Gender employment discrimination
In 1989, the United States Supreme Court held that Price Waterhouse must prove by a preponderance of the evidence that the decision regarding Ann Hopkins's employment would have been the same if sex discrimination had not occurred. The accounting firm failed to prove that the same decision to postpone Hopkins's promotion to the partnership would have still been made in the absence of sex discrimination, and therefore, the employment decision constituted sex discrimination under Title VII of the Civil Rights Act of 1964. The significance of the Supreme Court's ruling was twofold. First, it established that gender stereotyping is actionable as sex discrimination. Second, it established the mixed-motive framework as an evidentiary framework for proving discrimination under a disparate treatment theory even when lawful reasons for the adverse employment action are also present.[76] Hopkins's candidacy for partnership had been put on indefinite hold. She eventually resigned and sued the company for occupational sexism, arguing that her lack of promotion came after pressure to walk, talk, dress, and act more "femininely."[77]
In 1990, a Federal district judge in Washington ordered the firm to make Hopkins a partner. It was the first time in which a court awarded partnership in a professional company as a remedy for sexual or race-based discrimination.[78]
Following the suit, the firm received media attention due to its discriminatory labor practices towards males as well.[79]
Tax issues
In 2014, it came to light that PwC had received $55 million from Caterpillar Inc. to develop a tax avoidance scheme. According to a US Senate investigation, PwC had helped Caterpillar Inc. drastically reduce its taxes for more than a decade.[80][81]
Profits worth $8 billion were shifted from the United States to Switzerland, allegedly enabling savings of more than $2.4 billion in US taxes over that period. In Switzerland, the profits were taxed at just 4%.[80]
A PricewaterhouseCoopers managing director involved in designing the tax savings plan wrote at the time to a PwC partner: “We’ll all be retired when this … comes up on audit.”[81]
American International Group Inc.
In 2005, BusinessWeek reported that PwC was American International Group Inc.'s auditor through AIG's years of "questionable dealings" and accounting improprieties. AIG on 30 March 2005, said that deals with a Barbados-based insurance company, for instance, may have been incorrectly accounted for over the past 14 years, because an AIG-affiliated company may have been secretly covering that insurer's losses.[82]
BusinessWeek said that PwC also appeared to have "dropped the ball" on the deals between AIG and Berkshire Hathaway Inc.'s General Re Corp. General Re transferred $500 million in anticipated claims and premiums to AIG. BusinessWeek asked: "Did the auditor do its job by verifying that AIG was assuming risk on claims beyond the $500 million, thus allowing AIG to account for the deal as insurance? That's Accounting 101 in any reinsurance transaction."[82]
According to a memo published by Business Insider, witnesses wondered how PwC was signing off on the accounts for both AIG and Goldman Sachs when they were using different valuation methods for the swaps contracts (and therefore booked different values for them in their accounts).[83]
ChuoAoyama suspension
ChuoAoyama Audit Corporation (中央青山監査法人) was the Japanese affiliate of assurance service of PwC from April 2000 to 2006.[84] In May 2006, the Financial Services Agency of Japan suspended ChuoAoyama from provision of some statutory auditing services for two months[85] following the collapse of cosmetics company Kanebo, of which three of the partners were found assisting with accounting fraud for hiding deficits of about $1.9 billion over the course of five years.[86]
The accountants got suspended prison terms up to 18 months from the Tokyo District Court after the judge deemed them to have played a "passive role" in the crime.[86] The suspension was the first-ever imposed on a major accounting firm in the country. Many of the firm's largest clients were forced to find replacement auditors before the suspension began that July.[87]
Tyco settlement
In July 2007, PwC agreed to pay US$229 million to settle a class-action lawsuit brought by shareholders of Tyco International Ltd. over a multibillion-dollar accounting fraud. The chief executive and chief financial officer of Tyco were found guilty of looting $600 million from the company.[92]
Indian companies scandals
