When the tax scandal could no longer be ignored, the PwC board commissioned an “independent review” into its “governance, culture and accountability,” appointing former Kodak, Telstra and Optus CEO Ziggy Switkowski to conduct it. So what’s the scam?
The scam is that a review of PwC’s shortcomings commissioned by the people responsible for them could hardly be expected to be independent. Even more so when Switkowski was not even given full access to board reports and other relevant documents, only “representative samples”. Samples.
The focus of the review published today was on “frameworks and practices relating to governance, culture and accountability that currently operate within the firm.” However, the specific issue that caused the review – the leaking of confidential information from the Australian Tax Office to PwC’s corporate clients – was explicitly excluded. Switkowski notes in his introduction that:
My task has not been to assess how the breaches occurred and persisted uncorrected for such an extended period or whether appropriate disciplinary actons have been taken.
Switkowski was also not given full access to material that a truly independent review would have demanded, such as board minutes. He states in the introduction that “It is noted that PwC Australia provided limited samples of agendas, papers and minutes from the Board of Partners and Executive Board and their respective Committees, and various councils, panels and forums across the firm.”
Where samples were made available, these were assumed to be representative in formulating the findings of the Review.
So much for independence and transparency.
The review comprises 23 recommendations. Some are of material consequence, such as establishing a proper board, including independent directors to whom the CEO is accountable, abandoning the practice of selecting the CEO by popular partner vote, and having the company financials subject to proper audits (sic). The majority of the recommendations are mostly aspirational, full of non-committal verbiage such as ‘clarify’, ‘review’, ’embed’, ‘fix’, and the ubiquitous ‘improve’, which was mentioned 19 times in all.
Imaginary recommendation 24 – to break up the company to separate its audit division from the consultancy and advisory business, is – as expected – absent. That would be way too independent … let alone dumping the ancient, secretive ‘partnership’ structure in favour of incorporating.
Kim Wingerei is a businessman turned writer and commentator. He is passionate about free speech, human rights, democracy and the politics of change. Originally from Norway, Kim has lived in Australia for 30 years. Author of ‘Why Democracy is Broken – A Blueprint for Change’.