© Reuters. The PwC sign is seen in the lobby of its offices in Barangaroo, Australia, June 22, 2023. REUTERS/Lewis Jackson/File Photo
by Lewis Jackson
SYDNEY (Reuters) – PwC Australia signed an exclusivity deal with private equity firm Allegro Funds on Sunday to sell its government practice for A$1, as it hired a Singaporean executive to steer his local firm through the fallout. of a national scandal.
The scandal, which broke in January, revolves around a former PwC tax partner who had been advising the federal government on laws to prevent corporate tax evasion and shared confidential information with colleagues who then used it to sell work to multinational companies.
Amid growing backlash from major government clients, PwC said it had signed an exclusivity agreement to sell its federal and state government business to Allegro Funds for A$1 ($0.67), as first reported. time on Friday.
Both PwC and Allegro aim for a binding agreement within a month, the professional services firm said in a statement on its website.
If the deal goes through, Allegro will set up the new firm as a corporation, not a partnership, according to a source not authorized to speak to the media. Ownership will be split between Allegro and former PwC partners, although the exact split is unknown, the source said.
An Allegro Funds spokesman declined to comment.
PwC said the divestment accounted for around 20% of revenue for fiscal 2023. The company had revenue of A$3 billion ($2 billion) last fiscal year.
“We have taken this step because it is the right thing to do for our public sector clients and to protect the jobs of approximately 1,750 talented people in our government business,” said PwC Australia Chairman of the Board Justin Carroll.
The deal is intended to isolate the firm’s government consulting business and rebuild trust with the many departments and agencies that have locked the firm out of new work.
Labor Senator Deborah O’Neill, who helped release a cache of internal PwC emails last month, said the firm cannot get out of the scandal until it reveals full details of those involved in the breach of confidential documents.
“More of the same with a new name is even more of the same,” he said in a statement.
NEW EXECUTIVE DIRECTOR
PwC Global Chairman Bob Moritz publicly apologized in a statement, saying PwC Australia failed to live up to the company’s standards and values under previous leadership.
Kevin Burrowes, currently head of Global Clients & Industries based in Singapore, will become CEO, assuming the role once he relocates to Sydney.
Interim CEO Kristin Stubbins will remain in the role until Burrowes arrives.
“PwC Australia has a lot of work to do and I am confident that the steps they are taking … will result in a stronger company,” Moritz said.
($1 = 1.4977 Australian dollars)
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