In 2007, India's accounting standards agency ICAI found partners of PwC guilty of professional negligence in under-providing for nonperforming assets of the now-defunct Global Trust Bank.[93] This led to the RBI banning PwC from auditing any financial company for more than a year.[94][95][96] PwC was also associated with the accounting scandal at the India-based DSQ Software, which collapsed in 2003.[97]
In January 2009, PwC was criticised,[98]
Association with the hiring of a person accused in gold smuggling case
PwC, which provides consulting service to the Kerala government's Department of Information Technology[111][112] and its Space Park project,[113] has been criticised for appointing Ms. Swapna Suresh, who is accused in a case of smuggling gold in a diplomatic bag.[113] Following an investigation, the Kerala government decided to terminate the consultancy services of PwC for the proposed Space Park project in Thiruvananthapuram.[113] PwC sub-contracted the resource from a vendor, Vision Technologies, but the government considers that the primary liability is on PwC for recruiting Swapna Suresh.[113]
Yukos prosecutions
Yukos was a Russian oil and gas company that was the target of politically motivated prosecutions by Russian authorities. The company's assets were sold for alleged unpaid taxes and it was declared bankrupt. PwC's audits were the foundation for the firm's defense in a series of continuing trials against former chief executive, Mikhail Khodorkovsky, and the former majority shareholder, Platon Lebedev. The Russian authorities then went after PwC. In March 2007, police raided PwC's Moscow offices, confiscating documents related to Yukos and charging and convicting PwC of failing to pay 243 million rubles, or $9.4 million, in taxes. PwC withdrew its Yukos audits and less than two weeks later authorities cleared PwC of any wrongdoing in regard to its audit.[118][119]
In 2010, Joe Nocera in the New York Times wrote, "In 2007, with the prospect of parole on the horizon, the same prosecutors—with what appears to be the complicity of PricewaterhouseCoopers, Yukos's longtime accounting firm—indicted the two men (Mikhail B. Khodorkovsky and Platon Lebedev), again, bringing a new round of Kafkaesque charges."[120]
In 2010, it was revealed that the Russian government placed pressure on PwC to withdraw audits.
Transneft Russia case
Upon the completion of the construction of the ESPO (East Siberia-Pacific Ocean) pipeline by Transneft in December 2010, an official report of the Audit Chamber of the Russian Federation suggested that $4 billion was stolen by Transneft insiders.[125] One Federation Council Speaker, Sergei Mironov, called for an investigation. Alexei Navalny, a minority Transneft shareholder and lawyer, accused the company of wrongdoing in his personal blog, and criticized PwC, Transneft's auditor, of ignoring his warnings. PwC denied wrongdoing, stating that, "We believe there are absolutely no grounds for such allegations, and we stand behind our work for OAO AK Transneft."[126]
Northern Rock
In 2007, PwC was criticised by the Treasury Select Committee of the Parliament of the United Kingdom for helping Northern Rock, a client of the firm, to sell its mortgage assets while also acting as its auditor.[127][128] In 2011, a House of Lords inquiry criticized PwC for not drawing attention to the risks in the business model followed by Northern Rock, which was rescued by the UK government during the 2008 financial crisis.[129][130]
JP Morgan Securities audit
In 2012, the Accountancy and Actuarial Discipline Board (AADB) of the UK fined PwC a record £1.4m for wrongly reporting to the Financial Services Authority that JP Morgan Securities had complied with client money rules which protects client funds. The accountants neglected to check whether JP Morgan had the correct systems in place and failed to gather sufficient evidence to form opinions on the issue, and as a result, failed to report that JP Morgan failed to hold client money separate from JP Morgan's money. The £1.4m fine was at the time the greatest penalty administered to a professional accountancy firm in the UK.[131]
Water privatisation in Delhi
PwC was found to be unethically favored by the World Bank in a bid to privatize the water distribution system of Delhi, India, an effort that was alleged as corrupt by investigators.[132] When bidding took place, PwC repeatedly failed in each round, and the World Bank in each case pressured PwC to be pushed to the next round and eventually win the bid. The effort at privatization fell through when an investigation was conducted by Arvind Kejriwal and the non-governmental organization (NGO) Parivartan in 2005.[132]
After submitting a Right to Information (RTI) request, Parivartan received 9000 pages of correspondence and consultation with the World Bank, where it was revealed that the privatization of Delhi's water supply would provide salaries of $25,000 a month to four administrators of each of the 21 water zones, which amounted to more than $25 million per year, increasing the budget by more than 60% and water taxes 9 times.[133][134]
