PwC sold part of its Australian business for $1 due to tax leak scandal

By Ananya Bhattacharya, Quartz (TNS)

PwC is selling its scandal-plagued Australian government services business for next to nothing. The consultant June 25 announced the sale to Sydney-based private equity firm Allegro Funds for the price of just $1 Australian dollar ($0.67). The deal, which is expected to conclude by the end of July, will result in two separate deals, with PwC Australia exiting all government advisory work, both at the state and federal levels.

The tax scandal involved PwC tax expert Peter John Collins leaking confidential government plans to other staff in Australia to advise global companies on new tax laws. The Australian treasury has now ousted Collins from the profession and is weighing a Criminal case Against him.

The embattled Big Four firm will now bring in a PwC veteran to serve as its Australia chief executive during this corporate makeover. Interim CEO Kristin Stubbins, who wrote an apology on PwC’s failures in the scandal in May, will remain interim boss until Kevin Burrowes takes over.

PwC Australia’s government business, by the digits

• 20%: How much of PwC Australia’s 2023 revenue was generated by the government’s trading arm, according to PwC.
• 1,750: People employed in PwC’s government business in Australia, whose jobs the company intends to protect during the divestment, according to PwC.
• $2.5 million: How much PwC charged in fees to advise 14 clients on how to circumvent new tax avoidance laws in 2016, using confidential Treasury information.
• $750 billion: Value of five industry retirement funds (AustralianSuper, Australia Retirement Trust, Hesta, Aware Super and CareSuper) that stopped doing business with PwC after the scandal.

Quotable: This Australian lawmaker is unimpressed

“I am very concerned at this point that the motivations of those at PwC remain self-centered and not about service.”

—Australian Labor Party Senator Deborah O’Neill, who heads the finance committee investigating PwC and other consultanciesin a sentence quoted in Bloomberg on June 26.

A non-exhaustive list of what PwC is doing to get its Australian business back on track

tom seymour resigned as chief executive of PwC Australia on May 8, days after revealing that he was one of dozens of partners who received emails discussing plans to use sensitive government tax policy information to gain new customers. Seymour remains a partner in the firm. He is planning to retire in September.

On May 29, PwC ordered nine partners to take leave with immediate effect. On the same day, the company said it will appoint two independent non-executive directors to its board of directors and will publish the Independent Review’s report and recommendations in full.

Employees involved in the scandal will face “serious” consequences, Stubbs said a state parliament inquiry today (June 26th). The company isn’t shying away from naming and shaming. already named four former partners directly involved in the breach of confidentiality, two of whom have publicly denied wrongdoing.

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