Some Europeans Told the European Commission to Fire PwC Over Conflict of Interest

Over in Europe, PwC has won a €395,000 contract to come up with a report on the impact of country-by-country reporting, which basically forces multinationals to break out reporting by country versus "Europe" or "the Americas." Public country by country reporting for EU banks would include data from banks regarding their turnover, staff numbers, taxes paid and subsidies received in each country they operate, and this data must be made public from 2015 barring "significant economic disadvantages to its publication."

That's all well and good, except some folks are concerned PwC may have a bit of a conflict of interest:

Development aid organisations today (2 July) called on the European Commission to oust auditors PwC from an impact study on country reporting for EU banks, saying the company has lobbied against the legislation and therefore has a conflict of interest.

Despite having lobbied against the transparency initiative, PwC was employed to assess the economic consequences of making public data from banks regarding their turnover, staff numbers, taxes paid and subsidies received in each country they operate in.

That's not all. The strongly-worded letter, written by The European Network on Debt and Development (Eurodad) on behalf of 32 organizations, accuses PwC of bias and suggests "the European Commission terminate the contract with PwC and either appoint a neutral institution that has not stated a position on the matter to carry out this task, or conduct the assessment itself."

We welcome the strong support you have previously demonstrated for greater transparency of multinationals’ activities, in order to ensure that they pay their fair share of taxes where their real economic activity occurs. We are calling upon you to respect this engagement and make sure that the CBCR assessment will not be carried out by a company, which has a biased position and conflicting interests in the matter.

While the report from PwC is expected in the coming months, we feel that this company – or any other company that has an obvious conflict of interests and biased position on the matter – is not well placed to assess whether certain financial information for CBCR should be made public. During the recent OECD consultation on the same topic, in the framework of the Base Erosion and Profit Shifting process, PwC made it very clear that they oppose making CBCR information public. They are calling for ‘a more stringent confidentiality regime – i.e. requiring the master file and CbC template to be submitted to the parent company’s home tax authority and distributed only through relevant provision and upon request (together with real sanctions for countries that violate confidentiality provisions)’1. Other major accounting companies, which are part of the so-called “big 4”, have also announced similar positions.

An impact assessment on this measure, carried out by a firm that has already publicly declared its opposition to the measure, will not be regarded as credible, could introduce controversy into what should be an objective process and risks undermining a critically important process.

Members of European Parliament are also concerned that PwC counts among its clients major European banks who might no doubt be affected by this, but the European Commission assures them "the contract with PwC had clear provision to avoid any such conflicts." Because of course PwC would act in the best interest of everyone rather than the clients that keep it in business.

 

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