Australia’s Federal Treasury is currently reviewing overseas takeovers that have involved consultancy firm PricewaterhouseCoopers (PwC).

In collaboration with the Australian Taxation Office (ATO), the Federal Treasury is examining records to identify whether any foreign investment applications where PwC was involved were based on false or misleading information.

The story was initially reported by the Sydney Morning Herald, which named at least four PwC clients that were acquired by foreign groups, including surfwear group Billabong International which was acquired by Boardriders in 2018.

PwC was acting as an independent auditor for Billabong International at the time - according to an interim financial report dated December 31, 2017 - with the surfwear group then housing several brands including Billabong, Von Zipper and Element.

The document also detailed the takeover scheme with Boardriders, which was valued at $380 million. 

It is unclear if PwC was involved in the takeover deal, however a scheme booklet was issued to shareholders in February 2018 showing that Grant Samuel & Associates Pty Ltd acted as an independent expert.

Ragtrader has reached out to Boardriders and its parent company Authentic Brands Group for further comment.

The probe into PwC came amid an overall review on advice given for Foreign Investment Review Board (FIRB) applications as well as a tabled plan to reform and renew Australia’s foreign investment framework.

According to the Treasury, direct and portfolio foreign investment in Australia grew to be worth about $3.5 trillion in 2023.

Labor Senator Deborah O’Neill has been pursuing PwC’s involvement in foreign acquisitions through a Senate parliamentary inquiry.

In questions directed at the Department of the Treasury, O’Neill demanded to know which actions the FIRB took to determine whether PwC may have engaged in practices “which has the potential to mislead or subvert the ATO”.

In response, the Treasury wrote that it assesses the risks of each foreign investment proposal on a case-by-case basis, and any risks to tax revenue are considered in consultation with the ATO. 

“These assessments consider the validity and completeness of the information provided by investors in their submission. The consultation process complements the ATO’s activities by providing the ATO with insights into the structure of proposed actions by foreign investors which may pose tax risks. 

“This enables the ATO to take proactive steps to develop and recommend conditions to be imposed under the Foreign Acquisitions and Takeovers Act 1975, which then require investors to provide certain information and co-operate with the ATO throughout the life of the investment.”

The Treasury also confirmed that it is presently examining its records and working with the ATO to identify whether any foreign investment applications where PwC was involved were based on false or misleading information. 

“These investigations commenced following the ATO’s response to this Committee’s question on notice referred to above. Subject to the findings of these investigations, Treasury will consider what further actions or responses may be appropriate to take.”

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