That headline is not an exaggeration, they really did. Technically it was $1 AUD.
Yesterday’s news cycle was quickly dominated by news that KPMG US would be slashing its workforce by 5% but we would be remiss not to remind everyone that while us Americans were blissfully snoozing away on Sunday night, PwC Australia sold off its poisoned consulting business. This is the latest of many moves by the firm to shake off the reputational damage from former partner Peter Collins leaking confidential government tax information back to the firm.
PwC Australia has announced today that it has entered into an exclusivity agreement to divest its federal and state government business to Allegro Funds for $1. Both parties are targeting signing a binding agreement by the end of July.
The divestment will create two independent firms, while ensuring that there will be no disruption in vital services to public sector clients. PwC Australia will work with Allegro Funds to ensure a seamless transition.
“We have taken this step because it is the right thing to do for our public sector clients and to protect the jobs of the c.1,750 talented people in our government business. This transaction will result in the first pure play, at scale, government business in the market. This was an extremely difficult decision, but we are determined to take all necessary steps to protect the jobs of our people and re-earn the trust of our stakeholders,” said Justin Carroll, Board Chair, PwC Australia.
For PwC Australia, the transaction will result in an exit from all government advisory work, at both the state and federal levels. The divestment of this business, which represented c. 20% of the firm’s FY23 revenue, will impact the firm’s future size and operations. However, it allows the firm to move forward with predictability and focus, and ensure stability for the rest of PwC’s clients in other parts of the business.
“This transaction marks a new direction for PwC Australia and puts us on a path for success as we focus on our people and serving clients across Australia and our critical role in supporting the capital markets,” said Carroll.
“What I’m concerned about is the cultural practices that have now been revealed at PwC morphing across under a different name and title,” said NSW Labor senator Deborah O’Neill who absolutely will not let this thing go. The firm will not say if the business’s 130 partners and nearly 2,000 staff will be guaranteed to keep their jobs as part of the deal.
The firm also announced the appointment of a new CEO. PwC veteran Kevin Burrowes, who first joined the firm in 1986 and is currently the PwC Network’s Global Clients & Industries leader, will step into the CEO shoes vacated by Tom Seymour in May. He will become a partner in PwC Australia and relocate to Sydney upon completion of the Australian immigration process, said the firm. As well as working for PwC earlier in his career, Kevin has held senior executive positions at IBM, Credit Suisse and Royal Bank of Scotland. He has been a PwC partner for 19 years, having re-joined PwC UK in 2009. He has lived and worked in London, New York, Singapore and Frankfurt.
Says the press release:
The appointment of a new CEO and the intent to divest the government business is the latest in a series of actions taken by the firm to enhance its governance, culture and accountability. As previously stated, PwC’s clients were not involved in any wrongdoing and no confidential information was used to enable clients to pay less tax.
Meanwhile, current acting CEO Kristin Stubbins was getting grilled by parliament yesterday, vowing that those involved in the leak will be named and shamed (this despite the firm releasing information in dribs and drabs up until now) “This is a comprehensive, detailed investigation and as you can appreciate, we need to get it right,” she told the inquiry. “When the investigation is complete, which it will be shortly, we will be naming all those people who did anything wrong and there will be appropriate accountability.”
And now you’re all caught up. For today.