PricewaterhouseCoopers pays €37m to save Spanish employees from jail
The accountancy firm PricewaterhouseCoopers has handed over €37m (£29m) to the Spanish government to save four of its former employees from serving lengthy jail terms for fraud.
The four former senior executives, who include the firm’s ex-president Miguel Fernández de Pinedo, had faced up to 14 years in jail for their part in the allegedly fraudulent sale of PwC’s systems consultancy to IBM in 2002. Charges were dropped against 40 other former employees and one serving member of staff.
De Pinedo and the other three executives have been sentenced to a symbolic three to six months in jail, sentences they will not have to serve. The anti-corruption attorney-general’s office said PwC’s willingness to pay up was key to reaching a settlement. The €37m is made up of €17m in unpaid tax, €11m in interest and a €9m fine.
The case was brought in 2008 when the anti-corruption office accused former PwC employees of having carried out a fictitious restructuring process in the sale of its systems consultancy to IBM in 2002 in order to benefit from tax relief available for this type of operation.
The attorney-general also claimed an advance of €21m on the deal should have been declared as income and not as an increase in the business’s assets.
The four former employees, who left the company eight years ago, have insisted all along that the operation was completely transparent and legal and that the relevant taxes had been paid.
The former employees claimed the restructuring was real, not fictitious, and was carried out correctly with the support of lawyers and independent experts. They added that the structure they devised is the one currently in place.
They also said it should never have gone to court and should have been dealt with through administrative channels as the issue was a technical discrepancy on how the deal should be taxed. They insist the tax authorities were kept informed throughout and did not raise any objections.
Regarding the accusation that the €21m advance should have been treated as income, the four say the payment was linked to the segregation of the systems consultancy and its subsequent sale to IBM and was therefore declared as assets, not income.
However, the former employees felt that to continue to fight the case any longer was not in their interest and was damaging PwC’s image.
Source: TheGuardian
