“Big 4” global accountancy practice, PwC is being investigated by the UK Government for auditing two Palestinian NGOs alleged to have had links to a terrorist organisation. The UK National Contact Point for the OECD Guidelines for Multinational Enterprises has decided that issues raised in a complaint made by UK Lawyers for Israel (UKLFI) are “material and substantiated” and “merit further examination”.
PwC Office in Tel Aviv
UKLFI alleged that two Palestinian NGOs audited by PwC had links to the Popular Front for the Liberation of Palestine (PFLP), a designated terrorist group, and that PwC breached the OECD Guidelines for Multinational Enterprises on responsible business conduct (the Guidelines) by ignoring these links in its audits.
UKLFI is an organisation that uses the law against attempts to undermine, attack and delegitimise Israel.
UKLFI provided information about the Union of Agricultural Work Committees (UAWC) and Defence for Children International – Palestine (DCI-P) to show that both had links to the PFLP when PwC audited their accounts from 2014 to 2018. PwC continues to audit DCI-P’s accounts but lost the contract for the UAWC audits in mid-2019. According to PwC International, “PwC Palestine continues to engage with DCI-P.”
UKLFI argues that PwC failed to highlight the many and various links between the PFLP and the UAWC or DCI-P when it audited their accounts. PwC also failed to take any steps to mitigate the impact of these terrorist links as required by the Guidelines.
UKLFI consider that as a result of these alleged failures, UAWC and DCI-P were able to continue providing support to the PFLP by
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Employing members of the PFLP
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Offering support to members of the PFLP
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Enabling direct or indirect funding of the PFLP
UKLFI consider that this support assisted the PFLP to further its objectives, which included terrorism.
For example, two former finance directors of UAWC were recently arrested and have now been put on trial for a bomb attack on the Schnerb family in August 2019, which killed 17 year old Rina Schnerb and injured her father and brother.
Abdul Razaq Farraj, who was the finance director of UAWC in 2018, had been an employee of UAWC for 30 years. He was arrested by the IDF in late 2019 as part of a 50 person PFLP terror network. According to his indictment, he authorized the bombing of the Schnerb family.
Samer Arbid was Financial Director of the UAWC from around 2015 to 2016, and commanded the PLFP terror cell that carried out the bomb attack on the Schnerb family.
PwC does not accept the allegations made by UKLFI and does not consider itself to be a multinational enterprise.
Caroline Turner, director of UKLFI commented: “We have evidence that donors to UAWC and DCI-P relied on the fact that they were audited by PwC, a big 4 accountancy firm, and this provided them with confidence that their money was being used for legitimate objectives and not to facilitate terrorism. We believe that UAWC and DCI-P benefited from PwC conferring legitimacy on their international fundraising activities.”
“By failing to mention the many links between these NGOs and a terrorist organisation, PwC may have contributed to violations of the human, economic and civil rights of terror victims, diverting support from the Palestinian citizens who should be benefiting from the aid of donors, and misleading taxpaying citizens of the donor nations.”
In particular the Netherlands has donated around $26 million to UAWC over the past 6 years, and the EU has also been a major donor to UAWC. Tax payers may be surprised and disturbed to learn that their overseas aid has been going to organisations with links to a designated terrorist organisation.
The Initial Assessment of the UK National Contact Point regarding the complaint by UKLFI against PwC is available HERE.
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The UK National Contact Point is part of the Department for International Trade and implements the complaints mechanism set out in the OECD Guidelines for Multinational Enterprises..
The OECD Guidelines for Multinational Enterprises are recommendations for responsible business conduct that 44 adhering governments – representing all regions of the world and accounting for 85% of foreign direct investment – encourage their enterprises to observe wherever they operate.