PwC tax scandal goes global

G’day.

Welcome to Point Blank.

Today’s brief:

• PwC’s global tax scandal deepens, dragging in US execs and raising fresh accountability questions.

• MinRes braces for shareholder scrutiny as scandals shake confidence ahead of today’s AGM.

• BHP bets big on $14bn on Chilean copper expansion as the race for critical minerals heats up.

 💼 Practice Points

• The Federal Treasury has dropped the exposure draft for the Treasury Laws Amendment Bill 2024, and it's aiming to give a major overhaul to the substantial holding and tracing notice regimes under the Corps Act. The goal is to expand the disclosure of beneficial ownership for listed entities.

• ASIC has unveiled a draft regulatory guide on the new sustainability reporting regime and is seeking your feedback. The guide breaks down what needs to go in the reports, how to handle sustainability info outside the report, and how ASIC plans to manage reporting requirements, including relief.

• Buyer beware no longer. The government’s consultation paper on the new unfair trading practices prohibition outlines how it will crack down on businesses that unreasonably distort or manipulate (or are likely to distort or manipulate) consumer decision-making. The focus? Subscription traps, drip pricing, and dynamic pricing.

🏘️ Word on the Street 

• The PwC tax scandal just went global. Former partner Paul McNab has named Matthew Chen, a key figure in PwC’s US arm, as allegedly receiving confidential Australian tax info back in 2014. McNab, now fighting to clear his name in court, claims he acted under senior management’s direction.

• Slater and Gordon are in hot water, accused of deliberately miscalculating leave entitlements, failing to reconcile them, and firing the chief people officer for blowing the whistle. Now, the HR boss is hitting back with an unfair dismissal suit.

📢 Talking Points

• There’s a lot to be answered for at MinRes’ AGM held today at 12.30pm in Perth. Shareholders will no doubt question management over the numerous scandals that have made global headlines – from undeclared offshore entities, questionable property deals and conflicts of interest. MinRes shares are down 12% over the past and Chris Ellison has even lost his billionaire tag.

• Chalmers to funnel the $230bn sovereign wealth fund to drive Labor’s agenda on affordable housing, green energy projects and critical infrastructure. Established under Howard, the Future Fund was previously geared towards a benchmark return rate. It will now have a set political direction despite its independent mandate. But if the projects and returns are equally green, is there anything to question?

• Rio Tinto’s push for diversity is stirring tensions on the ground, a new report finds. Rio’s challenge? Sell the benefits of diversity while keeping fairness front and centre. Despite raising female representation to 25% and prioritising gender in hiring, some women worry that efforts to level the playing field have left them facing credibility questions. Men report feeling undervalued and claim there’s "reverse discrimination". Bullying complaints are up too—39% of staff reported incidents, with female equipment operators hit hardest.

• LexisNexis' flagship AI legal assistant is “riddled with mistakes” and a no-go for law students, according to a Canadian law professor. Tests had the assistant draft a court motion and summarise a case—both tasks resulted in made-up legislation and responses packed with legal inaccuracies.

🏦 The Treasury

• China’s economy stabilises and shows signs of growth in consumption, services, foreign trade and industrial production. The unanswered question remains: when will US trade sanctions and tariffs stunt China’s newfound boost? UBS reckons US sanctions could start as early as Q1 2025 but will be rolled out slowly to avoid inflationary pressure on the US.

• Across the pond in the UK, inflation rose faster than expected, to 2.3% year on year in October, up from 1.7% in September, with energy prices the culprit. Bitcoin hits new record.

  

🤝 Deal Room

• Will BHP take another swing at the world’s largest platinum producer? Under UK Takeovers law, BHP has to sit on its hands for at least 6 months before it can pursue another bid at Anglo American. That timeout expires at the end of the month. It’s crystal clear that BHP’s eyes aren’t set on platinum but on copper, as the mining giant seeks to bolster its assets of the critical mineral.

• Australia’s packaging giant Amcor just inked an all-scrip, US$8.4bn (A$12.9bn) merger with Berry Global, solidifying its spot as the world’s largest plastic packaging company.

• Piedmont’s merger with Sayona looks like a funding lifeline. With its market cap dropping from $1.36bn to $350m in just two years, some are saying Piedmont would have to close its mine without this deal.

• TPG Capital has unfinished business. Domain is back on TPG’s radar—just a few years after TPG’s bold 2017 play to buy Domain, following which it made a takeover attempt of Fairfax, Domain’s prior parent.

• The Blackstone/AirTrunk deal is in its home stretch. AirTrunk is expected to get FIRB approval as soon as next week, ticking off the last condition precedent.

• The market’s losing faith in the Paladin/Fission Uranium deal, with Canada extending its national security review. The deal, originally set to close in September, is now stuck in limbo.

🏗 Sector Specific

Diggers

• Resolute CEO and execs have been released from detention in Mali after the gold company struck a US160m “tax dispute” deal. It’s a significant blow to Resolute who holds about US$157m in cash. Luckily, the payment is split into two tranches, with the initial US$80m to be paid from existing cash reserves and the next in the coming months.

• BHP has put its money where its mouth is with a $14bn Chilean copper expansion. And it’s ambitious, aiming to increase production output by 430,000 to 540,000 tonnes per year. Chile is the largest copper producer globally, with 28% of the world’s annual supply. BHP has even corned the Chile market with 27% slice of Chile’s copper production coming from BHP’s mines.

• Senator Price slams the federal government’s rejection of Regis’ McPhillampys gold mine as an example of “weaponising” Indigenous people. She argues Plibersek should’ve trusted the Land Council, not a fringe group, and the real cost is traditional owners losing out on local jobs.

Fin

• Sydney-based venture capital firm Airtree Ventures has raised most of a $650m fund to back Aussie tech, with support from US heavyweights like Harvard and local supers like AustralianSuper. The fund will target early-stage startups and scaling companies, signalling confidence in ANZ’s tech rebound despite recent sector challenges.

• Job security is becoming a luxury. Deloitte UK is cutting 180 more advisory roles, just a month after slashing 250 in the same department, blaming a sluggish post-pandemic consulting market.

• It’s a tug-of-war over Chalmers’ new regional bank levy. Commbank’s CEO is all in, calling out free-loaders like Macquarie who skip paying for banking infrastructure like branches. But other bankers are firing back, saying the levy would reduce competition from the digital-only banks.

Tech

• Alibaba launches AI-powered search engine for B2B sourcing. Termed, Accio – after the Harry Potter spell to lure things closer – the tool leverages generative AI tech to enhance product discovery and procurement process. The results are in: Accio saw a 40% uptake in purchase intent when compared to traditional search engines.

• San Francisco hosted the world’s first inter-government summit on restraining AI. Delegates from nine countries, plus the EU, aim to put adequate “guardrails” on AI. Though, China missed the invite to the two-day event.

Retail & Real Estate

• Woolworths’ executives remain in the hot seat as the ACCC continues to examine its price practices. The inquiry heard evidence that some suppliers would be put on a supplier ‘holiday’ if they didn’t take the price offered by the supermarket giant. Top boss Amanda Bardwell said that “certainly should not be happening at Woolworths”. ACCC will release its report in late February.

PS. When you’re trying to plan a holiday, prepare for Christmas and excel in your career