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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

PwC has been accused of interfering in Australia’s political and regulatory affairs after documents revealed the Big Four accounting group warned its local firm against co-operating with investigations into a damaging tax leaks scandal without permission.

The Australian Senate published documents on Friday that included a letter from Diana Weiss, PwC’s global counsel, sent to PwC Australia last year. She wrote that the local firm needed to comply with a set of remedial actions or face suspension, or expulsion, from the global network.

A drastic move by PwC International to take control of PwC Australia last year followed the publication of internal PwC emails by the Senate in May. They revealed a partner in its tax practice had used confidential information from government meetings to assist his colleagues in winning new business from multinational technology companies.

The Weiss letter, sent in May two weeks after PwC launched a review of its Australian firm, stipulated that PwC Australia should not provide “any regulator or other governmental or legal authority any formal, significant or substantive submissions or responses” without approval from Weiss and a representative of PwC International’s leadership team.

The letter said Weiss and the network’s representative also had to sign off any decisions related to the accountability of individuals regarding the tax leaks scandal.

Deborah O’Neill, chair of the Senate committee conducting the inquiry into the consulting industry, said on Friday that the Weiss letter demonstrated, “in crystal-clear detail, the lengths to which PwC International went in its attempt to inhibit transparency and accountability in the wake of the tax leaks scandal”.

“The full implications of PwC International’s clear intent to interfere with Australian parliamentary, regulatory and legal authorities must be determined,” she said, adding that the Australian public deserved to know how PwC International had acted to “firewall itself from the Australian firm” to protect its global reputation.

The Weiss letter was also sent to the firm’s global chair Bob Moritz and partner Kevin Burrowes, who was named as chief executive of PwC Australia in June last year, a month after it was sent. It said the tax leaks scandal had caused “ongoing reputational and global brand damage” to PwC.

PwC Australia declined to comment on the senator’s statement, and PwC International was not immediately available for comment.

The scandal provoked an ongoing investigation into the actions and culture of PwC Australia — and the wider consulting industry — and led to repeated calls for the global unit to release details of its own investigation detailing which international partners used the confidential information.

Despite the release of the Weiss letter, the Senate documents revealed that two subsequent letters related to the remediation process were not provided to the Senate, as they contained “commercially sensitive” and “personal sensitive” information.

PwC this week said Asia-Pacific profits declined nearly 13 per cent in the year to June, as it lost market share as a result of scandals in Australia and China.

WASHINGTON — Boeing overcharged the Air Force nearly $1 million for spare parts on C-17 cargo planes, including an 8,000% markup for simple lavatory soap dispensers, according to the Pentagon’s inspector general.

The Defense Department’s auditor reviewed prices paid for 46 spare parts on the C-17 from 2018 to 2022 and found that 12 were overpriced and nine seemed reasonably priced. It couldn’t determine the fairness of prices on the other 25 items.

The Office of the Inspector General said it reviewed the soap dispenser prices after getting a hotline tip.

Boeing disputed the findings.

“We are reviewing the report, which appears to be based on an inapt comparison of the prices paid for parts that meet aircraft and contract specifications and designs versus basic commercial items that would not be qualified or approved for use on the C-17,” Boeing said in a statement. “We will continue to work with the OIG and the U.S. Air Force to provide a detailed written response to the report in the coming days.”

The C-17 Globemaster is one of the military’s largest cargo aircraft. It can carry multiple military vehicles, large pallets of humanitarian supplies or, in extreme circumstances, hundreds of people. The Air Force flew C-17s nonstop for two weeks during the hectic August 2021 withdrawal from Afghanistan, evacuating more than 120,000 civilians fleeing the Taliban.

Since 2011, the U.S. government has awarded Boeing more than $30 billion in contracts to purchase needed spare parts for the C-17 and be reimbursed by the Air Force.

Boeing is still trying to recover from financial and reputational damage caused by two deadly crashes in 2018 and 2019 of its bestselling airline jet, the 737 Max.

This has been a particularly volatile year for the aerospace giant. It came under renewed scrutiny and federal investigations after a door plug flew off a 737 Max during an Alaska Airlines flight in January. Federal regulators limited Boeing production of the plane.

In July, Boeing agreed to plead guilty to a felony count of conspiracy to defraud the government for misleading regulators who approved pilot training rules for the Max. That plea deal is pending before a federal judge in Texas.

