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Pension funds freeze PwC contracts over Australian tax leaks

MELBOURNE, AUSTRALIA - JULY 30, 2018: PwC headquarters building

Five Australian pension funds representing more than A$750 billion in savings have frozen contracts with PwC Australia, in reaction to the tax leaks scandal.

PwC Australia has lost out on new deals with a growing list of superannuation funds since the tax leaks scandal engulfed the ‘big four’ firm.

One such fund, Aware Super, decided to temporarily freeze new contracts with the firm on Friday, June 9. A spokesperson explained: “We’re deeply disappointed by the reported failures of governance, accountability and culture at PwC.

“We look forward to the full extent of this issue being promptly investigated and addressed,” said the spokesperson.

AustralianSuper was the first major pension fund – with A$270 billion ($182 billion) in assets – to freeze new contracts with PwC on June 2, but several companies have since initiated reviews over the scandal.

Aware Super, Australian Retirement Trust, CareSuper and Hesta have followed AustralianSuper’s decision to freeze contracts with PwC Australia. These super funds collectively hold more than A$750 billion in retirement savings.

Meanwhile, LegalSuper and Rest Super are reviewing their arrangements with the firm, and Cbus and Hostplus are reportedly monitoring developments closely. Most of the Australian pension industry relies on the big four firms for audit and tax services.

Each company needs two firms to handle internal and external audits separately. This may mean super funds will turn to PwC’s rivals for new contracts.

PwC Australia has so far not commented on the decisions of these clients.

Tax leaks scandal

The scandal initially erupted after it was discovered that Peter-John Collins, former head of international tax at PwC Australia, had sent confidential emails detailing legislative changes on tax avoidance to colleagues between 2015 and 2016.

Collins retired in October 2022, but the scandal broke in January this year. He was later banned by Australia’s tax industry watchdog, the Tax Practitioners Board, on January 23.

PwC Australia CEO Tom Seymour stepped down on May 8 2023 after it was confirmed that he had received information from Collins. He later announced his plan to retire in September.

The Australian Federal Police launched a criminal investigation into Collins on May 24, before PwC Australia suspended nine unnamed partners on May 29.

Last week, in a letter to the Australian Senate, PwC named all 67 members of staff who received confidential information by email.

The big four firm is conducting an internal inquiry, and there is an independent review set to conclude in September.

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