PWC scandal: Australian consultancy firm announces new CEO and sells off government operations

Beleaguered consultancy giant PwC Australia has named its new CEO and announced it will sell its government operations to a private equity firm for just $1.

The big four professional services firms announced on Sunday that it would fly over a new CEO from its team in Singapore as it tries to repair the repeated damage caused by the tax leak scandal.

PwC is in crisis mode after revelations that former tax partner, Peter Collins, leaked sensitive and confidential government information to fellow partners and clients.

Mr Collins has since been banned from acting as a tax adviser, and the Federal Treasury has referred the scandal to the Australian Federal Police for a criminal investigation.

In an effort to stave off further controversy, PwC confirmed on Sunday that all of its federal and state government assets would be sold exclusively to Allegro Funds for just $1.

The new entity is referred to as project ‘Bell’. It will become a corporation and will therefore be subject to corporate governance obligations and supervision from ASIC through the Companies Act.

PwC Australia operates on a partnership model, which means it is not incorporated and is not subject to corporate governance oversight, but has voluntarily adopted a code of conduct.

The deal involves approximately 130 partners and 2,000 employees. PwC’s government advisory business division was responsible for about 20 percent of the company’s revenue in fiscal year 2023.

The companies are positioned to sign a binding agreement by the end of July.

In addition, PwC world leaders Kevin Burrowes will be parachuting for the top job after taking control of the company’s troubled Australian arm.

Burrowes succeeds Kristin Stubbins, who has held the top position for nearly seven weeks after former CEO Tom Seymour stepped down in early May.

Mr Seymour resigned after it was revealed that he had received emails from Mr Collins containing confidential Treasury information.

Nine PwC partners were instructed to go on leave immediately around the same time Mr Seymour stepped down last month.

Tom Seymour (pictured) stepped down as CEO of the consulting firm in May after it was revealed he had received emails from former tax partner, Peter Collins, containing confidential Treasury information

Kevin Burrowes succeeds Kristin Stubbins (pictured) as PwC’s new CEO. Ms. Stubbins held the top position for nearly seven weeks after Mr. Seymour stepped down

Mr Burrowes plans to move from Singapore to Sydney to become a PwC Australia partner and CEO of the firm, but has yet to complete the Australian immigration process.

PwC Australia’s move to divest its government business comes after the federal government effectively barred the company from new contracts and the The NSW government announced a temporary suspension when offering new tax work to the company.

The consulting firm said the sale of this part of the company to Allegro Funds would affect the company’s future size and operations.

Justin Carroll, chairman of PwC Australia, said the sale was “the right thing to do for our public sector clients” and he hoped the move would protect jobs involved in the company’s government business.

“This was an extremely difficult decision, but we are determined to take all necessary steps to protect our people’s jobs and regain the trust of our stakeholders,” he said in a statement to the media on Sunday.

Mr. Burrowes becomes the new CEO of PwC Australia following a stint as the PwC Network’s global client and industry leader after first joining the company in 1986.

PwC has said Mr Burrowe’s priority would be improving the corporate culture, with a specific focus on ‘ethics and controls’.

He said he was “honored” to have been selected to lead PwC Australia and pledged to “work tirelessly” to increase transparency and rebuild trust with the company’s stakeholders.

The consulting firm said the sale of this part of the company to Allegro Funds would affect the company’s future size and operations

Bob Moritz, chairman of PwC Global, said on Sunday that PwC Australia had failed to live up to the professional standards and values ​​of the global partnership under his previous leadership.

“His past actions are not representative of PwC’s work and conduct around the world and I am deeply sorry to our clients, our wider stakeholders and our people,” he said.

“PwC Australia has a lot of work to do and I am confident that the steps they take with the support of the network will result in a stronger company.”

Earlier this month Ms Stubbins has released a statement stating: ‘I would like to apologize on behalf of PwC Australia. For sharing confidential government tax policy information and for violating the trust placed in us.”

She admitted that there was a clear lack of respect for confidentiality and that PwC Australia lacked adequate processes and governance.