Big four consultants inquiry brings back ghosts of banking royal commission

On top of this, Australia’s two largest banks – the CBA and Westpac – were ultimately fined a combined $2 billion for breaches of anti-money laundering laws.

Three of the four bank chief executives didn’t survive the findings, neither did two chairmen, and the overhaul of the financial services industry was unprecedented.

And this was an industry that was ostensibly well-regulated.

If sunshine is the best disinfectant, a royal commission into these mega consultants should blow away the clouds.

Thanks to one exposed incident at PwC and its cover-up, there are now growing calls for a royal commission into this industry.

Whether it takes the form of a royal commission or some other commission of inquiry, the public is entitled to know what is happening under this industry’s hood.

One of the loudest of calls for a royal commission came from KPMG partner-turned-whistleblower Brendan Lyon. He declared at the ongoing Senate inquiry into consultants that the big four used the “bastardisation of the partnership model” to create “a risk-free, tax-free and consequence-free model”.

During this inquiry, there has been an emerging theme that the partnership structure of the big four firms helps them escape the type of regulatory oversight and disclosure that other large private companies are subjected to.

Thus, it feels risky for any of the consultant firms to hold themselves up as true clean skins.

But on Tuesday, EY’s Australian head David Larocca took the opportunity to throw PwC under the bus and point out the differences between the two firms.

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He labelled the conduct by rival PwC, which triggered the tax scandal engulfing the sector, as “deeply disturbing”.

Larocca told the Senate inquiry that at EY, “We don’t deliberately breach confidentiality, we don’t market tax minimisation schemes, we don’t use blanket legal professional privilege claims to frustrate regulators.

“Our business model is not built on condoning, rewarding or covering up this kind of thing.”

But before his evidence was complete, the sanctimonious approach had already backfired when Greens Senator Barbara Pocock attacked EY for its lack of disclosure.

“You distinguish yourself from PwC, and you’re telling us you’re different and that you are better […] I go to the deed of how you have responded to the questions on notice that we have given you,” she said during a Tuesday public hearing of the inquiry.

“Those questions went to the partnership deed, which you have not supplied to us. We asked for earnings data for partners. You have decided not to supply that to us.”

If sunshine is the best disinfectant, a royal commission into these mega consultants should blow away the clouds.

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