PwC conflict of interest over transparency initiative
Several development aid agencies have called on the European Commission to oust auditors Price Waterhouse Coopers (PwC) from an impact study on country by country reporting of profits for EU banks, saying the company had lobbied against the legislation and therefore had 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. PwC saw off competition from two other tenders in June 2014 to win the contract, which was worth €395,000.
The company told a recent OECD consultation on the issue it wanted “a more stringent confidentiality regime” and called for “real sanctions for countries that violate confidentiality provisions.”
The firm was also employed by large European banks, which had raised concerns over conflicts of interest from members of the European Parliament. The Commission said the contract with PwC had clear provision to avoid any such conflicts.
The European Network on Debt and Development (Eurodad) wrote to Internal Market Commissioner Michel Barnier, urging him to sack PwC. The letter was sent on 2nd July 2014 on behalf of 32 civil society organisations, including Oxfam, Christian Aid, the Tax Justice Network and Action Aid.
The European Greens had also written to Barnier about PwC's potential conflict of interest in carrying out the impact assessment study. Belgian Green Philippe Lamberts and Germany's Sven Gielgold argued last week that because PwC was employed as an auditor for big European banks such as Barclays and Commerzbank, it shouldn't have been given the job by the Commission.
Public country by country reporting for EU banks was part of the fourth Capital Requirements Directive. From 2015, this information should be made public, unless there are significant economic disadvantages to its publication. In that case, the Commission can delay publication.
Civil society organisations argue the information is vital to fight corporate tax dodging and must be public.
Tove Maria Ryding, tax coordinator for Eurodad, said, “PwC has shown itself as a hardline opponent of public country by country reporting, but at the same time the company holds itself up to be a neutral and unbiased assessor.
“The company clearly faces an impossible conflict of interest and will not be able to deliver a credible impact assessment. We have urged the European Commission to terminate the contract with PwC and either find a neutral institution to do the impact assessment, or simply do the work themselves.”
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