PwC Australia has announced it will sell its government consulting team to a private equity firm for $1.
It comes after a Senate committee accused PwC of trying to”cover up” a confidentiality breach, when it allegedly used government information to attract clients.
The sale would allow the government consulting team, which was not directly involved in the breach, to continue its work.
What is PwC?
PricewaterhouseCoopers (PwC) is a global firm which provides a range of client services, including accounting and consulting (i.e. advice). Its clients include governments and businesses.
PwC’s Australian branch employs more than 9,000 people, with around 1,750 of its staff working in the government consulting team.
Government contracts made up 20% of PwC Australia’s 2022-23 revenue.
Former PwC partner Peter Collins is accused of using confidential government information to attract business clients.
Between 2013 and 2016, Collins helped the government design new tax rules for global corporations. He signed several confidentiality agreements.
It is alleged he then improperly shared details about the rules with his colleagues so they could find a way around them and attract new clients.
In late 2022, Collins lost his practicing licence over the breach.
Earlier this year, a Senate committee uncovered emails which suggested over 60 PwC employees were aware of the breach. CEO Tom Seymour resigned and nine PwC partners have been stood down. In May, acting CEO Kristin Stubbins admitted the “culture” in PwC’s tax business “allowed inappropriate behaviour”.
The Treasury has referred the matter to the Australian Federal Police.
A committee made up of cross-party senators was tasked with investigating PwC. Last week, it published a report accusing the firm of a “deliberate” cover-up and “calculated breach of trust”.
“[PwC’s] desire to aggressively monetise confidential Commonwealth information demonstrates no regard for the public interest… it is clear that the desire for personal gain trumped any obligations that PwC had to the Commonwealth of Australia and its citizens,” the report read.
Consulting team affected
Although the breach did not originate within PwC’s government consulting team, the fallout from the incident has affected the team’s ability to carry out its work.
The Department of Finance recently confirmed “unethical behaviour” in past dealings was a relevant consideration in awarding new contracts.
Last month, Finance Minister Katy Gallagher suggested it would be difficult for PwC to win any new government contracts in the short term.
The $1 sale
On Sunday, PwC announced it planned to sell the consulting team to private investment company Allegro Funds for $1. PwC said this would “protect” the government consulting team by allowing it to pursue new work away from the firm.
According to its website, Allegro Funds specialises in “turnarounds” and “transformation” for the businesses it purchases, including “corporate carveouts” like the one PwC proposes.
The $1 price effectively reflects that the team in its current form has lost all its market value.
Labor Senator Deborah O’Neill, who sat on the investigating Senate Committee, said today the “mind-boggling” sale price raised several questions.
O’Neill accused PwC of acting in a “self-centred” way to rescue its lucrative government work. She said it would be difficult for the government to trust any PwC spin-off because PwC had not been fully transparent about who was involved in the breach.
“Not everybody at PwC can be bad… But [we have] no clear vision of who was ethical and who wasn’t ethical,” O’Neill said.