BCA suggests Australian govt to reveal terminated contracts amidst spree of consultancy scams

The Bussiness Council of Australia (BCA) in a public statement on 23rd February 2024 urged the Federal Govt to track down consultancy contracts that got terminated due to material breaches and discrepancies. Further, the apex body added, that the Federal Govt should consider banning firms involved with the contracts to limit them from getting work.

As per a report in the Australian Financial Review, the body further suggested that there needs to be more transparency in declaring information on public sector tender bids, along with releasing indispensable data on unsuccessful tender bidders. The grouping which has some of the most known firms in the consulting world; along with major global companies, urged the Govt to employ specialists in bureaucracy.

The BCA appeared before a consulting committee formed by the senate to inquire regarding the matter in Canberra on 23rd February 2024 on Friday. The grouping made 11 recommendations in dealing with the terminated contracts. 

Bran Black the Head Executive of the grouping suggested the Govt to train Bureaucrats in taxation law and help them to assess the contracts beforehand and look out for any possible conflict of interest with the party offering the tender. 

He urged the Finance Department to maintain a central register with names of people who have been alleged to have been found with deceptive consulting contracts. Along with that also make defined and clear rules on the consequences of such violations, this will enhance honesty and accountability among the involved parties.

The BCA also reiterates that the guidelines of the contract should be very clear about the right scope of the deliverables, roles, and responsibilities of the firm getting the contract. Also, mention consequences if certain important guidelines are not followed. This should all descriptively be laid down in the register.

Photo of Bran Black, Chief Executive of the Bussiness Council of Australia
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PwC Scam exposed Consultancy Firms

These changes were recommended by BCA when some consulting firms have been alleged of leaking sensitive information discussed with the Govt to big corporations. In 2016 the PwC scam sent shockwaves to people informing the public about falter lines that are spread out in the Consulting space. PwC partner Peter John Collins was caught supplying sensitive information about policy decisions on making better taxation laws to his other colleagues, the information was highly confidential, and knowing it could have led to Tax avoidance or worst theft. 

Collins faced a ban as an employee of PwC after this incident and also lost his status as a Tax Agent for 2 years. The senate published a report citing multiple emails Collins was sending to many big businesses in North America assisting the companies to set up shop in Australia. According to the Australian Tax authorities, this scam was done at the behest of a loss of A$180 million of taxpayers' money.

The Australian Govt however in light of the recent PwC tax leak scandal, has lowered its spending on consulting work. The Govt has decided to not take private parties as consulting agents. Seeing this many Pension Funds and companies followed suit and canceled deals with Tax Consultants..The Senate in the wake of the scam back then on 8th June 2023 conducted an inquiry on the entire Consulting Industry. 

In her statement to the Financial Times, Deborah O’Neil, a teacher turned Senator on 15th June 2023 who published the spree of emails that Collins had sent to his friends to award them contracts says there exists a revolving door between Govt departments and Consultancy Companies mainly the Big 4, including PwC, Deloitte. KPMG and EY (Ernst & Young). She reiterates that legal privilege is often exercised by companies to hide their nefarious acts, comparing it to an invisibility cloak as seen in the Harry Porter book series.

Academic report censored

In December 2023 another incident exposed the fault lines in the Australian Consulting space when Peter Carey an academic from Deakin University along with his colleague George Tanewski, alleged that a Govt agency prompted them to research financial reports. Australian Accounting Standards Board (AASB), told the duo not to mention the shoddy financial audit reports of the Big 4 as there are members from each of these companies who are also members of the agency holding a seat. 

In the wake of these incidents, Deborah O Niel the Labour senator alleges that her country is seeing a regulatory capture where personal inclinations and needs are put above collective work.

These claims are however meted with sharp criticism by Keith Kendall the AASB Chair, as per a piece written on 15th June 2023, in The Guardian Australia where he suggested that no explicit mentioning is done to alter reports and choose companies based on personal whimsies. Carey also praised the AASB for keeping regulatory positions in mind, which is in sharp contrast to Senator O’Neil’s position.

Graeme Samuel the acting head of the Australian Competition and Consumer Commission, further reiterates that a Consultant cannot be a Consultant as well as an Auditor, these two roles do not complement each other, and it produces a redundant and bad audit report.

Image of a checklist
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The people’s response

On May 18, 2023, The Australian Institute conducted a public survey to see the mood of the populous and their opinion on these Consultancy scams. This new research shows major trends of change in public discourse. 

As per the results, a majority of Australians close to 80% suggest govt to cut ties with companies that are involved in these scams. The report also shows that 85% of Australians would urge the members involved in the deal to be ready to come anytime the Senate calls for an inquiry with committees, 79% of Australians believe that Officials involved in the public sector are equally competent in Consulting work as private players.

72% of respondents expressed concern about Govt using the $1 Billion funds alone on Consultancy work and have deemed it unnecessary, they would rather put their faith in Govt servants in the public sector.

Conclusion

This piece caters to the theme of Consultancy material breaches and in the wake of it manipulation of govt information. This piece reflects on BCA and their recommendation letter to urge govt to make Consultancy reports that the centre terminated available to the public. Along with the current development instances of earlier circumstances that led to such a theory about the government coming together with Big 4 and other prominent companies in the first place we move back to the threshold of this phenomenon as discuss the Tax Scams PwC Tax Leak, or the Curtailing of academic freedom.