The Delhi Jal Board
Cattles
In 2013, Cattles plc brought a legal action against PwC in the UK in respect of 2006 and 2007 audits, claiming that PwC had failed to carry out adequate investigations.[136] Cattles, a UK consumer finance company, later discovered control weaknesses which caused its loan book to be materially overstated in its balance sheet; having been listed as a FTSE250 company, it subsequently lost its listing. PwC disputed this legal claim.[137] The claim was settled out of court on undisclosed terms.[138]
The Financial Reporting Council (FRC) issued a fine of £2.3m on PwC and ordered the firm to pay £750,000 costs following their investigation of the 2007 audits of Cattles and its principal trading subsidiary. PwC admitted their "conduct fell significantly short of the standards reasonably to be expected of a member firm" in respect of the 2007 financial statements. The FRC said that PwC had insufficient audit evidence as to the adequacy of loan loss provisions.[139]
Quinn Insurance
In 2015, PwC Ireland was sued by the joint administrators of Quinn Insurance Limited (QIL) for €1bn. Having been audited by PwC for the years 2005 to 2008, QIL went into administration in 2010. The administrators alleged that PwC should have identified a material understatement of QIL's provisions for claims.[140][141]
Connaught plc
Connaught plc, a UK former FTSE 250 Index outsourcing company operating in property maintenance for the social housing and public sector, was put into administration in 2010 after reporting material losses. In 2017, the Financial Reporting Council (FRC) severely reprimanded PwC and its audit partner following an investigation of their conduct in respect of the 2009 audit of Connaught. PwC was fined a record £5 million plus costs.[142]
Tesco
In 2014, Tesco, a UK retailer, announced that it had overstated profits by £263m by misreporting discounts with suppliers. The Financial Reporting Council started an investigation into accounting practices at Tesco and into the conduct of PwC in carrying out its audits in 2012, 2013 and 2014.[143] Two members of Tesco's Audit Committee, responsible for monitoring Tesco's relationship with its auditors, had themselves previously worked for PwC, including its chairman, Ken Hanna; he later stood down.[144]
In 2015 PwC were replaced as auditors of Tesco, ending a 32-year engagement, following a tender process to which they did not participate.[145] In June 2017, the Financial Reporting Council said there was no "realistic prospect" that a tribunal of the UK's accountancy watchdog would rule against the auditor PwC concerning its involvement in Tesco's 2014 case.[146]
Bank of Tokyo-Mitsubishi UFJ
In 2014, The Bank of Tokyo-Mitsubishi UFJ was investigated by New York banking regulators over its role in routing payments for Iranian customers through its New York branch in violation of U.S. sanctions. It was found that PwC had altered an investigation report on the issue; PwC itself was fined $25 million in relation to the matter.[147]
Luxembourg Leaks
The firm helped multinational companies obtain 548 legal tax rulings in Luxembourg between 2002 and 2010. The rulings provided written assurance that the multinational companies' tax-saving plans would be seen favorably by the Luxembourg authorities. The companies saved billions of dollars in taxes with these arrangements. Some firms paid less than one percent tax on the profits they shifted to Luxembourg. Employees or former employees of PwC provided documentation of the rulings to journalists.[148][149] In 2013 and 2014, PwC UK's head of tax was called before the UK's public accounts committee and was questioned about lying regarding the marketing of these tax avoidance schemes. He told the committee the financing, investments, and tax structure is legal and well known to the British government. "If you want to change the Lux tax regime, the politicians could change the Lux tax regime."[150]
The disclosures attracted international attention and comment about tax avoidance schemes in Luxembourg and other tax havens. The revelations later led to a series of EU-wide measures aimed at regulating tax avoidance schemes and tax probes into several EU companies. In 2016, PwC initiated charges against the two whistleblowers that revealed the LuxLeaks tax controversy, and they were convicted and sentenced with suspended prison sentences and fined. In March 2017, a Luxembourg appeals court upheld the convictions of the two whistleblowers, but with reduced sentences.
