The global chairman of PwC has seen his fair share of controversies during his 40-year career at the firm.
From a record fine over the collapse of BHS to the infamous Oscar “envelopgate” mix-up, when one of his executives presented the Academy Award for Best Picture to the wrong film, Bob Moritz has weathered a number of storms.
But as the New York-based chairman of the accounting giant prepares to retire, there is one scandal that arguably poses an even bigger risk to the British brand’s reputation and threatens to explode again.
Moritz, 61, has spent the latter part of his accounting career overseeing the efforts of PwC International’s top executives in London and New York to contain the Australian tax leakage scandal, a big enough stain on the firm’s notebook to have your own Wikipedia page.
These efforts may be in vain as Australian senators are determined to prove that partners around the world were complicit.
Crisis: Retired: PwC Chairman Bob Moritz with Emma Watson. Moritz has spent the latter part of his accounting career overseeing efforts to contain Australia’s tax leakage scandal
Last week, a damning Australian Senate report piled on the pressure by accusing PwC of covering up the role of its international arm in an effort to contain the crisis.
It concluded that PwC International’s refusal to release a report by London law firm Linklaters into the role played by staff outside Australia is part of a years-long cover-up that is ‘exacerbating crime’.
In January last year it emerged that Peter Collins, a former tax partner at the Australian arm of PwC, had exploited confidential information from his client – the Australian Treasury – to help multinational companies avoid the stricter tax laws he helped design.
The scandal broke in May when a trove of emails revealed that Collins had shared this information with colleagues in Australia and abroad, who then sold the information to US companies as part of an initiative called Project North America.
Nearly a year after PwC was accused of ‘a calculated breach of trust’ in its first report, the Australian Senate Committee on Finance and Public Administration released an equally damning follow-up, entitled The Cover-Up Worsens The Crime.
It accused PwC of making only “superficial commitments to change”, arguing the group has not yet clarified the involvement of partners and staff outside Australia in the scandal, and has not fully cooperated with investigations.
The committee highlighted Moritz’s refusal to turn over the Linklaters report, which focused on the role of a group of international partners dubbed by senators the “dirty six.”
British veteran Kevin Burrowes has been parachuted in to clean up the mess
The Senate committee described the release of the Linklaters report as a “first step in restoring confidence in the Australian Parliament” and said the “extent of the involvement of the Dirty Six and others abroad in the abuse and attempted the monetization of confidential government information remains a problem’. crucial and conspicuously absent piece of the puzzle’.
It added: ‘The committee does not see how PwC can restore their reputation while continuing to obfuscate, as the two are incompatible. The cover-up does indeed worsen the crime.”
London-based PwC International commissioned a separate investigation into abuses within its Australian arm and published the findings in September.
In contrast, it published only a one-page press statement on the Linklaters report, stating that the investigation had found ‘no evidence that PwC staff outside Australia used PwC Australia confidential information for commercial gain’.
PwC said the report concluded that six people, whom it declined to identify, should have asked questions about whether the information was confidential. It said “appropriate action” had been taken against those who remained with the company, but left it at that.
Bosses at PwC International, led by Moritz, who retires at the end of June, have outraged the Senate committee by refusing to hand over the report, citing legal professional secrecy.
They have taken the same approach to block demands from the Australian Tax Office (ATO) and the Tax Practitioners Board, which is conducting nine investigations into the tax leaks.
Even Kevin Burrowes, the British veteran who parachuted into the Australian operation and cleared up the mess, did not receive a copy.
The Senate committee noted that PwC Australia used the same legal professional privilege argument to hide thousands of internal documents from the ATO during its initial investigation into the affair years ago.
‘Cover up’: PwC bosses led by Moritz have outraged the Senate committee by refusing to hand over a key report, citing the privilege of legal professionals
The Australian branch of PwC has already paid a high price. It was forced to sell its government consulting unit for $1, laid off hundreds of employees and overhauled its internal governance. The country is also facing numerous investigations, including a criminal investigation by the Australian Federal Police.
BUT the Senate committee cited the lengths PwC International has gone to protect its global empire, which spans 151 countries and has more than 360,000 employees.
Last month it emerged that the company was quietly using network rules to control its Australian business after concluding that the tax leak scandal was causing the company “ongoing reputational and global brand damage”.
Business newspaper Australian Financial Review revealed that the global network sent a legal letter to PwC Australia in June last year, placing the company under ‘supervised remediation’ and ordering the department to ‘take all necessary steps’ to appoint Burrowes as interim boss set.
Labor Party senator and committee member Deborah O’Neill described the publication of the Linklaters report as an “essential” step to rebuild trust.
“The reputational and financial damage the company has rightly suffered as a result of their misconduct cannot easily be erased, despite the company’s efforts to burn its Australian operations out of its global network,” she said.
“Unless PwC demonstrates this commitment to accountability and reform, its government and corporate clients cannot be confident that the firm can be considered a trusted entity.”
A spokesperson for PwC said it has taken “significant steps to transform our business,” including plans for a major package of governance reforms that will include “the implementation of cultural change from the top down.”
Some links in this article may be affiliate links. If you click on it, we may earn a small commission. That helps us fund This Is Money and keep it free to use. We do not write articles to promote products. We do not allow a commercial relationship to compromise our editorial independence.