16 March 2023

PwC under fire as Greens call for harsher penalties against rule-breaking consultancy firms

| Chris Johnson
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Barbara Pocock speaking in the Senate

Senator Barbara Pocock has called for harsher penalties against consultancy firms that break the rules. Photo: Screenshot.

The role of consultancies in government departments continues to attract political attention, with a Senate inquiry launched and fresh calls for harsher penalties against firms that breach ethical standards.

The Australian Greens are calling for consultancy firms that step outside of the rules of working for the Federal Government to be excluded from procurement pools.

Senator Barbara Pocock, the Greens spokesperson for Employment, Finance and Public Sector, has asked Finance and Public Sector Minister Katy Gallagher to remove PricewaterhouseCoopers from the Management Advisory Services Panel (MASP) the government uses to appoint consultants.

According to the Finance Department’s website, MASP was established to “improve the quality, consistency and efficiency of the procurement of management advisory services by Commonwealth entities” and the services provided under the panel were for consultancies.

“As a coordinated procurement, use of the panel is mandatory for non-corporate Commonwealth entities that are subject to the Public Governance, Performance and Accountability Act 2013; and optional for corporate Commonwealth entities and Commonwealth companies, including government business enterprises, authorised by the Department of Finance to use the panel.”

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Senator Pocock said PwC had forfeited its right to be part of that panel.

It follows a former PwC partner being banned as a tax agent for sharing confidential Treasury information with colleagues and, by extension, clients of his own firm.

Peter-John Collins lost his registration for two years after a Tax Practitioners Board (TPB) investigation found him guilty of integrity breaches.

The investigation began shortly after Mr Collins left PwC in October.

It revealed that while a partner of PwC, Mr Collins was part of a confidential Treasury consultation about improving tax laws in a bid to stop multinational tax avoidance.

The TPB found Mr Collins made unauthorised disclosures of this confidential law reform information and, in so doing, failed to act with integrity, as required under his professional, ethical and legal obligations.

The unethical behaviour sparked government threats to exclude PwC and other big consultancies from future confidential briefings.

It also led to calls for a review of all the Big Four accountancy firms’ contract work for the Australian Public Service.

The Senate has now referred an inquiry to the Senate Finance and Public Administration References Committee for review of the management and assurance of integrity by consulting services provided to the APS.

Terms of reference were released this week and include scrutiny of:

  1. The management of conflicts of interest by consultants.
  2. Measures to prevent conflicts of interest, breach of contract or any other unethical behaviour by consultants.
  3. Enforcement measures taken in response to integrity breaches, such as the inadequate management of conflicts of interest, breach of contract or any other unethical behaviour by consultants.
  4. The management of risks to public sector integrity arising from the engagement of consultants.
  5. The transparency of work undertaken by consultants and the accountability of consultants for this work.
  6. Any other related matters.

Submissions to the inquiry must be lodged by 21 April and the committee must report by 26 September.

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Senator Pocock has led the charge in budget estimates and elsewhere for greater controls over the Big Four.

Last week, she wrote to Senator Gallagher suggesting it would be wise to remove PwC from the procurement panel.

“It would send a message to the big consultants, or anyone who breaches the confidentiality requirements, that there are consequences when they act against the interests of the government,” Senator Pocock said.

“At present, it’s very unclear that there are any real commercial direct costs for such a significant breach of confidentiality.”

The Minister has not appeared inclined to take such a step and the Opposition has outright rejected disciplinary action against the firm.

Former assistant treasurer Michael Sukkar, who worked for PwC in 2005 and 2006 and is currently Shadow Minister for Social Services, NDIS, Housing and Homelessness, said disciplinary action for breaches of confidentiality should be focused on individuals rather than the firms for which they work.

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Individuals and the firms they work for are jointly responsible and so should both have consequences. Firms choose who they hire as consultants and how they manage them, with them representing the firm and the firm being paid for their work.

A PwC partner (like this guy) is a clear representative of the firm and legally part of PwC, so not an individual acting alone, but working for the firm and part of it beyond just being an employee. He was part of management. The liability of PwC is clear. Sukkar has a vested interest in keeping his old firm’s reputation and opportunities out of the picture, but that would be wrong as PwC is responsible for its people.

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