Petrobras Brazil
In 2015, the Bill & Melinda Gates Foundation of Microsoft founder Bill Gates sued oil company Petrobras and accounting firm PwC's Brazil arm over investment losses due to corruption at the Brazilian oil company. The filings also alleged that PwC's Brazil affiliate, PricewaterhouseCoopers Auditores Independentes, played a significant role by attesting to Petrobras financial statements and ignoring warnings.[152]
Gay marriage in Australia
In 2016, Luke Sayers, then CEO of PwC Australia,[153][154] had the firm prepare a report projecting the excessive cost of a plebiscite on gay marriage.[155] Mark Allaby, a senior executive at PwC, left the board of the religious lobbying organisation Australian Christian Lobby, a group campaigning against same-sex marriage, following public outrage and pressure from PwC Australia.[156]
Centro Properties Group
In 2007, shopping center giant Centro understated its liabilities by more than $3 billion and almost collapsed when it was unable to refinance its debt during the 2008 financial crisis.[157] PwC was Centro's auditor and admitted negligence. In 2012, Centro and PwC paid a $200 million settlement to resolve the shareholder class action, the largest ever in Australia.[158]
BHS
In 2016, PwC in the UK was investigated by the Financial Reporting Council over its conduct in relation to the audit of BHS for the year to 30 August 2014. PwC completed their audit of financial statements in which BHS was described as a going concern days before its sale for £1 to a consortium with no retail experience. BHS collapsed the following year with a substantial deficit in its pension fund.[159]
MF Global malpractice lawsuit
In 2016, a United States federal judge rejected PwC's bid to dismiss a $3 billion lawsuit accusing the accounting firm of professional malpractice for helping cause the October 2011 bankruptcy of MF Global, a brokerage once run by former New Jersey Governor Jon Corzine.[160][161][162]
BT Italy
BT Group (British Telecom), a client of PwC, reported in 2017, that profits in its Italian subsidiary had been over-stated by £530 million. BT reportedly sought the immediate replacement of PwC as auditors following a breakdown of trust, but had existing commercial relationships with the other Big 4 firms which would have prevented their early appointment.[163] BT subsequently stated that its audit would be put out to tender to identify a replacement for PwC,[164] In June 2017, the Financial Reporting Council began an investigation of PwC's audits of BT covering the years 2015 through 2017.[165]
Oscars Best Picture announcement error
At the 89th Academy Awards in 2017 La La Land was incorrectly announced as the winner of Best Picture after PwC partner Brian Cullinan gave presenters Warren Beatty and Faye Dunaway the wrong envelope. PwC was responsible for tabulating the results, preparing the envelopes, and handing them to presenters.[166]
It was called "as bad a mess-up as you could imagine."[167] The firm took "full responsibility" for handing the presenters the wrong envelope and apologized for the error,[168] acknowledging that Cullinan and PwC partner Martha Ruiz did not follow protocols for correcting the error quickly. In March 2017, the board of governors for the Academy voted to retain the services of accounting firm PricewaterhouseCoopers, despite the mix-up, saying "new protocols have been established including greater oversight from PwC's U.S. chairman Tim Ryan."[169]
PrivatBank
PwC Ukraine had its audit license removed by the National Bank of Ukraine in July 2017 for its alleged "verification of misrepresented financial information" leading to a $5.5 billion balance-sheet hole in PrivatBank.[170] The government of Ukraine had had to rescue PrivatBank by nationalisation in 2016 to protect its 20 million customers.[171]
Colonial Bank audit
In 2017, the U.S. District Court for the Middle District of Alabama held PwC liable for professional negligence in its audit of Colonial Bank, which failed in 2009, after filing materially false financial information with the SEC. In 2018, a federal judge later ordered PwC to pay the FDIC $625 million, the largest-ever judgement against a U.S. audit firm.[172] The FDIC reached a $335 million settlement with PwC in March 2019.[173]
Age discrimination lawsuit
In 2018, PwC was accused of disproportionately hiring younger workers and fostering "an age-conscious workplace in which youth is highly valued."[174] Plaintiffs estimated that younger applicants are more than 500% more likely to be hired than candidates over age 40. In March 2019, a collective action related to the case was certified by a federal judge in San Francisco.[175]
Luke Sayers' AVP investment review
In 2018, PwC Australia CEO Luke Sayers was connected to perceived conflict of interest issues on a related to a personal investment in Australian Visa Processing (AVP),[176] a company part-owned by PwC that was submitting a tender to redesign and run Australia's visa processing system that is potentially worth billions of dollars, which would result in a significant financial advantage for its investors.[177]
This investment led to a "storm inside the firm",[178] interjection by PwC Global and a review by PwC Australia of its personal investment policy for partners.[178] The option to invest had not been offered to all partners or even the entire firm.[176] A review was announced around the way partners make personal investments.[176]
Improper audit services in US
During 2019, PwC's US affiliate agreed to pay more than $7.9 million to its US regulator, the Securities and Exchange Commission (SEC), to settle allegations that it improperly performed IT and other non-audit services for several audit clients.[180]
Corruption in Angola
