PWC – Profits Without Conscience

Accounting multinational PWC has been condemned in a new report by the UK Parliament’s Public Accounts Committee (PAC) for providing misleading evidence to Parliament and “promoting tax avoidance on an industrial scale.” The Committee, which has led the way globally in exposing the tax avoidance industry, has accused PWC of not disclosing its role in helping hundreds of multinational companies to shift profits to subsidiaries in tax haven Luxembourg in order to avoid paying taxes in the countries where the profits originated.

During the Committee’s hearings, PWC had claimed it was “not in the business of selling (tax avoidance) schemes”.  This claim was subsequently demolished by the evidence revealed by Antoine Deltour, an auditor formerly employed by PWC in Luxembourg, which conclusively demonstrated the industrial scale on which PWC has been creating tax avoidance structures on behalf of its multinational clients from across the planet.  In their damning conclusions, PAC members declared:

“PwC did not convince us that its widespread promotion of schemes to numerous clients, based on artificially diverting profits to Luxembourg through intra-company loans, constituted anything other than the promotion of tax avoidance on an industrial scale.”

The PAC members also condemned PWC’s code of conduct for selling tax advice, which they have described as “not fit for purpose”, and more generally they criticise the tax advising industry for its failure to promote a culture that achieves a balance between profiting from selling services to clients and serving public interest:

“Whilst the code may prevent PwC tax advisers from acting outside of the law, it does not prevent them from devising and selling schemes that have no purpose other than the avoidance of tax. The tax industry has demonstrated very clearly that it cannot be trusted to regulate itself.”

For its part, PWC has disagreed with the Committee’s findings and stated that “we recognise we need to do more to explain the positive role we play in the tax system.”  Readers can draw their own conclusions about whether this is anything other than shameless spin from a company with a long history of audit failures (see here, here and here) , tax avoidance and political spin.

PWC, which has had close political relations with both the current government and the preceding Labour administrations headed by Tony Blair and Gordon Brown, and with the UK’s Treasury (which is heavily infiltrated by City of London interests), responded aggressively to the Luxembourg Leak revelations, accusing Antoine Deltour of “stealing” information of a commercially confidential nature.

Earlier this week, this blogger met with a senior PWC official who repeated this accusation and absolutely denied that Deltour’s actions served public interest.  The official also stated that the public had no legitimate reason to know what tax deals were being struck between governments and multinational companies, even when those deals involved major multi-year upstream oil & gas and mining contracts.

PWC and other leading accounting firms have for decades been engaging in an organised and calculated way to deprive citizens throughout Europe and other continents of hundreds of billions of tax revenue.  They represent a threat to democracy.  TJN heartily endorses the suggestion by Margaret Hodge MP, chair of the parliamentary PAC, that governments – and the European Commission – should immediately take action to ban PWC from all areas of government procurement.

You can access the PAC report on the role of the large accounting firms in organised tax avoidance here.  Also take a look at the most recent edition of our flagship newsletter, Tax Justice Focus, edited by Will Snell, which explores the role of tax advisers, for both good and ill, in navigating that fine line between legitimate planning and illegitimate avoidance.