PricewaterhouseCoopers accused of conflict of interest in development role

Diane Abbott is furious that PwC is working on a DfID scheme called the Investment Facility for Utilising UK Specialist Expertise

Diane Abbott, the shadow international development secretary, highlighted PwC’s World Bank tax report and Luxembourg role (EPA)

Big Four accountant PricewaterhouseCoopers has been accused of “a very serious conflict of interest” in its role as an adviser to the Department for International Development (DfID).

Diane Abbott, the shadow international development secretary, is furious that PwC is working on a DfID scheme called the Investment Facility for Utilising UK Specialist Expertise. The Government says this helps British departments share specialist expertise with developing countries to help “create the conditions for economic growth”.

But two years ago PwC was found to have helped set up sweetheart deals in Luxembourg so that its clients could avoid tax. The scandal was dubbed “LuxLeaks”, because of the discovery of sensitive documents that showed how one of the EU’s smallest states was using preferential tax deals to save multinationals millions that arguably should have gone to its neighbours.

Ms Abbott also points to PwC’s work for the World Bank. The accountancy giant produces a report on international taxation showing what it is like to do business in different territories and ranks those jurisdictions.

Last year’s report stated it is “the only piece of research which measures the ease of paying taxes across 189 economies by assessing the time required for a case study company to prepare, file and pay its taxes, the number of taxes that it has to pay, the method of that payment and the total tax liability as a percentage of its commercial profits”.

Critics believe this type of research puts pressure on poor countries to reduce corporation tax.

Ms Abbott told The Independent: “As the LuxLeaks scandal has shown, PwC is in the business of helping multinational corporations avoid tax. For this reason it is abundantly clear that there is potentially a very serious conflict of interest in DfID paying PwC to administer projects designed to help developing countries raise more tax.

John Christensen, executive director at the Tax Justice Network, added: “There needs to be scrutiny of Government and big accountancy firms, all of which are pushing for tax breaks for their clients, not just in this country but around the world.”

A DfID spokesman said: “PwC act as managing agents for DfID’s Investment Facility for Utilising UK Specialist Expertise programme but are not involved with advising developing countries, which is carried out by independent tax experts. We have rigorous checks in place to ensure there is no conflict of interest.”

PwC declined to comment.