In 2020, the International Consortium of Investigative Journalists (ICIJ) leaked more than 700,000 internal documents revealing that PwC had facilitated multiple dealings in which Isabel dos Santos, the daughter of former President of Angola José Eduardo dos Santos, made a fortune while in charge of the state oil company, Sonangol. Dos Santos established a network of more than 400 companies to facilitate tax evasion and the steering of millions of dollars of Angolan state contracts to companies under her control.[181]
Her husband, Congolese businessman and art collector Sindika Dokolo, made millions from a suspiciously one-sided partnership with the state diamond company, SODIAM, to buy a stake in Swiss luxury jeweler De Grisogono.[182] After ICIJ's revelations, PwC indicated it would terminate its relationship with Dos Santos.[181]
MBC Group
During November 2017, PwC was engaged in due diligence and valuation of the media company, MBC Group, owned by Saudi businessman, Waleed bin Ibrahim Al Ibrahim, who was allegedly held against his wishes at the Ritz-Carlton in Riyadh as part of an attempt to coerce him into selling it to the Saudi Crown Prince.[183]
JD Classics
In July 2021, PwC was sued by administrators Alvarez and Marsal on behalf of JD Classics, a UK-based car dealership, for negligence related to audits in 2016 and 2017.[184] A failure to identify fraud at the company led to losses of £41m. PwC responded with a statement that "this claim [lacks] merit and [we] will be vigorously defending it."[185]
Lobbying revolving door
In 2021, an investigation by the New York Times found that PwC staff sought employment at the Treasury Department where they pursued policies that helped PwC clients. After completing their time at the Treasury Department, the staff were promoted to partner at PwC.[186]
Evergrande
PwC has audited Evergrande, a Chinese property company, since 2009 and received fees worth $42 million for doing so.[187] By 2021, Evergrande had collapsed financially and set off the Chinese property sector crisis, which sparked questions about PwC's role in inflating the company's revenue prior to the firm's eventual bankruptcy.[188]
In October 2021, the accounting regulator in Hong Kong announced an investigation into PwC's audit of Evergrande. PwC had signed off the 2020 accounts of Evergrande without reference to its uncertainties as a going concern. After the announcement of the fraud investigation, PwC resigned as auditor of Evergrande's accounts.[189] One year later, in February 2024, Evergrande's liquidators prepared for a potential lawsuit against PwC.[190]
In September 2024, PwC ZhongTian, PwC's auditing business in China, was suspended for six months. China's securities regulator also confiscated the revenue PwC earned from auditing Evergrande and imposed a fine of $62 million.[191]
South African Airways
The Zondo Commission report on state capture in South Africa uncovered several instances of alleged corruption, fraud and mismanagement at South African Airways (SAA). The report found that PwC effectively enabled capture of SAA by failing to adequately audit its financial and accounting processes between 2012 and 2016.[194]
Kier and Galliford Try
In June 2022, the UK's Financial Reporting Council fined PwC and a former partner, Jonathan Hook, over audit failures relating to construction firms Galliford Try and Kier Group. PwC was fined just over £3m for failing to adequately challenge revenue and costs recognised by Galliford Try's management on large, complex long-term construction contracts during 2018 and 2019 audits, and fined £1.96m for similar failures during the 2017 audit of Kier. Both fines were reduced (from £5m and £3.35m respectively) to reflect PwC's cooperation with the investigation.[195]
Americanas (AMER3) controversy
In January 2023, the firm was involved in a controversy when it approved Americanas' (AMER3) balance sheets with accounting inconsistencies of around US$4 billion. This caused volatility to company's price on the Brazilian stock exchange and losses to the company's shareholders. After verifying the impacts caused, the CVM (Brazilian body that regulates the stock exchanges) opened investigations against the company's auditors to determine responsibilities.[196][197][198]
Australia tax leak scandal
In 2023, it was revealed that a PwC partner, who was a member of consultation groups set up by the Australian Treasury to improve tax laws, had been leaking confidential government tax plans to PwC. The data leaked by the PwC partner included new taxation rules to close loopholes which allowed multinational companies to avoid paying tax.[199]
After PwC completed an internal investigation in July 2023, eight partners, including former chief executive Tom Seymour, were removed from the partnership.[200][201] In July 2023 PwC sold its Australian government consulting business to Allegro Funds for $1 with the business rebranded Scyne Advisory.[202][203]
Aiding Russian oligarchs
PwC's Cyprus unit helped dozens of Russian oligarchs to shuffle their wealth and evade sanctions after Russia's invasion of Ukraine.[204][205] PwC helped Alexey Mordashov transfer a $1.4 billion investment out of his name in order to elude EU sanctions.[204] PwC also helped two oligarchs who were instrumental to the waging of Russia's war in Ukraine to hide $100 million.[204]
After the start of the full-scale Russian invasion of Ukraine, on 7 March 2022, PwC stated that "under the circumstances, PwC should not have a member firm in Russia and consequently PwC Russia will leave the network."[206] On 29 April, PwC Russia announced the withdrawal of the brand from the PwC network, and on 30 June, a legal agreement was signed on the withdrawal of the firm in Russia from the network.[207]
Curacao fraud
PwC helped billionaire Hushang Ansary allegedly defraud a pension fund in Curaçao by setting up shell companies to drain it.[211]
