Australian Pension Funds Freeze Contracts with PwC Australia Following Tax Leaks Scandal

Several major Australian pension funds, representing over A$750 billion in savings, have decided to freeze contracts with PwC Australia in response to the tax leaks scandal. The scandal has significantly impacted the 'big four' firm's ability to secure new deals with superannuation funds.

The first fund to take action was AustralianSuper, with A$270 billion in assets, which announced the freeze on June 2. Since then, several other funds, including Aware Super, Australian Retirement Trust, CareSuper, and Hesta, have followed suit, collectively holding more than A$750 billion in retirement savings. These funds expressed disappointment in PwC's reported failures in governance, accountability, and culture.

A spokesperson from Aware Super stated, "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."

Other funds, such as LegalSuper and Rest Super, are currently reviewing their arrangements with PwC, while Cbus and Hostplus are closely monitoring the developments. The majority of the Australian pension industry relies on the services of the big four firms for audit and tax services, necessitating a potential shift to PwC's competitors for new contracts.

PwC Australia has not yet commented on the decisions made by these clients.

The tax leaks scandal originated when it was discovered that Peter-John Collins, former head of international tax at PwC Australia, had sent confidential emails outlining legislative changes related to tax avoidance to colleagues between 2015 and 2016. Collins retired in October 2022, but the scandal surfaced in January 2023. Australia's Tax Practitioners Board subsequently banned Collins on January 23.

Following confirmation that PwC Australia CEO Tom Seymour had received information from Collins, Seymour stepped down on May 8, announcing his retirement in September. The Australian Federal Police initiated a criminal investigation into Collins on May 24, and on May 29, PwC Australia suspended nine unnamed partners. PwC is conducting an internal inquiry into the matter, with an independent review expected to conclude in September.

The fallout from the tax leaks scandal has highlighted concerns over PwC Australia's governance and has led to significant financial repercussions, as Australian pension funds sever ties with the firm amidst a climate of increased scrutiny and accountability.

By fLEXI tEAM