61 PwC partners to face trial for tax fraud

Current and former partners of PricewaterhouseCoopers (PwC), the world's second largest consultant and auditing firm, faced a trial on Monday in Spain, accused of a €40m fraud linked to the $3.5bn (£2.3bn) sale of the firm's consultancy arm to US technology outfit IBM in 2012.

Madrid prosecutors want to impose prison penalties of between two years and 14 years on partners from PwC in the UK, Spain, France, Ireland and Austria for committing tax fraud.

The partners allegedly did not declare €20.9m (£15.1m) in the bonuses perceived in January 2002 as compensation for their work on the sale of PwC Consulting to IBM. The compensation was included in the sale price, resulting in a much lower take for the tax authorities.

According to the prosecutor, the defendants also made several pre-sales operations allegedly with the aim of defrauding the State, and "unduly" declared in their income tax filings amounts owed as a result of the sale "by applying the antiquity of other values that were not sold". A total of €12m (£8.7m) were allegedly defrauded.

Meanwhile, the four subsidiaries in which the partners served omitted amounts from their income taxes worth €9.5m and presented the sale as a corporate restructuring operation in order to commit fraud worth €18.3m (£13.2m).

PwC issued several statements denying the allegations and stressing that there was no intention to either conceal information nor to conmit fraud. The firm assured that everything was "absolutely correct and consistent with the law" and that the allegations put forward by the prosecution "do not correspond to reality".

In addition, PwC emphasised that the corporate transaction that prosecutors described as fictional, was "real, public, clear and subject to the corresponding tax benefits".

UPDATE: The prosecutor later withdrew charges against 12 of the 59 ex PwC partners. In the first trial session on Monday, the central criminal judge Jose Maria Vazquez Honrubia agreed to suspend the hearing for a period of 20 days, so that defenses have time to work on crucial expert reports.

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