The New South Wales government has dismissed EY Oceania’s public and private assurances about its conflict of interest policies just hours after its senior partners fronted a parliamentary inquiry.
Relations between the firm and the state government soured last year after Guardian Australia revealed EY did not disclose it was being paid by Santos for assurance work before being awarded a $67,375 contract to inform a department’s “future of gas statement”, which greenlit the gas giant’s Narrabri development.
At a NSW parliamentary hearing into the consultancy industry on Monday, senior EY partners insisted its work for Santos did not need to be declared because “there was no conflict of interest”. The firm’s risk and independence leader, Leigh Walker, said EY “did the economic modelling and then walked away” without making any recommendations.
Catherine Friday, the firm’s government and health sciences leader, revealed she and another senior partner sought an August meeting with the NSW natural resources minister, Courtney Houssos.
That was shortly after the minister criticised the non-disclosure and accused the firm of demonstrating a “systematic pattern of behaviour which only serves to undermine confidence in the development of public policy”.
“In our discussions with the minister, we were very clear that we understood the concerns about the perception of conflict of interest,” Friday told the inquiry, before confirming the firm’s policies did not change in response to the minister’s criticism.
But Houssos told Guardian Australia she still believed EY’s work with the gas industry should have been disclosed and suggested stricter reporting standards could be introduced.
“The disclosure of actual or perceived conflicts of interest is crucial to ensuring transparent and proper working relationships between consultants and the government,” Houssos said.
“That no disclosures were made reflects poorly on the systems in place which administer the government’s use of consultants. I look forward to receiving the committee’s report and ensuring the government’s use of consultants aligns with community expectations.”
EY Oceania was contacted for a response to the minister’s statement.
Walker told the inquiry there had been some “misinformation” in the media about the firm’s work on the future of gas statement and stressed its input was “very limited in scope”.
“We didn’t write the future of gas statement,” Walker said. “We did economic modelling based on [the government’s] scenarios”.
The inquiry’s chair, Greens MP Abigail Boyd, told the inquiry that conducting modelling alone presented a potential or perceived conflict of interest that should have been disclosed for the sake of transparency. She also accused the firm of “breathtaking arrogance” in response to the committee member’s questions.
“Judging by their evidence … today, they are still not even at the point of admitting there is a problem, let along taking action to prevent it,” Boyd said.
Earlier on Monday, the board director of PwC Australia’s spin-off company Scyne Advisory told the inquiry that conflicts of interest were “inherent” in firms that simultaneously provide advice to government and private sector clients.
The firm’s board director, Adrian Loader, whose private equity business Allegro Funds purchased PwC Australia’s government services division for just $1 after a scandal involving the misuse confidential information, said intense scrutiny on the consulting industry was justified given recent scandals.
Last year, Alan Fels, a former chair of the Australian Competition and Consumer Commission, urged the federal government to break up the big four consultancy firms to reduce conflicts of interest.
“I think government legislators should come down hard on the industry, almost too hard at the beginning, rather than leaning on the soft side,” Fels told a seperate federal Senate inquiry.
