ADELE FERGUSON, REPORTER: These tranquil waters are a sanctuary from the cut and thrust of corporate life.
ADELE FERGUSON: Now he wants to expose the roles of auditing giant KPMG and consultancy group PwC in the scheme.ADELE FERGUSON: We know how influential the big four accounting firms are in the public sector. SENATOR DEBORAH O'NEILL, ALP: When they tell the truth, proper decision making can be undertaken about where to make investments.
ADELE FERGUSON: Tony Watson worked for Greenwoods and Herbert Smith Freehills since it began in 1985.TONY WATSON: I worked for Lendlease and the board on nearly every major tax transaction they did for 30 years, so if the board did acquisitions, capital returns, dispositions, any tax litigation, I was involved.
ADELE FERGUSON: Watson raised his concerns, but they were ignored. Instead, he says Lendlease called on PwC for advice on the scheme. ADELE FERGUSON: In August 2021 - almost a decade after Watson first raised his concerns - Lendlease finally told its thousands of investors the tax office was auditing its retirement village tax scheme.
PROF. JOHN DUMAY, MACQUARIE UNIVERSITY: I think at the end of the day, companies like Lendlease should be rotating their auditors.JOHN DUMAY: That's always been an issue that's been debated.JOHN DUMAY: Ten years could work. I think that's really something that the regulators need to actually look at.
ADELE FERGUSON: ASIC told 7.30 it will now combine its annual audit reviews with surveillance of financial reporting, and that targeted reviews of the largest firms will happen “from time to time”. ADELE FERGUSON: The company’s external auditor KPMG missed the errors when it approved the accounts as fair and true; charging $16 million for its audit work and another $1.8 million in consulting work.
Monaco, an exclusive enclave in the French Riviera is a playground for the rich and powerful - a haven for tax avoidance.ALLAN FELS: They're in Monaco because it is the tax avoidance centre of the world. It is also an epicentre for money laundering.ADELE FERGUSON: Professor Allan Fels is a former head of Australia’s competition regulator and a global expert on economics and accounting.
ALLAN FELS: We know that the global financial crisis of 2008 was partly triggered by bad auditing, and I have deep fears that something similar could occur to topple the global and the Australian economy in the coming period.