evidence, are true then the fallout for PWC is massive. There is a massive breach of client confidentiality involved in this issue. The fact that it seems that data from one client (the Australian government) was used to directly benefit others (those seeking to avoid tax) makes this especially egregious. Most breaches are about partners in these firms using client data to enrich themselves. The allegation here is that they turned the resale of client confidential data into a business model in its own right.

I suspect that this story has some way to run as yet. Instincts tell me that it will not have a happy outcome for PWC.

Instincts also tell me that every suspicion that I ever had on such matters is justified.

Having seen how effectively firms like PWC controlled the legislative process in tax havens when I first began working on that issue (a process well documented by Prem Sikka) I never felt comfortable with the cosy relationship between the Treasury and such firms.

Consultation on legislation is one thing, and usually beneficial. Bringing in these firms (on which Labour has a poor track record of also relying) opens the door to a singularity of worldview that is at best unwise and, as this Australian case implies, potentially harmful to all involved.

Government has a duty to form its own view, using its own expertise, which it has a duty to develop. When it fails to do that we are all in trouble and open to abuse, as the Australians are discovering right now.

It is time that the belief in the omniscience of the Big 4 was shattered, for good.


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