Following a scandal involving the misappropriation of secret government tax schemes, PwC Australia has decided to divest its government services sector for a mere A$1 (50p). The company concurrently declared the induction of a new CEO.
According to the firm, this strategic decision is expected to foster a future marked by certainty and concentrated efforts. The scandal broke out in January when it was discovered that a previous PwC Australia associate, who had been providing counsel to the government, had disseminated preliminary versions of corporate tax evasion legislation to his peers. These drafts were later utilised to allure prospective clients. The leakage spanned from 2014 through 2017.
Despite claims from PwC Australia that no confidential data had been deployed to assist clients in reducing their tax obligations, public officials and politicians have urged a prohibition on PwC Australia receiving government contracts until an appropriate resolution to the scandal is achieved.
Earlier this month, PwC Australia announced the identification of 76 present and past partners associated with the controversy, and divulged their identities to Australian legislators. Kristin Stubbins, PwC Australia's acting CEO, informed a parliamentary inquiry on Monday that severe repercussions would be imposed on employees found guilty of inappropriate conduct.
Acknowledging their failure to uphold their organisational standards, Stubbins apologised on behalf of the firm. PwC Australia introduced Kevin Burrowes, former PwC Network's global clients and industries leader, as the new CEO on Sunday. Justin Carroll, Chair of PwC Australia's governance board, affirmed that Burrowes would collaborate with his team to regain stakeholders' confidence.
PwC Australia also revealed its plans to transfer its Australian federal and state government operations to Allegro Funds, a private equity company. The intent is to finalise a legally binding agreement by next month's end. This transaction will give rise to two autonomous firms while ensuring the continuation of crucial services to public sector clients, assured PwC Australia.
Around 1,750 employees and approximately 20% of PwC Australia's annual revenue is contributed by their government services division. In May, Tom Seymour, PwC Australia's erstwhile CEO, stepped down following his confession of being one of the recipients of the confidential information, leading to the company suspending nine partners and restructuring its governance board.
Jim Chalmers, Australia's Treasurer, referred to the incident as a "severe violation of trust". For the current fiscal year, the Australian government has approved contracts worth A$255m with PwC, as per official data. Following the scandal, significant pension funds such as AustralianSuper and the nation's central bank declared their decision not to ink any fresh contracts with PwC.