Boeing is on its third chief executive in five years, having hired an outsider who joined the company in August. Last week, Boeing reported a third-quarter loss of more than $6 billion because of charges for several commercial, defense and space programs.

A strike by 33,000 union machinists is now seven weeks old and has crippled production of 737s, 777s and 767 freighters, cutting off much-need cash. New CEO Kelly Ortberg has announced roughly 17,000 layoffs, and the company will issue new stock to raise up to $19 billion to shore up its debt-laden balance sheet.

Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

The top commander of Iran’s elite Revolutionary Guards issued a stark warning to Israel on Thursday, vowing that Tehran would deliver a harsh response to last week’s Israeli strikes on the Islamic republic.

Major General Hossein Salami, the head of the guards corps, warned in a speech that Iran’s retaliation would be “unimaginable” as Iranian officials stepped up their rhetoric against Israel.

“Israelis think they can launch a couple of missiles and change history,” he said. “You have not forgotten . . . how Iranian missiles opened up the sky . . . and made you sleepless.”

Separately his deputy, Brigadier General Ali Fadavi, told Al Mayadeen, a Lebanese television channel close to Iran, that a response would be “inevitable”. In more than 40 years, “we have not left any aggression without a response”, he said.

The belligerent comments came as the Islamic regime weighs its options following Israel’s attack on Saturday, during which Israeli war planes launched three waves of strikes at Iranian military installations. The targets included missile factories and air defence systems in three provinces, including Tehran.

Regime insiders told the Financial Times that the options being considered include a possible strike before next week’s US presidential election, or Iran’s leaders could decide to hold off for now.

“The winner of the US election could take an Iranian attack personally and act against Iran. So, if Iran wants to respond to Israel, the best time is before the US election,” one insider said. “The only thing that could change this would be a fair breakthrough in ceasefire talks between [Hizbollah in] Lebanon and Israel which does not seem very likely.”

The US has this week stepped up efforts to broker a deal to end the conflict that has lasted more than a year between Israel and Hizbollah, Iran’s most important proxy.

But there was little optimism of a breakthrough as Israeli Prime Minister Benjamin Netanyahu insisted Israel retain the right to unilaterally enforce any agreement that would lead to Hizbollah withdrawing from southern Lebanon.

Another Iranian insider indicated Tehran might opt to maintain psychological pressure on Israel rather than launch a direct assault.

“With Hizbollah launching tens of rockets into Israel daily in a legitimate war, a direct response may not be necessary right now,” the insider said. “What benefits us is not a direct war with Israel. We need to keep the level of people’s stress low so that they can live their lives. This is the top priority.”

But an Iranian analyst said the dilemma for Tehran was “that Israel would take any delay in Iran’s response as a sign of weakness and would feel emboldened”.

Iran’s initial reaction to Israel’s strikes — which were in retaliation for an Iranian missile barrage fired at the Jewish state on October 1 — suggested that Tehran’s response would be measured and not immediate, Iranian analysts said.

Speaking on Sunday, a day after Israel’s attack, Ayatollah Ali Khamenei, the country’s supreme leader and ultimate decision maker, refrained from vowing to retaliate.

Instead, he said the strikes should neither be “overestimated or underestimated”. Iranian state media played down the impact of the attack, which killed four soldiers and a civilian, saying the damage was limited.

But Tehran has shown a willingness to risk an escalation with Israel as regional hostilities triggered by Hamas’s October 7 2023 attack have spread across the Middle East, thrusting Iran’s years-long shadow war with its regional enemy into the open.

In April, it fired more than 300 drones and missiles at Israel in a clearly telegraphed retaliation for an Israeli strike on the republic’s embassy compound in Syria, which killed several senior guards commanders.

It gave little notice before launching 180 ballistic missiles at Israel on October 1, a more severe attack that was in response to the Israeli assassination of Hassan Nasrallah, Hizbollah’s leader and a close confidant of Khamenei.

“Only a shock can stop Israel from its aggressions and free the region from the current stalemate,” the first regime insider said. “Iran might even go for a big bang and do something totally outside Israelis’ calculations as there is no other way to stop it.”

The US, which has pledged an “ironclad” commitment to the defence of Israel, has warned Iran not to retaliate as western nations have sought to contain the crisis amid heightened fears of all-out war.

“We will not hesitate to act in self defence. Let there be no confusion. The United States does not want to see further escalation,” Linda Thomas-Greenfield, the US ambassador to the UN, said this week.